Financing Care: Public Coverage, Health Expenditure

Access to healthcare in Mexico is often compromised by geographic, financial and accessibility barriers that jeopardize patient outcomes as well as their economies and that of the entire health system. While the current government’s focus is on health universality, expenditure and planning have been insufficient to achieve this goal. 

Currently, public health has prioritized the part of the population that historically has not been covered by social security, first through INSABI and now through IMSS-Bienestar. Nonetheless, INSABI’s lack of clear operational frameworks, coupled with the COVID-19 pandemic, has resulted in an increased use private services and out-of-pocket expenditure.

To date, Mexico covers only 49 percent of all healthcare services. “IMSS-Bienestar is an attractive alternative from a universal health perspective because its functionality is better established than INSABI’s. But the mechanisms for its services to reach people are still unclear, as is the way its funds will be divided in the provision of healthcare,” explains Andrés Castañeda, Health and Wellness Coordinator, Nosotrxs.

IMSS-Bienestar has been successful in providing primary care services to those in rural zones. In a 2018 evaluation, when IMSS-Bienestar was still IMSS-Prospera, the program was recognized as a national benchmark due to its ability to provide services to entire regions through community action, as well as personal attention to those who request it at medical units, under no conditions. “The program favors the participation of the population in community actions and in the improvement of services,” reads the evaluation.

However, some question IMSS-Bienestar’s capability to provide services to a much larger population. In a column for Reforma, Julio Frenk, Former Minister of Health and Founder, Seguro Popular, said that IMSS-Bienestar will be unable to fulfill its assigned task as its US$98.02 expenditure per capita is the lowest out of all health programs. IMSS-Bienestar’s US$12 billion budget is also insufficient to provide health services to 70 million people. Frenk claimed that the decision “reflects the lack of a clear health strategy and the failure of INSABI.”

Challenges to Address

Frenk argues that IMSS-Bienestar might limit itself to ambulatory services and general hospitalization as its infrastructure is insufficient to meet the demand for other services. In 2020, IMSS-Bienestar’s infrastructure represented 3,622 beds and 80 second-level rural hospitals. IMSS-Bienestar has the lowest attention rate out of all health systems and it dropped even lower due to the pandemic, found a study by the Center of Economic and Budget Education (CIEP).

Uncertainty has become a constant in the current health system as it has been permeated medicine acquisition processes, care provision through INSABI and financing of infrastructure projects that this sector would need to offer the universal quality service it promises. The health expenditure budget for 2022 is of US$38 billion, which is an over US$5 billion increase against 2021’s budget. Nonetheless, to make a palpable impact on the sector, Mexico would need to “to make this change permanent,” according to Javier Marín, Senior Director Healthcare Americas, LLYC. Budget allocation is also an issue. IMSS-Bienestar is receiving just 10 percent of the budget of INSABI.  Moreover, according to CIEP, Mexico would have to allocate at least 5 percent of its GDP to attend 13 medical areas, including maternal care, infections, chronic diseases, as well as prevention and health promotion, without considering the expense COVID-19 represents.

Deficiencies in public health provision have led to an increase in the provision of private health services, out-of-pocket expenditure and novel financing options for different levels of care. According to the Ministry of Finance, out-of-pocket spending represented 42.1 percent of the total spending on health in 2019, while in 2020 it shot up to 49.4 percent. Out-of-pocket spending on health in Mexico represented more than double the average of the member countries of the OECD, which stands at 22.7 percent. This reflects Mexico’s performance at the OECD Health at a Glance report, where the population’s satisfaction regarding health services is among the lowest (48 percent) compared to other member countries.

There are many obstacles to universal health coverage and effective public/private health financing. An analysis by the European Observatory on Health Systems and Policies found that the fragmentation of coverage is due to an uncoordinated response with the private sector to increase the satisfaction and capacity of the public sector, coupled with an absence of a referral system based on primary care. Moreover, the analysis suggests that while interstate patient flows have been improving among the non-insured since 2000, labor rotation is high across the formal and informal sectors, erecting artificial barriers to health service access and leading to low levels of continuity of care. Furthermore, there are inequalities in access to services derived from differences in financial protection coverage, high out-of-pocket payments and uneven urban–rural distribution of human resources and health infrastructure.

Proposals to revert the scenario are coming from both private and public sector fronts. While criticism against IMSS-Bienestar has been made vocal, efforts from IMSS to strengthen the program are already in place through a program dubbed the “Wellness Health Plan.” This encompasses medicine distribution, public tenders for medicine and medical device acquisition and recruitment of medical and nursing professionals. Results are yet to be delivered but, so far, states benefiting from it include Nayarit, Baja California Sur, Campeche, Mexico City, Colima, Durango, Michoacan, Morelos, Oaxaca, San Luis Potosi, Sinaloa, Sonora, Tlaxcala, Veracruz and Zacatecas.

The Role of Insurance

While the public sector consolidates its plans for universal care provision, “the private insurance market in Mexico is going to grow significantly over the next decade,” assures Alec Lee, Director Healthcare Research, FrontierView. The trend has been noticed and addressed by private care providers. As a result, integral health initiatives are arising to either offer affordable insurance services to the population or offer additional health services to the existing insured base to boost health and well-being.

Historically, insurance penetration in Mexico has been significantly low, which motivated new entrants to develop responsive services for those in need. One example is Sofia, an insurance company that targets new generations, encouraging the early habit to have these types of health financing services. “Sofía offers a complete insurance plan that covers both minor and major expenses. It also covers and focuses on preventive care. This fresh approach to health is attractive to new generations that tend to be more aware and mindful about their health and daily habits,” says CEO and Founder, Arturo Sánchez.

Complementary services like DOC24 have created an ecosystem of digital solutions that includes telemedicine, preventive practices and follow-up tools, to “close that gap to provide quality health services at a fair price point,” explains Pablo Utrera, Co-Founder and CEO, DOC24. The company is also integrating mental healthcare and nutritionist services to improve its offering through insurance services.

For non-insured patients that still do not want to receive attention from the public sector, pharmacy adjacent medical offices (PAMOs) are the most immediate solution. PAMOs register around 360,000 consultations per day and 10 million per month. During the most difficult months of the pandemic, PAMOs attended an average of 100,000 patients with COVID-19 and other ailments. “The 18,000 private consulting rooms attached to pharmacies provide consultations to people suffering symptoms such as fever, loss of smell or other irregularities and low oxygenation,” according to Marcos Pascual, Commercial Director, ANAFARMEX.

Fragmentation is not the answer, however. Financing health must be a joint effort between the public and private sector, says the European Observatory on Health Systems and Policies’ analysis. Yet, there are specific needs to be prioritized in this collaboration, including the recovery of non-COVID-19 related treatments, the migration of medical professionals from the public to the private sector and self-financing schemes for patients, says Lee. “Vaccination is also crucial for COVID-19 and non-COVID-19 patients.”