Mexican Healthcare Model Reform, by Act. Eduardo Lara di Lauro. 1. The Mexican Health Care Model.

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1 One of the most clear and unquestionable indicators to measure the development of a nation is without doubt, its populations health. Given the importance that has the healthcare system and model in a country and its close relationship with the actuarial work, we consider relevant analyze the trends that are taking place in Latin America and particularly in Mexico. Due to the space limitations following we are just going to give a just brief explanation of the Mexican Healthcare Model that the Ministry of Health has established as a Target, by the end of the current administration in 2006, as well as some reflections and comments respect such Model. Reminding that a System is an easy, complete, dynamic and useful way to show a complex reality, making emphasis in its components and the interaction of themselves; and that generally it is showed in a schematic form which is called Model. Lets take as a premise, what the Mexico s Development Strategic Plan for establishes about population s health: in order to improve the health of the population, it is necessary democratizes the healthcare delivery system, which means, create the suitable conditions to achieve good access, better quality as well as the proper financing of the healthcare services, independently of the population residence place or economic capacity. 1. The Mexican Health Care Model. Analyzing the Mexican Health Care Model in terms of the basic functions every healthcare delivery system has to perform, we see that the Mexican is such that is organized by social group (Chart 1). It divides or segregates its social groups in two factions, the insured and the uninsured to a Social Security Institute. The main Social Security Institutes are, the Mexican Social Security Institute (), for private workers and the Mexican Social Security and Services Institute (), for federal and state workers. The Social Security Institutions are responsible for all of the insured, which are all those workers either public or private with a formal job. People do not have a formal job are considered the uninsured population, such as independent professionals or street vendors or even poor. In this faction it is considered two subgroups, the middle and upper classes that go to the private sector to acquire health insurance coverage and/or pay the required services out-of-pocket, -fact that is one of the worst and inefficient way for financing healthcare services-. As a mater of fact many members of these classes, in particular those with a formal job, pay their contributions to the social security but they do not use it, and attend their healthcare needs in the private sector. The second subgroup of the uninsured population is constituted by the low income and poor people, -urban and rural-, which, theoretically must be attended by the Ministry of Health, which is insufficient. It is important to say that also in this subgroup there is the harmful out-of-pocket, for private healthcare services.

2 Chart 1. Current Mexican Healthcare Model 1 S O C I A L G R O U P FUNCTIONS INSURED N O N I N S U R E D Poor Med/Upper Classes Modulation Articulation Social Security Ministry of Health Sector Each of these three systems, the Social Security, the Ministry of Health, and the Sector, individually set their own policies and procedures (modulation), control their own financing mechanisms, articulate and create their own infrastructure and deliver the services to their specific populations. It is evident that this model creates overlaps, duplicity of functions, of infrastructure and operations among the systems, and therefore wastes of resources, inefficiency and users in satisfaction. 2. Lines of Action for the Financial Protection in Healthcare Services. One of the strategies of the National Health Program for is Give Financial Protection for Healthcare to all the Population ; in order to achieve this strategy the Ministry of Health through its Financial Protection Area set the following five Lines of Action: 2 1. To consolidate the basic coverage and promote a Third Public Health : The Popular. 2. To promote and to extend the social security enrollment. 3. To regulate and put in order the private healthcare prepaid schemes. (Insurers, and TPAs) 4. To develop other schemes of financial protection. 5. Articulate the general framework of healthcare financing In particular this line of action number 5, has as main objective link the different schemes of financial protection, in order to give an incentive to the population to be a member of one of the public systems and go from the informal economy to the formal economy, from a basic coverage to a comprehensive coverage and from the partial financial protection to a full one. In this way it

3 will be possible link the different schemes, avoiding the isolated efforts of the systems and facilitating the portability of the benefits from one scheme to another. 3. Creation of a Third Public. As Chart 2 shows, the new public health insurance called Popular, will identify the open population (the uninsured), thorough an ID card and creating a data base, as the social security system does. In the first stage each public insurance will deliver the healthcare services thorough its own infrastructure to its corresponding population. (It will continue been a Segregated Model). Chart 2. Phase I: Creation of Popular 2 Popular Health Sector Financial Protection Health Fund Maternity and Sickness Fund Medical Benefits Fund Ministry of Health Healthcare Services 4. The Target: Universal Health System. In the second stage, see Chart 3, the model is seeking that with an appropriate articulation of the insurance schemes, will contribute to achieve an optimal utilization of the country s healthcare infrastructure. The chart shows that families will be able to be attended by medical units from any public insurance, independently of to which insurance they contribute. This articulation will facilitate the resources flow from one institution to another, thus the system walk to the separation between financing and delivery of the healthcare services. Once the families have been identified in some scheme of financial protection and such scheme supports their health expenses, the family will be able to choose the institution that will deliver their healthcare services. In this articulation process will be important consider the roll that the Specialized Health Institutions (ISES) 3 could play.

4 Chart 3. Phase II: Universal Health System 2 Popular Health Financial Protection Health Fund Maternity and Sickness Fund Medical Benefits Fund Ministry of Health The purpose is, achieve in the future a model where exists one unique financing entity and competence among providers, with the assumption that the risks diversification among the population groups will be higher integrating the financing of the three groups. 2 Until here I have tried to explain what the Ministry of Health set as its Target. Analyzing carefully these proposals, it is clear that inside this new Universal Health System, is the Model called Structural Pluralism, which was created as the best model for the Latin American Healthcare Systems, among others by doctor Julio Frenk, PhD Structural Pluralism. Under this model, the health reform must base in the principles of universality, solidarity and pluralism, for thus follow the equity, quality and efficiency purposes. The health system must organize itself by functions instead of by social groups. In this scheme, the basic functions of every healthcare delivery system (regulation, financing, articulation and delivery) are divided with he intention of create a system of weights and counterweights which promote the competence and with that, the efficiency and quality, besides of promote the users participation of their own healthcare needs. Thus the Modulation becomes the core mission of the Ministry of Health, the is the social security responsibility, extending to the private insurance participation, the Articulation function becomes explicit with the payments administration and provider networks organization, through the ISES; finally the of the services will remain open to a plural private and public institutions scheme.

5 Chart 4. Structural Pluralism Healthcare Model 1 S O C I A L G R O U P FUNCTIONS INSURED N O N I N S U R E D Poor Med/Upper Classes Modulation Articulation Ministry of Health Social Security Structured Competence Public & Pluralism It is important to say that in 1996 the Health Committee of the Mexican Association of Companies (AMIS), made a study analyzing various healthcare delivery systems around the world, getting among other conclusions that those systems that have achieved larger coverage and better satisfaction index among their population, are those which have balanced in a proper way the public-private participation mix in their systems. Also, we know that one of the international trends in the healthcare delivery systems is change the supply subsidy, for schemes based on demand subsidies which follows the population healthcare needs, so if Mexico wants to democratize its healthcare system must includes the private sector in the delivery of the services, in the articulation function, and even in the financing. 6. Proposal: Universal Health System (Plural and Democratic). Finally, Chart 5 shows our Proposal, as a complement of Phase II: Universal Health System established by the Mexican Ministry of Health, the proposal consists in to include in the Model, another player the private sector, which create a healthy competence among financing entities and providers that result in a better quality and services as well as competitive and better costs for users, achieving thus the plurality and democratization of the Mexican Health Care Model.

6 Chart 5. PROPOSAL Phase IIa: Universal Health System (Plural and Democratic) Popular Health Sector Financial Protection Health Fund Maternity and Sickness Fund Medical Benefits Fund ISES Ministry of Health Healthcare Services Carry out this integration means that every population group will have access to the same system, because there is freedom of choice, under this variety the population has more options and the providers found more opportunities for the autonomy and competence. Conclusion. So our conclusion is that we agree with the changes that the Mexican Health Care Model is taking place, but we expect that the track the Mexican health authorities are taking, been towards the Structural Pluralism Model and take in count the Political Strategies to Implement Health Care Reforms also established in Dr. Frenk s studies. We consider of vital importance that the Mexican Healthcare Reform must be discussed by all sectors, and must be included in the political and legislative agenda within the deep reforms that nowadays are been discussed in Mexico, such as the tax reform, energy reform and labor reform all so essential for the advance and grow of Mexico. Eduardo Lara is the Director of Milliman México Salud, a Milliman Global firm specialized in healthcare consulting based in Mexico City. For more information, please contact Eduardo at +52 (55) ext. 107, or elara@grupotec.com.mx & eduardo.lara@millimna.com 1 Health Observatory, Frenk Julio, Mexico, FUNSALUD. 2 Source: Ministry of Health Action Programs, General Direction of Financial Protection, Mexico, SSA.

7 3 ISES is the acronym in Spanish for the Specialized Health Institutions, which are private health insurance companies similar to the U.S. HMOs. 4 Julio Frenk, PhD is the current Mexican Ministry of Health and was one of the strongest candidates for occupy the General Direction of the World Health Organization, (WHO) this period.