Experimental regulation in private healthcare systems: the strategic role of sandboxes

Luciana Mayumi Sakamoto

Souto Correa, São Paulo

luciana.sakamoto@soutocorrea.com.br

Maria Luísa Matos

Souto Correa, São Paulo

maria.matos@soutocorrea.com.br

The regulatory state

The evolution of social and economic relations throughout history has led to systemic crises and profound transformations in the interaction between the public and private sectors, demanding ongoing adjustments in government actions. This phenomenon has mandated the continual re-evaluation and reformulation of the paradigms that guide public administration.

The emergence of the rule of law, driven by the French and American revolutions in the 18th century, established the primacy of laws as instruments of legal certainty and control over administrative acts. However, the experience accumulated under monarchical regimes highlighted the need for greater administrative autonomy, culminating in the creation of administrative courts in France, responsible for exclusively evaluating the acts of the executive power. As a result, this model represented a paradigmatic transition, acknowledging the dynamic nature of social demands and promoting greater flexibility in normative interpretation.

This historical development established the groundwork for the concepts of administrative discretion and normative flexibility, which are crucial for addressing the needs of a constantly evolving society. The scientific, technical and industrial advancements of the 19th century posed unprecedented challenges to state regulation, requiring more sophisticated instruments to harmonise the relationship between law and public administration. Thus, the so-called indeterminate legal concepts emerged as tools to provide discretion to administrative actions.

Nevertheless, the administrative discretion expansion raised concerns about the potential for state arbitrariness. Thus, the evolution towards the so-called post-modern state implied a search for balance between the flexibility required for managing complex problems and the necessary limits to prevent abuse. The crisis of the interventionist model in the 1970s, marked by economic stagnation and the rise of liberal ideologies, fostered the adoption of a decentralised administration.

By the late 20th century, public administration embraced new paradigms of efficiency and governance. In this context, the regulatory state model was consolidated, guided by consensus, normative flexibility and active participation of regulated entities, prioritising the balance between economic freedom and state supervision. The regulatory sandbox exemplifies this approach, enabling controlled experimentation with innovations under regulatory supervision, reinforcing the state’s role as a mediator in economic relations.

Public administration, therefore, is moving toward a technical and adaptive role compatible with the complexity of a dynamic and plural society – ensuring efficiency, legal certainty and the protection of fundamental rights.

Innovative market regulation

Contemporary society is immersed in a cycle of profound and constant transformations, driven by new economic sectors, changes in labour relations and the consolidation of shared economy models. In the face of this dynamism, the state is increasingly challenged to regulate private relations effectively, given the accelerated obsolescence of normative frameworks and the speed at which goods, services and information are produced, exchanged and disseminated.

The multiplicity and transformation of legal subjects and objects unequivocally reveal the inadequacy of traditional administrative mechanisms. In this sense, the contemporary legal-constitutional framework legitimises the delegation of normative powers to decentralised entities through the phenomenon of deregulation. In Brazil, this trend is widely reflected in the norms structuring regulatory agencies, designed to address highly complex and technical sectors.

The modern perspective of administrative law transcends the dogma of the unconditional prevalence of public interest over private interest, favouring a more technical, scientific and balanced approach, where cost-benefit analysis is a central element in decision-making.

However, the rapid emergence of technological innovations and new business models highlights the inadequacy of traditional regulatory processes. Although naturally more agile, the normative acts of agencies face challenges such as regulatory impact analyses, which demand greater rationality while simultaneously requiring a faster and more adaptive response to market realities.

On the other hand, excessive formal regulation may hinder the adoption of disruptive solutions, particularly when innovations offer equivalent or superior levels of safety and efficiency compared to traditional command-and-control regulatory models. This reality requires a reanalysis of regulatory approaches to foster operational freedom for innovative agents, promoting economic growth and enhancing the competitiveness of jurisdictions on the global stage.

Jaques Chevallier, in coining the concept of the ‘strategist state’, argues that the modern state operates in a competitive environment where various actors, unequal in resources and capabilities, vie for space. In this context, the state must promote strategic activities, prioritising innovation and technological development, especially in highly technical and regulated sectors.[1]

Among the most relevant tools of dynamic regulation is the regulatory sandbox: a model of experimental regulation widely recognised for its ability to address the challenges posed by disruptive innovations and regulatory disconnection.

The regulatory sandbox, as observed by Eduardo Vianna,[2] presents several key characteristics:

• temporary duration;
• partial or total exemption from specific norms;
• continuous monitoring by the regulator;
• limited testing scope; and
• rigorous entry criteria, including proof of effective technological innovation.

The success of the British model demonstrates the effectiveness of this approach in fostering innovation and modernising the market. For this reason, the model has been gradually adopted in other jurisdictions, including Brazil, each adapting it to its specific regulatory needs and contexts.

Thus, the contemporary state, acting as a strategist, fosters innovation and global competitiveness by employing the regulatory sandbox and other dynamic regulation tools to build flexible, responsive and market-aligned normative environments that meet the demands of both the market and society.

Health discount cards and the regulatory sandbox in the global landscape

The private healthcare market in Brazil faces challenges that demand sophisticated and adaptive regulatory solutions. Health discount cards have emerged as a significant commercial alternative to conventional healthcare plans, with lower medical service prices, especially for consumers seeking broader access to medical services – not to mention that such products also relieve the public healthcare system (Sistema Único de Saúde or SUS).

However, the absence of specific regulation for this modality exposes vulnerabilities that could compromise consumer protection. Therefore, the National Agency for Supplementary Health (Agência Nacional de Saúde Suplementar or ANS) is advancing the implementation of a regulatory sandbox, proposing an experimental environment to evaluate innovative business models in this segment.

While these new products provide access to healthcare for people who either do not want or cannot afford a health insurance plan, the fact that they are not regulated may affect market competitiveness and leave consumers less protected. It is this scenario that ANS must analyse to decide which kind of regulation should be implemented. This is because overly stringent regulation could drive such products out of the market, which would also not be in the consumer's best interest.

The provision of health services by private entities is ensured by Article 199 of the Federal Constitution, which recognises the freedom to operate in the sector, provided regulatory requirements are observed to guarantee safety, accessibility, and quality.

This balance between economic freedom and social protection is reinforced by the supplementary health regulatory framework established by Law No. 9,656/1998, which assigns the state a mediating role in the relationships between operators and consumers, ensuring compliance with constitutional principles.

Discount cards, by their nature, fall outside the traditional scope of ANS regulation as they lack the defining characteristics of healthcare plans. They operate as commercial contracts where consumers, by paying membership fees or monthly dues, gain access to discounts at accredited networks for consultations and exams. However, they do not guarantee continuity of care, effective coverage or quality monitoring.

The use of discount cards varies significantly across jurisdictions, reflecting the economic and regulatory specificities of each country. In the United States, discount cards for medications are widely used, benefiting between 40 and 60 million people, primarily due to limited prescription drug coverage under health plans and the high costs of these products. In contrast, discount cards for medical services are less common, restricted to contracts with high-deductible health plans, and used by an estimated three to six million people, as 92 per cent of the population has some form of health insurance.

In Latin America, health discounts and prepaid cards are more relevant in countries with fragmented healthcare systems or restricted access to services. In Mexico, ‘Tarjetas Salud Digna’ offers discounts on consultations and exams, widely used by underserved populations or those needing to supplement the limited coverage of public and private systems. In Colombia, these cards reduce costs for medical services, while in Argentina, Peru and Chile, they serve as intermediary solutions for consumers without insurance or those looking to mitigate medical expenses in specific networks. In smaller markets, such as Paraguay and Bolivia, similar initiatives are gaining traction, reflecting the same coverage gaps observed across the region.

These models serve a practical purpose in expanding access but often operate in poorly defined regulatory environments, potentially compromising service quality and consumer safety.

Given the growth of the discount card market in Brazil and the uncertainties surrounding its operation, the ANS, through Public Consultation No. 138 (October 2024), proposed the creation of a regulatory sandbox,[3] aiming to establish a supervised environment where companies can operate under temporary regulatory flexibility – enabling controlled experimentation with new commercial practices, such as discount cards.

The ANS sandbox seeks to foster solutions that promote inclusion and efficiency in health access while collecting data on the impacts of these initiatives on the market and consumers. However, it is important to bear in mind that the main idea should not be that those alternative products become a healthcare plan.

The adoption of tools like the regulatory sandbox reflects an evolution in the role of the regulatory state, enabling it to balance legal certainty and innovation in a global context marked by disruptive transformations. Intermediate solutions, such as discount cards, illustrate the ability of jurisdictions to adapt regulatory instruments to local needs while maintaining a global perspective on efficiency and competitiveness.

In this sense, the regulatory sandbox is not merely a technical advance but also a strategic lever to modernise governance, foster innovation and attract investments. By consolidating their actions through adaptive regulatory practices, states not only expand access to essential goods and services but also strengthen their position in an interconnected global market.

Tools like the regulatory sandbox transcend borders by promoting solutions that address 21st-century challenges, contributing to socioeconomic development that combines inclusion, efficiency, and competitiveness. This model exemplifies how the state can take a leading role in building resilient and innovative systems for the benefit of global society.

Conclusion

The international experience demonstrates that innovative tools, such as the regulatory sandbox, transcend their technical application to serve as strategic instruments for strengthening public governance. The success of models like discount cards in the US and Latin America highlights the ability of jurisdictions to adapt to their specificities while emphasising the importance of learning from global practices.

The regulatory sandbox positions states as key players in a competitive environment, attracting innovation, investments and fostering regulatory efficiency. In this context, it becomes an essential element not only for addressing disruptive innovations but also for consolidating the leadership of jurisdictions on the international stage.