Medical Leave Spending Stalls After Initial Drop, Structural Reform Needed
Chile's spending on medical leave, measured as subsidies for temporary work incapacity (SIL), has shown a significant slowdown in its decline. Following a Comptroller's ruling in May of last year, which triggered a scandal, the number of medical licenses issued saw a sharp decrease of approximately 20% year-over-year. However, recent data from June 2026 indicates a 2% rise in issued licenses, suggesting this downward trend has halted. This 20% reduction appears to be the maximum achievable through current oversight mechanisms alone. A broader perspective reveals that between 2024 and 2025, the total expenditure on medical leave subsidies decreased by only 6.8%. This is particularly notable given that total spending on medical licenses had doubled in less than a decade, reaching 1.2% of GDP by 2022. Experts and international evidence suggest that further reductions require fundamental changes to the benefit's structure, the oversight institutions, and the incentives provided to employers to combat fraud. Several legislative proposals addressing these issues are currently stalled in Congress. The author argues that while these bills could be improved, such as by introducing a decreasing replacement rate to better align with the broader social security system, their continued delay is counterproductive. The urgency of addressing these issues necessitates prioritizing their discussion and refinement. The author proposes granting these legislative projects urgent status.
The Chilean government's efforts to curb medical leave expenditure have encountered a plateau, indicating that punitive fiscal measures alone are insufficient. The initial 20% reduction achieved through enhanced oversight suggests that the system's design and incentive structures may be inherently prone to higher utilization. The observed stagnation, despite a prior significant drop, highlights the need for systemic reforms rather than incremental adjustments. Future policy must consider how to balance worker welfare with fiscal sustainability, potentially by re-evaluating benefit eligibility criteria, the role of medical professionals in certification, and employer accountability. The stalled legislative progress underscores a potential disconnect between identified policy needs and the political will or capacity to enact change, a common challenge in complex social security systems navigating evolving economic and demographic landscapes.
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