As we head into 2022, governments across Latin America have published their healthcare budgets, mainly, but not exclusively, focusing on addressing the backlog of non-COVID-related procedures. We are forecasting that 2022 will put severe strains on supply chains creating premiums for companies that are able to guarantee supply for hospitals.
Brazil 2022 Healthcare Budget
The 2022 PLOA (preliminary budget) released in August shows a 7.8% increase for federal healthcare spending compared to 2021 but most of that increase is directed to COVID spending. For non-COVID activity, the allocation has remained effectively flat. With limited information in the PLOA, and expected changes to allocations across 2022, we need to analyze previous years to build forward-looking expectations.
The budget proposal (PLOA) for 2021 was only 2% larger than the PLOA in 2020 (in nominal terms), indicating efforts from the finance ministry to control public spending. For both years, however, the government approved continuous budget increases, bringing up the actual budget by 63% in 2020 and 54% in 2021.
Part of this additional funding has come from emergency funds used to address the COVID-19 pandemic, while another portion (around R$ 5.3 billion in 2021) originated from the Emendas Parlamentares, or budgetary amendments proposed by deputies and senators to meet their required healthcare spending floors.
In 2021, emergency spending on COVID was lower than the allocations made in 2020, resulting in a -4% reduction in the overall SUS budget despite significant increases for primary (10%), secondary, and tertiary care (30%). Across all levels of care, the government is currently over-executing its budget despite still not seeing full demand recovery for non-COVID procedures. Therefore, we expect a larger portion of the budget to be focused on addressing the backlog of non-COVID related procedures.
Mexico 2022 Healthcare Budget
The 2022 health budget proposal provides mixed signals for government prioritization of healthcare. There was a proposal to increase public health expenditure from MXN 145.4 billion in 2021 to MXN 192.4 billion in 2022 (0.37% of Mexico’s GDP). However, further dissolution of the Health Funds for Wellbeing (FONSABI) to finance the pandemic add to current challenges in the health delivery for those dependent on the public sector for non-COVID high-cost care.
The shifts in the health focus areas of the budget are mainly driven by limited infrastructure in IMSS and INSABI driving prioritization of preventive care rather than specialty care, and financial demands of the pandemic leading to the reallocation of funds from FONSABI.
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