President Pedro Castillo’s first budget in the new Peru government calls for an increase in health spending that is three percentage points above forecasted economic growth, following campaign promises to dramatically improve patient access in Peru’s public health system while increasing public health financing as a component of GDP. While the increase would still be positive even after discounting for inflation, overall, it does not keep up with growth projections.

Overview for 2022

The 2022 budget proposal calls for a 5.7% increase in SIS spending. This includes extra funding to cover the expansion of beneficiaries realized at the end of 2020, additional funding to implement the country’s planned electronic health record system, and allocations to cover extra demand on EsSalud facilities. We are still waiting for the final budget, which we expect to be revised up slightly, with potentially more funding for the high-cost disease fund (FISSAL). For 2022, we also anticipate a strong recovery in private insurance growth in addition to a very strong rebound in procedure volumes for all payer verticals.

Risks to Forecast

The largest risk currently (outside the emergence of a new disruptive variant of the coronavirus that causes COVID-19) would be related to poor execution of overall policy from the new Peru government as it implements its first annual budget. Of great concern is the ability to ensure that EsSalud’s fiscal gap is adequately addressed. Likewise, Peru faces probably the largest backlog of non-COVID service delivery of any country within the region, which will require innovative approaches to reduce the waiting list as quickly as possible.

Business Implications

The expected rebound in diagnostics and treatments in Peru in 2022 will likely be larger than in any other country given the tremendous impact in volumes witnessed in both 2020 and 2021. This means that both payers and provider will require direct support in managing this monumental challenge. Companies should be prepared for extraordinary demands on supply chains, diverse needs from providers in terms of innovative solutions to care provision bottlenecks, and challenges from payers as costs outside of COVID begin to shoot up when patients more rapidly return for routinized screenings and treatment of non-communicable diseases.

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