(Bloomberg) -- Chile’s government confirmed that private health insurance companies will have to pay about $1.4 billion to abide by a 2022 Supreme Court ruling, confirming the worst-case scenario for an industry near collapse.
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The court order affects some 725,000 contracts between beneficiaries and the private insurers, known as Isapres, Victor Torres, the head of Chile’s health regulator, told lawmakers late on Wednesday. The figures had previously been given as estimates.
The Isapres serve roughly 16% of Chile’s 19 million population and have lured investments from international heavyweights including UnitedHealth Group Inc. and British United Provident Association Ltd. The crisis affecting the industry represents a headache for President Gabriel Boric’s administration, as the nation’s public health care system is already overwhelmed.
Read more: Chile’s Private Health-Care System Is on the Verge of Collapse
The 2022 Supreme Court ruling found that the ways that firms had set premiums based on gender and age were unconstitutional. Furthermore, it said insurers couldn’t charge at all for covering children younger than 2.
The order stipulated that Isapres had to reimburse users for overcharges starting in 2020. Regulators had until the end of this month to design a system for the companies to pay back the money, though they have requested an extension.
This week, Chile’s government presented a fast-track bill designed to chart a way out of the situation while also strengthening regulator oversight and public health. The administration has said it won’t eliminate private heath care.
The Association of Isapres wrote in a statement Thursday that the government’s proposal has no feasibility and hurts Chileans’ access to health care. Previously, it had said the paybacks would wipe out the entire industry’s net income from the past 33 years.
(Updates with new statements from Isapre industry association in final paragraph)
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