The Brazilian Public Health in Contemporary Capitalism

The Brazilian Economic, Political, Social, and Health Context

In Brazil’s recent political turmoil, privatization of the public health services has taken on different forms. During the civil-military dictatorship period, which lasted from 1964 to 1985, the favoring of the private sector in health services was established through generous funding of clinics and hospitals, which turned into huge profits for private enterprises. The extension of coverage to the population was achieved through the growing shares of private care, notably the inpatient and the specialty sectors.^5–7

The struggle against dictatorship brought together many segments – community neighborhood leaders in large cities, political party members, intellectuals, students – to form the so-called Brazilian Movement for Sanitary Reform (Reforma Sanitária), inspired by a similar movement formed in Italy in the 1970s. The sanitary reform project’s goal was to establish the social right to health care. It proposed the creation of a unified system of public services, which were until then separately managed by the 3 levels of government. The main idea was to guarantee universal access to such services, as opposed to the prior assistance focused only on workers with formal employment ties. ⁶

The new 1988 constitution expressed the dispute between 2 antagonistic political forces: while health was established as a universal right and a state’s duty, the health service field was franchised to private interests. One of the main determinants of this contradiction was due to the difficult transition from the dictatorship to the bourgeois democracy for the left-wing forces. As has happened in Spain, ⁸ the result of this disequilibrium was the conservative establishments’ influence on the 1988 constitution. Again, as in Spain, the dictatorship structure of power has been maintained, keeping the major role of the banking sector within the state.^8,9

The establishment of the Unified Health System (SUS) by the Brazilian Federal Constitution of 1988 was significant as an attempt to rescue the public debt accrued during the civilian-military dictatorship, in which the private health care sector took priority.^5,7

The private health sector acted successfully as powerful lobbies in the National Constituent Assembly in 1987–1988, particularly the Brazilian Federation of Hospitals and the Brazilian Association of Group Medicine, as well as the Brazilian Medical Association and their state branches, ¹⁰ including clauses in the constitutional text which assured the mercantile exploration of health care.

Such antagonistic constitutional provisions were extended by the dispositions of federal law no. 8,080, promulgated in 1990, formally regulating all health procedures and services in Brazil, whether public or private. This law also establishes the principles and guidelines of the SUS.

Regarding laws, the Movement for Sanitary Reform succeeded only partially. Additionally, each party coalition that took over (not only in the federal government but also in the states and municipalities) placed legal measures against the reform on the path and obstructed the realization of health care as a social right. ¹¹

After the reestablishment of direct presidential elections in 1989, in the course of the following governments, the public health services suffered from insufficient budgets. Since the second half of the 1990s, in Brazil, unlike every Western European country, private health expenditure has been the major portion of the total spending in the health care system. A quarter of the total expenditure belongs to private health insurance companies. ¹² Another difference in this context between Brazil and European countries is the well-equipped service network of the latter, in comparison with the quantitative deficit and qualitative inadequacy of personnel, physical installations, and equipment of the Brazilian public health sector.

In 1985, the civil-military dictatorship legally ended, and 2 years later a new federal constitution was promulgated. In January1990, an openly neoliberal government took power, giving way to a dismantling of the state apparatus. The newly elected president, Fernando Collor de Mello, was a right-wing populist with political roots in the recently departed military regime.^13(p8) The defeated candidate in this election was Luiz Inácio Lula da Silva, the charismatic leader of the Workers’ Party.

The social rights granted by the 1988 constitution, the universal right to health care among others, were contested since their inception, given that Collor de Mello clearly defended neoliberal aims. There was a dismantling of the social-focused ministries, among them the health ministry. The Collor de Mello government made no efforts to enact many of the social rights in the constitution, which already suffered from many conflicts between public and private interests.

Regarding SUS, Collor de Mello initially halted federal law 8,080, whose promulgation was a sine qua non condition for the start of the implementation of the National Health System (SUS), until September 1990. On promulgation of this federal law, the articles referring to financing of the public health system were vetoed. As a result, public health resources in Brazil have remained unstable every year, depending on decisions taken by the executive and legislative powers.

Collor de Mello eventually resigned from office to avoid being impeached for corruption charges. Itamar Franco, the vice president, then assumed the presidency until 1994, when Fernando Henrique Cardoso (FHC) was elected, and then re-elected in 1998 until 2002. A member of the Brazilian Social Democratic Party (PSDB), Cardoso’s government adopted a neoliberal economic policy founded on a macroeconomic tripod of inflation control, primary surplus, and floating exchange rates, which was maintained through the subsequent governments of Luiz Inácio Lula da Silva (2003–2006 and 2007–2010) and of Dilma Rousseff (2011–2014 and 2015–2016). This policy caused rising cuts into social public spending, especially regarding health spending, thus preventing proper development of universal health care in the country, given the underfunding imposed on the Unified Health System (SUS).

Since the 1990s, the reforms, inspired by the neoliberal model in the 2 terms of Fernando Henrique Cardoso (1994–2002), include “a privatist and narrow approach to the health sector, as compared to the model and principles of the Brazilian Unified Health System (SUS).”^11(p445) According to Noronha and Tavares ¹¹ this so-called “state reform” (or counter-reform), which transforms government agencies into private agencies called social organizations, represents “the decommitment of the State with the health of the population, handing it into the hands of private agents leveraged by public resources”^11(p448) and has promoted the transfer of financial resources and management to private enterprises in the public health sector. ¹¹

In 1990, the Brazilian public health expenditure was 2.81% of the GDP and the total health expenditure was 4.66% of the GDP. ¹⁴ In the last year of the Cardoso government (2002), the public health expenditure reached the maximum of his tenure, 3.18% of the GDP, while the total health expenditure stood at 7.13% of the GDP. ¹⁵ This indicates that private health expenditure has surpassed the public.

In comparison, in 2009, towards the end of the Lula administration, the public health expenditure rose to 3.84% of the GDP while the total heath expenditure grew to 8.65% of the GDP. ¹⁶

In the 1990s, the SUS was organized without changing the private sector dependence, a characteristic of the former social security model, which was mostly restricted to individual care with emphasis on hospital assistance, as well as in medium and high complexity exams and procedures. ¹¹

During Cardoso’s first term, relevant legislation was changed in time for his re-election, helped by influences on the parliament whose nature remains obscure to this day. His government kept political and economic dominance in the hands of the international-leaning bourgeoisie. ¹² For Boito and Saad-Filho, this bourgeoisie “consists of international banks, insurance companies, large consultancy and accountancy firms, transnational and internationally integrated manufacturing capital, and – very importantly – the mainstream media.”^17(p3) Fiori ¹⁸ establishes the congruency between Cardoso’s thesis – in which Brazil, as a country on the fringes of capitalism, should take the path of dependency in association to foreign capital – and the actual direction taken by his presidency.

So, expectedly, the reforms made during Cardoso’s 8-year government kept true to the formulations of the Washington Consensus:

the financial and commercial opening, the privatizations and the pro-market reforms (that eliminated the capacity of planning and the intervention of the State in economic activity) and the orthodox management of the economic policy (high interest rate and control of current spending).^19(p916)

In this context, eventually the Workers’ Party won the elections for the presidency, and 2003 marked the beginning of what, to many authors, came to be known as Lula’s Brazil:

Lula’s rise from worker on the shop-floor to leader of his country was never just an individual triumph: what made it possible was the most remarkable trade-union insurgency of the last third of a century, creating Brazil’s first – and still only – modern political party, which became the vehicle of his ascent. The combination of a charismatic personality and a nationwide mass organization were formidable assets.^20(p1)

This “neodevelopmentalist” strategy, expressed through anticyclic vigorous responses, which included a rise in government spending and a public housing program, sustained the recovering of the country in the event of the global economic crisis.

At the end of Lula’s 2 administrations, polls pointed to an 80% approval rating. By 2010 the Bolsa Família program (“family allowance”) had already reached over 11 million families, who received monthly allowances around US$40 per home. The social security coverage expanded from 45% of the workforce in 2002 to 51% in 2010. The minimum wage increased by 67% between 2003 and 2010, while real GDP grew 37%. ²² Nevertheless, the right-wing media, the traditional upper middle class, and the capital-dependent associated fractions did not endorse Lula and derided his humble origins. However, “Lula insisted, probably rightly, that the elite had never made as much money as they did during his government.”^22(p38) This statement is supported by authors such as Oliveira, ²¹ Teixeira and Pinto, ¹⁹ and others, who stress the concentration of income in the financial system and the impressive banks’ profits under the Workers’ Party government.

According to Morais and Saad-Filho: “the 2010 elections imposed a choice between two political and social projects and two visions of the Brazilian state. Neither was revolutionary, anticapitalist, or even unambiguously anti-neo-liberal, but they are supported by strikingly different social alliances.”^22(p39)

The neodevelopmentalist policies, adopted by the second Lula administration (2006–2010), continued when he succeeded in electing his successor and partner of the Workers’ Party, Dilma Rousseff.

The Rousseff administration expanded domestic workers’ labor rights, leading to increased costs for upper-middle-class employers. It should be noted that in Brazil there are approximately 6 million women working as domestic servants, often as the head of their families with the salaries they earn. In 2013, Rousseff also created a health program called Mais Médicos (“More Doctors”) that attracted thousands of foreign doctors, mainly Cubans, to municipalities with poor health conditions.^17,23–25 The huge majority of Brazilian doctors had never been interested in attending these poor regions. Medical associations heavily criticized the program using a racist and anti-communist discourse.^26,27

In 2014, the leaders of the capitalist fraction with ties to the international financial market – especially represented by the Brazilian Social Democratic Party (PSDB) – were defeated a fourth time by the Workers’ Party in the presidential elections. With the support from the mainstream media and from the upper-middle-class, they started an active campaign to overthrow Rousseff, exploiting the deepening of the economic crisis and the involvement of notable members of the Workers’ Party in corruption scandals with promiscuous relations between the public and the private sectors. Although Rousseff made several concessions to the right wing, the slowdown of Brazilian economy led to social conflicts and the “old ones [.] returned with [their] vengeance.”^17(p13) Boito and Saad-Filho state that “the PSDB and the mainstream media mobilized the judicial system in support for their strategy of aggression.”^17(p13) Amid this turmoil, prominent jurists and the independent press criticized a sector of the judiciary responsible for the Lava Jato operation, which is responsible for the arrest of many high-ranking businessmen of the largest Brazilian civil engineering corporations. These public prosecutors, judges, and attorneys, whose starting salaries range between 29 and 40 times the monthly minimum wages,^17(p13) overstepped their capacities and started to detain preemptively, in an effort to extract incriminating testimony from defendants, who are then judged, are found guilty, and have their sentences converted to a few years of house arrest. Furthermore, the Workers’ Party mobilized its social base too late against the biased treatment inflicted upon the party:

The PT administrations limited their aspirations to the “lite reformism” permitted by their unwieldy political alliances at the top. This strategy alienated the party’s base and provoked the opposition into an escalating attack that came to the boil in March 2015.^26(p214)

Currently, the new administration (considered illegitimate by many who denounce that there has been a parliamentarian coup) prepared and endorsed a constitutional amendment which limits public spending to the inflation index for 20 years, measures that will intensify the budget cuts in social policies, particularly health, education, and housing services. Social security expenditure once again is proclaimed by the current government and mass media to be the most responsible for the public debt. It is planned to raise the retirement age to 65 years in a country where the life expectancy of the lower classes simply does not surpass that age.

We will now present and analyze what we believe are the largest obstacles in the path to consolidate access to health care as a universal social right of the Brazilian population.

The Effects of the Contemporary Capitalist Crisis on Social Rights, Social Security, and Health Financing in Brazil

Since 1990, the current era of dominance of the interest-bearing capital (financial capital) has not yet been able to show us the state’s withdrawal from the economy, but instead we have seen its perverse “presence.” In particular, in this most recent crisis of capitalism, we have witnessed the state’s adoption of austere policies, with a reduction of social rights, including health policies, intensifying market-oriented mechanisms, deterioration of labor, and job insecurity. This is a reality in the central capitalist countries as well as in Brazil. We also observe how the state allows the appropriation of public funds by the capital, with constant disputes over financial resources supposedly intended for the development of universal public health, which have been always present since the creation of the Unified Health System (SUS) by the 1988 constitution. Many aspects have been weakening the state’s capacity of raising funds, thus harming SUS financing.

It is understood that the debates concerning the SUS budget, in this context, must encompass the relations between the contemporary crisis and the public health, sustained on the larger idea of a capitalist crisis.

We argue that the fundamentals of the capitalist crisis compose a wider scenario of coexistence between 2 articulated main tendencies, especially since the late 1970s. They are (1) the declining rate of profit tendency in capitalist economies, in particular the United States, after the Second World War, with a fall of 41.3% between 1949 and 2001^29,30 and (2) as a reaction to such a tendency, the capitalist system embarking on a path of financial accumulation, in which the interest-bearing capital, in its most perverse form as fictitious capital, takes the dominance in the economic dynamic of this period, mainly after 1980. ³¹ Between 1980 and 2013, global financial assets increased significantly, from US$12 trillion to US$285 trillion, respectively. ³² In the same period, this extraordinary expansion surpassed the growth of the global GDP, which only increased from US$11.8 trillion to US$73.8 trillion. ³³

The small recovery of the profit rates in the North American economy, after the 1980s, is mainly attributable to neoliberal policies, decreasing wages, and imposing of much worse work conditions. ³⁰ At the moment such a decrease occurs, an overaccumulation crisis is observed, which is explained not by the lack of effective demand but by the absence of profits. Starting in the 1990s, a growing part of the nondistributed profits were directed to the financial sphere, which led to the significant growth of fictitious capital, whether in the form of government bonds, shares traded on the secondary market, or derivatives of all types. ³¹

The impacts of the current crisis of capitalism on the Unified Health System (SUS) happened essentially over the financialization of public resources and appropriation of public funds by capitalists aiming for appreciation.

To understand the underfinancing of the Unified Health System (SUS), it is important to mention again the economic policies adopted by the federal government from the Fernando Henrique Cardoso period until the current government. These policies are known by the famous macroeconomic tripod: high interest rates and inflation targets, primary surplus, and floating exchange rates, which restrict public expenditure, even the social expenses such as fundamental public health services.^14–16

The history of conflicts over health budgets was always intense before and during the 2000s, even after the approval of the 29th constitutional amendment (EC29), which earmarked resources for public health. To the federal government was reserved the amount applied in the past year corrected by the nominal variation of the GDP. Even so, it has kept a complex scenario of lack of resources and insecurity about financing sources. Law no. 141/2012 (regulations for EC29) implied no resolution to such problems. Thus, in fact, the calculation basis for the federal government did not change, making resource allocation to a universal health system more difficult.

The Unified Health System (SUS) underfinancing was intensified by the approval of a new constitutional amendment, EC86, in 2015. It included a new basis of calculation for the application of resources by the federal government on health. It has changed, once more, the calculation basis of the last year amount corrected by the nominal variation of the GDP for an amount derived on the current net revenue (RCL). The federal government health allocation should escalate throughout the next 5 years, from 13.2% of the RCL, from the first financial budget after the promulgation of EC86 (2016) until reaching 15% of the RCL in the fifth financial budget in 2020. A loss of around R$9.2 billion to the Ministry of Health budget was already expected in this first year of implementation of the EC86. ³⁴

Despite the advances that the creation of the Unified Health System (SUS) represents, the Brazilian government does not commit itself to public health as any other country with a public universal health system does. In 2014, while SUS (public expenditure) spent 3.9% of the GDP (federal government,1.7%; states, 1.0%; and municipalities, 1.2%), the public spending on average in European countries with universal systems (France, Germany, Spain, Sweden, and the United Kingdom) was around 8.0% of the GDP. ³⁴

Article 55 of the Transitory Constitutional Provisions of the Federal Constitution has never been respected. It provides that 30% of all resources of social security should be allocated to health services. In 2014, the social security budget reached R$686 billion; considering the expenditure of the federal government, 30% would correspond to R$205.8 billion. Nevertheless, the actual value was half of that amount: R$100 billion. This clearly illustrates the historic underfinancing. ³⁴

Still, in 2015 the federal government supported a bill that aggravated the Unified Health System underfinancing even more. In January of that year, congress passed the law no. 13,097/2015 which, among other provisions, promotes the opening of the health system to foreign capital. According to that provisional measure, foreign companies can establish, operate, and exploit hospitals (including philanthropic ones) and clinics. They can also act over family planning services and health care services exclusive to enterprise employees. Currently, foreign capital’s presence already exists in other health sectors, such as insurance health plans and pharmacies. But the new law alters the Organic Health Law (no. 8,080/90), which originally forbade foreign investments in the sector, and also counters the Brazilian Federal Constitution of 1988, article no. 199. Note that the Brazilian constitution has contradictions concerning the public-private relationship. ³⁵

As a consequence of this new law, it is important to stress that in November 2015 the United Healthcare Global, an American group, acquired the philanthropic Samaritan Hospital in the São Paulo capital.^36–38 However, this hospital has remained a participant of the Institutional Development Support Program of the Brazilian Ministry of Health, developing research and personnel training courses for the Unified Health System, i.e., receiving public financial resources. Thus, in Brazil, nonprofit entities are allowed to benefit from fiscal waivers. The SUS, therefore, with its insufficient budget, indirectly contributes with resources to a foreign philanthropic hospital. Undoubtedly, this law has come out to further prevent the possibility of Brazilian society achieving health as a citizen right and to ensure the insatiability of interest-bearing capital in appropriating the public fund.

Another important obstacle to the Unified Health System financing refers to the Desvinculação das Receitas da União (DRU) (“De-earmarking” of Federal Revenues), through which 20% of the social security budget revenues are diverted for public debt interest payments, maintaining the primary surplus. It is known that after many changes since its 1994 creation, the DRU is guaranteed to last until 2023, i.e., for about 30 years, according to the constitutional amendment EC93/2016, which rose its rate to 30%. The Brazilian Federal Constitution of 1988 created the social security budget to support social policies – pensions, health, and social care. Nevertheless, institutionally the federal governments have never completely respected this budget since 1994. ¹²

At last, we have come face to face to one of the largest austerity measures supported by the financial capital, dismantling the Unified Health System budget for the next 20 years: the adoption of the constitutional amendment proposition no. 55/2016. It institutes a new tax regime by limiting public spending, starting in 2017 and thus proceeding for the next 20 years, adjusted only by inflation (measured through the Extended National Consumer Price Index – IPCA). However, it does not limit interest payments, only primary expenditures. In the Brazilian federal budget, public debt interest payments represent a much larger cost than any other public policies. In 2015, such a payment reached 8.5% of the GDP, around R$500 billion, which corresponds to 5 times the Ministry of Health budget in that same year. This constitutional amendment proposition (PEC) imposes on the public health system a profound dismantling and increasing privatization. The losses accumulated in the next 20 years for SUS, under this new fiscal regime, is predicted to range around R$433 billion. As an example, if this PEC had been implemented in the period of 2003 to 2015, this loss would have achieved R$135 billion, draining the federal resources allocated to SUS from 1.7% to 1.1% of the Brazilian GDP. ³⁹

In this scenario, Brazil has shown the specific presence of the state acting according to neoliberal ideology, i.e., reducing social rights and cutting social expenditure. As Navarro argues, it is false to claim that the role of the state has been declining in the neoliberal era. He emphasizes that “… states have become more, not less, interventionist.”^40(p50)

Conclusions

In Brazil, the deepening of the capitalist crisis competes with a political crisis. In a country in which the capitalist classes have a “panicked fear” of any kind of social change, reacting with violence to any threat to the stability of the order, the classes’ fear is the historical equivalent to ethnic fear. ⁴¹

The 3 powers, the executive, the legislative, and the judiciary, exchange conflicts and ceasefires always to the detriment of the lower classes. Congressmen who are defendants in the supreme federal court pass laws which limit the power of the judiciary. Social movements protest against the current government and are violently repressed. During the impeachment process of President Dilma Rousseff, we witnessed the rise of far right-wing groups, some of which advocate for the return of the military dictatorship and which are suspected of having external financing. They receive support from many mainstream media organizations and from the upper middle class, who no longer tolerated the widening of social citizenship.” ¹⁷ The protests, backed up by capitalist entities, eventually were successful in deposing president Rousseff, opening a path to a project which has strengthened austerity measures against the working class, against the universality of social rights and specially against the Unified Health System (SUS).

The troubled SUS financing, in this critical scenario of contemporary capitalism, went on a long process of tensions. The interest-bearing capital (financial capital), particularly the fictitious capital, seeking to ensure more immediate profits in the whole world over the last 30 years, assuming dominance in the dynamics of capitalism, has developed an important role in Brazil as well. A restrictive neoliberal economic policy remained very strong during the 1990s and 2000s. Under this condition, Brazil has faced the fragility of its social security financing and the draining of the public fund to the private sector.

In the name of a famous idea, “there is no alternative,” the current conservative Brazilian government justifies the recent austerity measures. Behind these orthodox measures, they are willing to undermine the power of the working class ⁴² and to abandon social universal policies adopted in the 1988 Brazilian Federal Constitution. The right wing’s project also aims to deride the left by demoralizing what was once the main workforce party, the Workers’ Party.

Nevertheless, even countries that have adopted these so-called austerity measures have maintained a high percentage of public spending on health in relation to the GDP.^15,16 In contrast, the Brazilian government does not contemplate any measures judged unacceptable by the capitalist classes. An example of these alternatives include validating the universal right to health care by giving priority to the financing of social security (health, pensions, and social care), which may be reached by measures that go against the regressive Brazilian tax policy. Thus, they must incise on the financial sphere, with the objective of the universality of health care. The following proposals are made: (1) an increase of the share of the Social Contribution on the Liquid Income – CSLL (the source of health care financing) for financial institutions; (2) a deepening of the mechanisms of taxation on the financial sphere, through creating a General Tax on Financial Transactions and the taxation of the income and shares of large multinational corporations, which are spared in the current legislation; (3) the taxation of large fortunes; (4) the rejection of the “de-earmarking” of federal revenues (DRU) as a way of strengthening the social security budget; (5) a reduction or extinction of the fiscal waivers with medical expenses and juridical ones that provide medical assistance to its employees.

It is the duty of the left to tread through the difficult path of correctly interpreting this complex conjuncture, bonding to and supporting the organization of the poor and of the working class, and denouncing internally and externally what is at stake in this moment of the class struggle in Brazil.