(Bloomberg) -- President Gustavo Petro’s decision to take control of a top Colombian health insurer sets a dangerous precedent, according to the industry and patient associations.

The South American nation’s health superintendent will run EPS Sanitas for one year after it failed to meet financial reserve requirements. With almost six million users, the company is Colombia’s second-biggest insurer. 

El Tiempo newspaper reported Wednesday that the government intervened in a second insurer, Nueva EPS, the nation’s largest, with more than ten million users. Representatives for Colombia’s health watchdog did not immediately respond to a request for comment. 

The Colombian government holds a 49.9% share in Nueva EPS through the finance ministry, while the rest is owned by private capital. 

Tuesday’s takeover of EPS Sanitas “doesn’t improve people’s health,” ACEMI, an industry group representing private health insurers, said in a statement. “Health workers and their families assume the uncertainty and risk of these processes.”

Petro is turning to direct intervention in private industry as his efforts to overhaul Colombia’s conservative economic model stall in congress. The leftist president wants to see the government play a bigger role in sectors from health to energy, but he’s facing increasing resistance and his political coalition is fracturing.

The health insurers, known as entidades promotoras de salud, have warned that delays in payments and insufficient government transfers have been drowning the companies in debt and putting their financial viability at risk. EPS Sanitas is a part of health group Keralty SAS and its main shareholder is Spanish multimillionaire Joseba Grajales. Representatives for Sanitas and Keralty declined to comment.

“Historically, when the authorities take control of an EPS there is a deterioration in long-term service, the debts grow and the problems grow until the insurers are liquidated,” Gloria Quiceno, a representative of a Sanitas patients association, said Wednesday in an interview. 

EPS Suramericana, a subsidiary of Grupo de Inversiones Suramericana SA, said in its fourth quarter financial report that it didn’t meet the government’s “adequate equity indicator.” The company cited that and insufficient funding as factors that may lead to financial deterioration of its assets. EPS Sura also flagged the possibility of a government intervention as a potential risk to its operations.

Petro defended his move on EPS Sanitas, arguing on social-media platform X that the government has “an obligation to save the health-care system.” 

Economic groups, however, see the president’s move against Sanitas as a potential threat to the entire healthcare system. 

“For several months we have warned of the immense risk that a major crisis could occur given the gap between costs and income in the insurance system,” ANDI, Colombia’s biggest business association, said in a statement. 

After Tuesday’s takeover of Sanitas, more than 25 million users — or around half of the country’s population— are under direct state responsibility in the health sector, the group said. 

Health Minister Guillermo Alfonso Jaramillo, meanwhile, urged Sanitas users to remain calm. “Services will continue without any inconvenience,” he said after the government’s intervention.

--With assistance from Nicolle Yapur.

(Updates with El Tiempo report on Nueva EPS intervention the third paragraph)

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