NOV. 21, 2019

Budget 2020: The Government and Senate reach an agreement to advance with the social agenda

As part of the Budget 2020 discussion, Treasury Minister Ignacio Briones and Labor Minister María José Zaldívar, together with senators from both the ruling coalition and opposition parties, have signed the Framework for Social Understanding. This addresses matters relating to pensions, public transport for senior citizens, and health care. Among the most significant measures are a 50% increase in the Basic Solidarity Pension and the Maximum Pension with Solidarity Contribution for people over 80 years old starting in January 2020.

In the early hours of Thursday, November 21, Treasury Minister Ignacio Briones and the Labor and Social Security Minister announced the Framework for Social Understanding achieved between the Government and senators from the ChileVamos coalition and the opposition parties. This was in order to address various petitions in the discussion about the draft of the Public Sector Budget Act for 2020 that form an important part of the Social Agenda presented in October by President Sebastián Piñera.

“This Framework is a demonstration of the republican commitment to public policies to improve the quality of life of all Chilean men and women, while respecting the existing institutions and the sustainability of the nation’s public finances,” explained Minister Briones. He was speaking in the Senate Hall of the Congress building in Valparaíso.

This agreement represents a commitment to approve the rejected entries of the 2020 Budget Bill, to reject the unconstitutional indications introduced and approved during the discussion, to restore the expenses reduced during the debate, and to vote in favor of the indications aimed at implementing the Framework for Social Understanding, explained the Treasury Minister.

Minister Briones welcomed the spirit of dialogue over the last few days that had made it possible to achieve this important agreement.

“After days of hard work, we are pleased to be able to move forward with the most pressing social demands from the citizens, especially with regard to our senior citizens, through improving pensions and public transport costs for senior citizens,” said Ignacio Briones.

The protocol addresses the following issues:

 

Pensions

The following improvements are proposed for the Solidarity Pillar, to be outlined in a new bill of law, other than the Budget Act, with fast-track legislation:

A 50% increase in the Basic Solidarity Pension (Pensión Básica Solidaria, PBS) and the Maximum Pension with Solidarity Contribution (Pensión Máxima con Aporte Solidario, PMAS), as of January 2020, for beneficiaries over 80 years old.

In addition, for pensioners between 75 and 79 years old, the PBS and PMAS will increase by 30% in January 2020 and reach a cumulative increase of 50% in January 2021.

Pensioners under 75 years old will receive a 25% increase in PBS and PMAS in January 2020, 40% in January 2021, achieving a cumulative increase of 50% in January 2022.

In the case of new pensioners, they will receive a final guaranteed pension in order to avoid total pensions received from dropping over time. In these cases, final pensions that have the benefit of the solidarity pillar will be paid from the pensions fund and, once that is depleted, from state coffers. In any case, the State will guarantee the payment of survivor pensions calculated on the basis of the notional balance that would have existed if this modality had not been used.

The increases established will not affect the calculation of the withdrawal of freely disposable surpluses with regard to the solidarity pillar.

 These measures will benefit around 1,600,000 pensioners, comprising around 1 million APS beneficiaries and 590,000 PBS beneficiaries.

 

Public Transport for senior citizens

The Government has committed to decreasing by 50% the normal fare in force at November 1, 2019, for all pensioners aged 65 or over, on all mass public transport services for paying passengers. This includes services established through a tender procedure within the concessions framework for using public roads; services that receive subsidies as established in Law Nº 20.378; or in the establishment of an exclusionary perimeter; or in the contracts for the establishment of operational conditions (either already in force or about to be renewed) or other types of operational authorization.

It also includes subsidies for transport between different municipalities within the same province, and sea, river, lake and air transport services that are subject to a tender procedure.

In January, a national implementation calendar will be announced, which will be completed by June 30, 2020.

 

Primary Health Care

The Government has committed to increasing the funding of Primary Health Care (Atención Primaria de Salud, APS) from the 6,722 Chilean pesos per capita currently defined in the draft of the 2020 Public Budget Act, to 7,200 Chilean pesos. This implies a real increase of 11% over the amount for 2019 (6,494 Chilean pesos).

This amount includes resources to fund the new Explicit Health Guarantees (GES) for Alzheimer’s disease.

Furthermore, a note is included stating that the municipalities must report to Congress every six months, to account for the exclusive use of these funds for the health care services for the people registered.

 

Medications

The Government and Senate agreed to adopt measures that will lower the price of medications, acknowledging the recommendation of the national Economic Prosecutor’s Office (Fiscalía Nacional Económica, FNE) in its study into the medications market, which recommends a structural reform of this sector.

Mechanisms for discussion are to be set up with the members of Congress represented within this framework of understanding in order to move forward with various options for improving the different legal and administrative initiatives in this area currently being discussed in Congress.

In addition, the Government commits to adopting the following measures:

 

  • To create a digital registry with the National Public Health Procurement Office (CENABAST) as well as an online digital platform that will allow people to purchase medication at the CENABAST cost. This medication will be sent to their home address through a channel to be defined.

  • To update the Formulario Nacional (National Drug Form), unifying it with the pharmaceutical stocks of the public system, centralized through CENABAST. 

  • To allow private individuals and legal entities to import medications through simplified payments (bill of law currently under discussion).

  • To exempt from customs duties the imports of organs and tissue donated to patients in accordance with existing legislation. To include the VAT exemption assessment with the tax committee that will analyze the tax expenditure items.

  • With regard to the costs of medication, the Chamber of Deputies has unanimously approved the bill of law that grants CENABAST full power to supply medication and consumables to any individual or legal entity requesting them, establishing a maximum sales price to the public.

  • The draft of Pharmaceutical Law II (in process of approval) introduces the figure of an international observatory of medications so that a referential price range can be established and a maximum price can therefore be set for high-cost medication.

  • The draft of Pharmaceutical Law II will be processed with extreme urgency.

 

Guaranteed Minimum Income

In the document signed, it was agreed to foster debate about a guaranteed minimum income, a legislative initiative that is currently before the Chamber of Deputies, in the awareness “that the mechanisms for direct transfers, as demonstrated by OECD experience, are very powerful instruments for reducing income inequality, an issue that concerns us all, and takes on a sense of urgency in a Chile that has changed,” states the Framework for Social Understanding published by the Senate.