(Bloomberg) — Private health insurers in Colombia are warning their financial viability is at risk as President Gustavo Petro’s administration weighs a key funding formula ahead of an end-of-year deadline.

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The health ministry sets the so-called UPC, which determines how much the government transfers to insurers per user of the health care system, each year in December. If the government opts not to set a specific level, the UPC increases in line with consumer price index inflation, which is forecast to end the year just below 10%.

An “increase equivalent to CPI would not correct” the funding gap insurers face, according to Ana María Vesga, who leads ACEMI, the industry group that represents the companies. “This deepens the defunding and puts the entire system at real risk,” she said Wednesday in an interview.

Some of the biggest private insurers, known as entidades promotoras de salud, have accused the government of trying to starve them financially. Petro said Thursday in a social-media post that his government has “complied with the law” in its transfers to insurers, adding that financial problems are related to mismanagement.

In a letter Wednesday to Health Minister Guillermo Alfonso Jaramillo, a government watchdog gave him three days to provide information on when the government will transfer some pending funds to the insurers, as well as asking if the ministry will hold meetings to discuss how it will calculate the UPC for 2024. The government’s actions “are affecting and destroying the system,” therefore threatening the guarantee of the fundamental right to health, the inspector general’s office said.

Jaramillo’s office didn’t reply to several requests seeking comment.

At a minimum, ACEMI says an increase of 6 or 7 percentage points plus inflation is needed to stop losses from piling up. The industry group estimates that for every 100 pesos the insurers receive from the government, they have to pay 104 in costs, leading to losses of around 1.1 trillion pesos ($280 million) so far this year through September.

Three of the biggest insurers — EPS Sanitas, EPS Sura and Compensar, which together account for about a quarter of users in the nearly $20 billion-a-year health system — went public with their complaints about underfunding in July.

EPS Sura is a subsidiary of financial holding company Grupo de Inversiones Suramericana SA. In its latest earnings report, the insurer posted $53.4 million in losses through the third quarter and warned insufficient transfers were raising doubts about its ability to continue as a going concern. EPS Sura declined to comment on the government’s looming decision on the UPC increase.

Petro is hoping to expand the role of the state in the health system, with the aim of allowing the government to pay care providers and medical professionals directly. The proposal won approval in the Lower House earlier this month, but still faces two debates in the Senate in the first half of 2024.

Experts have warned the government is pushing companies to buckle under their losses, which would cause users to be transferred from one defunct insurer to the next until they all eventually end up under the public system.

ACEMI estimates that insurers are owed about 9 trillion pesos in debt that’s accumulated since last year.

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