Selling the Public Sector: Latin America reacts; El Salvador: Who Will Have the Hospitals?

September 25, 2007

In El Salvador, efforts to put the public health system into private hands have provoked a wave of opposition: Last September 18, unionized doctors and workers at the Social Security Hospital in San Salvador, the capital, began an unprecedented joint strike in opposition to the privatization of the national system of which the hospital is a part. On October 9, employees of the Ministry of Public Health hospital system joined in with their own work stoppages. On October 16, thousands of doctors and medical workers protested in San Salvador against privatization in what has come to be called a White March, with participants dressed in white to show solidarity with the typically white-garbed medical profession and as a symbol of peace.

On October 23, community and social organizations joined the health care workers as an estimated 200,000 people dressed in white marched to the president’s house—the biggest protest in El Salvador since the civil war days of the early 1980s. A week later, protestors blocked the country’s main roadways, paralyzing 18 major arteries for most of the morning. Two more large White Marches took place on November 14 and December 6. The authorities reacted by stopping buses coming into San Salvador: People wearing white were taken off the buses, searched, intimidated and threatened, in a style reminiscent of the violent era of the 1970s and 80s.

The strike and marches were most immediately aimed at showing support for a legislative decree that would prohibit privatization of El Salvador’s two national health care systems: the Social Security Institute and the Ministry of Public Health. The national assembly passed the bill on October 17 with a simple majority, but President Francisco Flores threatened to veto it. Then, on October 31, in an attempt to thwart the mobilizations, Flores announced in a nationally televised address that he would not veto the bill, but using a play on words he also did not say he would sign it into law.

On November 14th the Legislative Assembly passed the bill again, this time with a two-thirds majority, obligating the President to sign the bill into law. This was a major victory for the anti-privatization movement, but it was short lived as on December 19 the decree was overturned in yet another assembly vote when the right-wing Party for National Conciliation (PCN), which had initially voted for the decree, joined the governing Nationalist Republican Alliance (ARENA) in opposing it.

Anti-privatization sentiment is widespread; a poll taken by the prestigious Jesuit University polling institution IUDOP showed that eight out of 10 Salvadorans are against privatization of the public health care system. But the issue has highlighted the continuing differences of the main opponents of the Salvadoran war years: ARENA—tied to death squad activity during the civil war era and El Salvador’s ruling party for the last thirteen years—has promoted privatization. The Farabundo Martí National Liberation Front (FMLN), the former guerrilla front, is now a legal political party that won 31 of 84 seats in the last assembly election, the largest number of any single party. The FMLN has been the only party to consistently support the anti-privatization movement and its call for maintaining the public health system.

Last year’s White Marches were the culmination of a series of actions against health care privatization that dates back to 1992, when workers affiliated with the General Union of Hospital Workers (SIGESAL) at the main national hospital, Hospital Rosales, began protesting World Bank and International Monetary Fund calls to privatize health care as part of an overall structural adjustment plan. Workers went on a week long hunger strike in 1993 and were able to derail privatization of ophthalmology and administrative services. In 1995, 100 workers, including the entire union board and some prominent doctors, were fired for their role in the protests. Some were rehired in 1997, in the wake of international charges that the firings were illegal.

Now, medical workers and professionals continue the strike they began last September. Besides a guarantee that the hospital system will not be privatized, the strikers also want guarantees that the government will take no reprisals against them, pay back wages and reinstate workers fired in the wake of the strike.The Salvadoran Government has carried out a multi-million dollar propaganda campaign to discredit the strike, offered workers sums of money to break the strike, used force against protestors and now refuses to compromise at the negotiating table.

Privatization began in El Salvador in 1989 with the election of the first ARENA president, Alfredo Christiani. The banking sector was the first to be privatized, and Christiani now owns one of the largest banks in El Salvador, Banco Cuscatlán. Since the signing of the 1992 Peace Accords that definitively ended the armed conflict, telephone, electric distribution and pensions have been privatized. The ports and airport have been partially privatized. The most lucrative businesses were privatized first. Next on the list are electric generation, education, water—and health.

In El Salvador, a country where 71 percent of the population lives below the poverty line, the majority of health care is covered by two national hospital systems: The Social Security system accounts for 17 percent of hospitalizations and provides coverage for all formally employed workers via payroll deductions and employer contributions. The Ministry of Public Health covers 74 percent of hospitalization, covering people with no or informal employment, generally those earning less than the $143 monthly minimum wage. Only nine percent of surgeries are currently done in private hospitals, according to a report by the Salvadoran doctors’ professional association.

Privatization has important supporters among the Salvadoran elites whose economic interests are at stake. For instance, Legislative Deputy Roberto D’Aubuisson Jr.—son of the ARENA founder and death squad leader—owns a business that provides hospital food service and intravenous feeding. The Poma family, one of the wealthy Salvadoran elite known as the “fourteen families,” is planning on investing in the mega-insurance business that goes along with privatization of health care.

The government has tried to sell the privatization of health care to the public by citing corruption and inefficient management in the current Social Security System. For the past 13 years, however, all the hospital directors have been appointed by ARENA—among them are some of the same people who hope to profit from private health businesses. What’s more, the government’s Ministry of Health has only spent 5.8 percent of its $2 million pharmaceutical budget in the first part of 2002, creating artificial shortages of medicine so people will become fed-up with the system. The ARENA government uses the artificially generated crisis to build its case for privatization.

The government’s strategy was to begin privatization of the health sector by privatizing individual hospital services like security and food, or individual medical sections such as ophthalmology. Privatization opponents have been successful in stopping or overturning some of these initiatives, such as the privatization of Hospital Rosales’ ophthalmology department. After the same hospital began replacing its security guards with a private contractor, SIGESAL, the hospital workers union, convinced a new management to reverse the plan: According to SIGESAL Secretary General Mario Arevalo, the hospital was paying the private firm $628 monthly per security guard, yet the security guards only earned $143, El Salvador’s minimum wage, leaving workers in a desperate situation which motivated some to carry out robberies. Hospital Rosales now contracts state employees at $400 a month, all of which goes directly to the worker. Though workers are getting almost triple the salary, budget costs went down, as did robberies around the hospital.

The Social Security health care system is targeted to be next up for privatization. The reason is simple: The system receives a steady monthly income from formally employed Salvadorans and system accounts contain $250 million dollars in reserves. Private investors are viewing this pot with a greedy eye. According to legislative assembly member Shafik Handal of the FMLN, President Flores’ plan includes giving $50 million to the private insurance companies to pay for start-up costs. Another $10 million will go to a propaganda campaign to sell the Salvadoran population on private insurance.

While the Salvadoran people may have been fatigued by 13 years of war, the threat of privatization of health care has touched a sensitive public nerve: Although the social security system does need to be reformed and modernized, most Salvadorans continue to support it because it pays for all users’ emergency situations, surgeries, and pregnancies, as well as ongoing consultations and exams. If private insurance companies and private medical practices took over the provision of and payment for health care, these services would not be covered or would escalate users’ costs way beyond their income. The public has also become aware that costs following privatizations generally go up, not down as supporters claim. Electric rates have gone up five times since that system was privatized and telephone costs have more than doubled.

One month into the health care workers’ anti-privatization strike, President Flores presented a proposal to “modernize” and “democratize” the health care system. Though Flores denied that his proposal was actually intended to privatize the system, members of the private business association ANEP were the main spokespeople for the plan. Notably absent was any consultation with the medical profession. But while Flores’ plan made big promises—for instance, that maids and farmers, who generally earn between $60 and $90 a month, would be included in the new health system and that people could choose to go to a private doctor instead of waiting in line at the Social Security Hospital—he offered no explanation of how all this would be paid for, nor did he mention that the monthly fees that would be channeled to private insurance firms would bankrupt the social security system. Instead of alleviating the crisis, President Flores’ plan deepened it by generating insecurity about the future of health care in the country.

As the anti-privatization White Marches built up steam late last year, President Flores looked for a way to demobilize the movement before November 23, the start date for the Central American and Caribbean Olympic Games, which El Salvador was hosting in the international media’s eye.

The government invested millions of dollars to attack the anti-privatization decree from all angles, including publicity, court challenges, calls to the legislative assembly to reverse the decree, and most outlandish, suspension of telephone, electric and garbage services to hospitals with the argument that private contracts for such services were prohibited under the anti-privatization decree.

In an audacious surprise move, Flores’ October 31 address proposed that San Salvador’s FMLN mayor, Hector Silva, head up a commission to study health care reform, by implication in a privatized framework. Silva, a doctor by profession, accepted, perhaps envisioning a resolution of the health care crisis as his ticket to the 2004 Presidency. Instead Silva sacrificed his 2003 mayoral candidacy—a Flores requirement for being named “negotiator”—and perhaps his political career for the long term. The U.S. State Department was reportedly grooming Silva as a presidential candidate to provide an alternative to the ARENA government, but required that he distance himself from the FMLN so that neoliberal economic measures could go forward as planned. In the end, Silva has been left in an embarrassing situation, rejected by the medical profession and his own party, which has steadfastly opposed health care privatization.

Silva’s move also leaves the FMLN, which controlled San Salvador’s city government during the six years of Silva’s mayoralty, in a weakened position just a few months before El Salvador’s mayoral and legislative elections. The FMLN and a broad center left coalition have not been able to come up with a candidate with as widespread support as Silva had, though at the moment, the FMLN is still ahead of ARENA in the polls. But even if the FMLN loses the San Salvador municipal elections, the political impact of contributing to a reformed national health care system and stopping a neoliberal economic measure that would hurt the poor majority will have a far-reaching impact. The continuing privatization struggle is sure to be a defining issue for both the 2003 mayoral and legislative assembly elections and the March 2004 presidential elections. It will also remain a focal point of grassroots mobilization and protest.

Leslie Schuld is the director and co-founder of the Center for
Exchange and Solidarity (CIS), in El Salvador.

Tags: El Salvador, privatization, health care, union, protest, neoliberalism

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