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Understanding the Columbian Health Care Market

By Xcenda

Colombia, the second-most populated country in South America, has been in transition since bold healthcare reform was introduced in 1993. We examine key market considerations of Colombia's unique healthcare model.


Colombia: A Unique Universal Healthcare Model in Latin America

With a population of nearly 50 million, Colombia is the second-most populated country in South America after Brazil.1 According to the World Health Organization, the country spent 7.2% of its gross domestic product (GDP) on healthcare in 2014, which is up from 5.4% in 2004 and 1.1% greater than the average of 6.1% for upper/middle-income countries. Latin America pharmaceutical sales in 2011 were reported to total $70 billion, which is relatively low compared to Asia ($265 billion), Europe ($329 billion), or North America ($358 billion). The projected sales growth in Latin America between 2008 and 2021 is much higher at 119% vs growth of 82% for Asia, 18% for Europe, and 22% for North America.2
The Colombian health sector has been in transition since bold healthcare reform was introduced in 1993, leading to major improvements in population health, such as increased overall life expectancy (69 years in 1993 vs 74 years in 2015) and decreased rates of infant mortality (down from 21 deaths per 1,000 births in 2000 to 14 in 2015).3 A critical part of reforms and change has also allowed for approximately 95% of Colombians to be registered under the Sistema General de Seguridad Social en Salud (SGSSS) national health coverage system. The remaining 5% of citizens are not insured and pay out of pocket.4

Structure of the Healthcare System

Colombia’s SGSSS has been providing universal public and private coverage since the introduction of Law 100 of 1993, whereby all citizens, irrespective of their ability to pay, are entitled to a comprehensive health benefit package.5 In 2012, the contribution of the SGSSS to public health expenditures was 75.8% and to private expenditures was 24.2% of the total health expenditure.6
Out-of-pocket healthcare expenses in Colombia account for approximately 14.4% of expenditures, one of the lowest rates in the Latin American region.7 Colombia was praised by the Organization for Economic Cooperation and Development (OECD) in its 2016 report for its move toward universal healthcare and related progress (eg, increased life expectancy, decreased waiting times); further, it was identified as a regional leader in healthcare improvements.7 Nevertheless, at least 1 study indicates that almost 10% of Colombians who incurred out-of-pocket healthcare expenses did so at catastrophic levels, surpassing their household payment capacity to manage these expenses.8
The SGSSS is funded through a combination of payroll contributions and general taxation. Out of those registered on the SGSSS, 43% are on a contributory (or "contribuyente”) scheme funded by 12.5% of an individual’s salary paid into the Solidarity and Guarantee Fund (Fondo de Solidaraided y Garantia, FOSYGA). The remainder of the SGSSS population (~48%) is covered by a “subsidiadas" plan designed for citizens who cannot afford to pay into the contributory scheme. This plan is funded by the federal government, municipal taxes, and a 1.5% payroll tax.9
All citizens registered on the SGSSS must select a health provider from within the Entidades Promotoras de Salud (EPS). EPS groups act as intermediaries between patients and health service institutions (Instituciones Prestadoras de Salud [IPSs]), akin to managed care organizations in the United States, and are funded through payments received from FOSYGA. IPSs are provider organizations that represent hospitals and clinics.
The Plan Obligatorio de Salud (POS) is defined by the CRES (Committee of Health Regulations) and is an inclusion list of the services and health interventions to which all Colombians have access to, regardless of their EPS affiliations.

Implications and Consequences of Colombia’s Healthcare Reform

In the first decade following the introduction of Law 100, healthcare coverage in Colombia increased almost 3-fold, from 25% in 1993 to approximately 70% in 2003; indeed, a majority of this coverage was achieved within 5 years, with estimated 60% national coverage in 1998.5 In 2007, the vast majority (90%) of Colombians were covered within the SGSSS, with three-quarters participating in the contributory regime compared to less than half in 2003; by 2011, current numbers were reached, with ~95% coverage and close to 80% in the contributory regime.5 The corresponding impact on public expenditures was a 13-fold increase between 1994 and 1995 (US$42 million to US$555 million) and a high of US$784 million in 1998 (public expenditure data reported only to 2000).5
A subsequent reform in February 2015 to the Ley Estaturtaria de Salud (LES), the statutory health law (Law 1751) in Colombia, resulted in an unprecedented range of available health services in Latin America; healthcare is now considered a fundamental right of citizens in Colombia. The details of how the implementation of this new regulation will be carried out are still being decided. Previously, products and services listed on the POS were limited to EPS members, and non-contributory citizens had access to only 60% of products and services available. Consequently, with healthcare now considered a fundamental right in Colombia, citizens are enforcing their rights to healthcare by invoking legal action when the EPS refuses to provide services, treatment, exams, or pharmaceuticals that are prescribed,5 thus turning Colombia into one of the most litigated healthcare sectors in the world according to the president of the Colombian Association of Companies for all Medicines (ACEMI).10
Despite the significant progress and funding over the last 25 years, there remains a substantial number of citizens classified as the Uninsured Poor Population (UPP) by the Ministry of Health for reasons including an inability to pay for insurance, lack of awareness or interest in obtaining coverage, and waiting on applications for coverage to be approved. Even those who have official access to universal healthcare often lack actual or “material” access to healthcare services.5
There remain substantial challenges ahead for the new reform, as spending is certain to rise with universal healthcare providing unprecedented access to drugs and healthcare to more Colombians than ever before without a clear plan on how it will be financed long term. Moreover, the SGSSS contributory scheme relies on funding from employee contributions, yet a sizable sector of the Colombian economy is funded informally through unofficial channels (eg, the “black market”) which evade formal contributions to SGSSS, with 55% of total employment in Colombia estimated to be informal in 2000.11
Figure 1. Structure of Healthcare Financing in Colombia

*This includes spending on infrastructure (e.g. public hospitals), services and drugs not included in the benefit package, claims of the uninsured, public health campaigns (e.g. vaccination) and public health programs (e.g. tuberculosis, HIV), among others.

Reimbursement of Pharmaceuticals

When healthcare provisions were first put into place in Colombia, much of the focus was on controlling infectious diseases; however, nearly 20 years later, 80% of the high costs to the SGSSS are due to cardiovascular diseases, cancer, and diabetes.9 Long-term consequences of these conditions also affect the population in Colombia, leading to conditions such as chronic kidney disease.11
La Cuenta de Alto Costo (CAC) has gathered information since 2007 from the healthcare providers on diseases considered at high cost for the SGSSS. The purpose of CAC is to manage the risk around health products and healthcare and to promote knowledge management through the articulation of different SGSSS stakeholders in order to reduce and optimize healthcare spending.12
Latin American countries recently collaborated with the Pan American Health Organization (PAHO), which recognized Colombia to have national regulatory agencies that are competent and performant.13 Despite this recognition of progress, the duration of time required to obtain product approval is relatively slow as a result of the regulatory agencies (Insituto Nacional de Vigilancia de Medicamentos y Alimentos [INVIMA] in Colombia), as median approval time across Argentina, Brazil, Colombia, and Mexico was 278 days in 2012 to 2013.
Reimbursement in Colombia is done through the POS list or reimbursement by FOSYGA. To obtain reimbursement, there are 2 paths: the first is through a scientific panel and the second is through legal action claiming fundamental rights (tutelas).14

Health Technology Assessment in Colombia

Instituto de Evaluación Tecnológica en Salud (IETS) is the national health technology assessment (HTA) agency in Colombia and was established in 2012. It has conducted 148 HTAs and has quickly become an increasingly important institution, developing clinical guidelines to allow physicians to make informed decisions on available therapies. IETS also produces efficacy/safety, budget impact, and cost-effectiveness reports on health technologies to inform government decision making. Nevertheless, it does not systematically assess products in the same way as major European agencies do (eg, National Institute for Health and Care Excellence [NICE], Haute Autorité de Santé [HAS]), and for the reports that IETS has produced, the process is not very transparent and the reported evidence is sometimes limited only to efficacy and safety. NICE has indirectly influenced decision-making in countries such as Colombia through the development of guidelines or the use of its HTA guidance for health products.15
To date, there has been no experience of payment-for-performance contracts or conditional reimbursement for the device or pharmaceutical industry. However, it is to be expected that IETS will be involved in value-based pricing negotiations for new pharmaceuticals in the near future. The purpose would be to introduce an additional step after drug approval to limit the introduction of expensive therapies and control healthcare spending.15

Key Takeaways 

  • As a recently identified OECD regional leader in healthcare, attention on the impact of Colombia’s reform can be expected to increase in importance across Latin America.
  • There is an evident distinction between the recent LES regulation guaranteeing universal healthcare in Colombia and the ability for its citizens to attain access to care. That is, the potential benefits afforded by the availability of universal healthcare have likely not yet been realized to the full potential, particularly in rural and poor communities.References
  • While health-related spending has necessarily increased with the introduction of reforms, spending is likely to continue to rise, along with increasing healthcare resource use, as “material”5 access to care improves.
  • IETS has been created recently and is gaining momentum in the Latin American region; however, how it operates is not yet completely transparent.
  • Future strategies to control healthcare spending may reasonably include value-based pricing schemes introduced and managed by IETS after regulatory approval.


  1. US Central Intelligence Agency. The World Factbook. Country comparison. Accessed January 11, 2017.
  2. J Davies, O Mazza. The pharmaceutical & healthcare industry in Latin America. Accessed February 16, 2017.
  3. The World Bank. Colombia February 6, 2017.
  4. Guerrero R, Gallego AI, Becerril-Montekio V, Vásquez J. The health system of Colombia. Salud Publica Mex 2011;53 suppl 2:S144-S155.ACEMI. Cifras e Indicadores de Sistema de Salud. 2015
  5. Lamprea E, Garcia J. Closing the gap between formal and material health care coverage in Colombia. Health Hum Rights. 2016 Dec;18(2):49-65.
  6. World Health Organization. Global expenditure database. Home/Index/en. Accessed February 22, 2017.
  7. OECD. OECD reviews of health systems: Colombia 2016. Accessed February 6, 2017.
  8. JL Amaya-Lara. Catastrophic expenditure due to out-of-pocket health payments and its determinants in Colombian households. Int J Equity Health. 2016 Nov 10;15(1):182.
  9. Oxford Business Group. The report: Colombia 2016. Accessed February 22, 2017.
  10. ACEMI. Cifras e Indicadores de Sistema de Salud. 2015. Accessed February 6, 2017.
  11. Pan American Health Organization. Profile of the health services system of Colombia. Accessed February 22, 2017.
  12. Cuenta de Alto Costo. Published February 6, 2017.
  13. Centre for Innovation in Regulatory Science. The changing regulatory environment in Latin America. 2015. Accessed February 14, 2017.
  14. Augustovski F, Rojas JAD, Ferraz MB, et al. Status update of the reimbursement review environment in the public sector across four Latin American countries. Value Health Reg issues. 2012;223-227.
  15. The Economist Intelligence Unit. Value-based healthcare: a global assessment, 2016. Accessed February 6, 2017.