The Healthcare Debate
The United States is again debating the country’s health care system. This time it is the Senate that is looking to repeal ObamaCare through a Republican plan. There are two extremes, those that believe that healthcare is the responsibility of the individual, and those that believe that healthcare is a right that must be paid for by taxes. There are many in between those two extremes. Today’s debate is repealing ObamaCare with a Republican model. Neither the existing model nor the proposed models satisfy the country and thus the debate rages on.
Today, let’s explore healthcare from the Mexican point of view. Many of you reading this are scoffing at healthcare in México, because well, that is what some of you do. But if some readers are willing to accept that México can offer solutions, then there might be some useful lessons for the U.S. debate.
The United States spent about $9,403 per U.S. citizen on a per capita basis in 2014. In 1995, it was $3,788. For comparison sake, the United Kingdom spent $1,364 in 1995 and $3,935 in 2014. Canada spent $5,292 in 2014 and $1,831 in 1995. México’s health care expenditure per capita was $172 in 1995 and $677 in 2014.
However, per capita expenditure does represent the whole issue as there are debates between government funded healthcare versus private healthcare. We need to look at the cost of healthcare by GDP to get a better understanding.
In terms of GDP, the United States spent 17.1% of its GDP on healthcare in 2014. In 1995, the U.S. spent 13.1% of its GDP. The United Kingdom spent 9.1% of its GDP in 2014, up from 6.7% in 1995. Canada spent 10.4% in 2014 and 8.9% of its GDP in 1995.
México’s GDP portion of healthcare was 6.3% in 2014 and 5.1% in 1995.
The figures above are from the World Health Organization Global Health Expenditure database.
Canada has offered a single-payer healthcare system since 1984. The services are paid for through taxes. It can be argued that Canada’s healthcare system is socialized medicine, i.e. long lines and excluded services. However, the Canadian system is not socialized medicine. It is a hybrid system where there is a single payer, funded by taxes, who pays the medical bills. The practitioners and service providers are private enterprises.
México, on the other hand, did not embark upon a universal healthcare system until 2003, when legislation established the Seguro Popular. The Seguro Popular went into effect on January 1, 2004. The plan was for the country to achieve universal coverage by 2010.
Prior to the Seguro Popular, about 50% of the population did not have healthcare coverage in México. Health insurance was provided via two systems, IMSS and ISSTE. The Instituto Mexicano del Seguro Social, or IMSS was established in 1943 to provide health care coverage for workers and their families in formal jobs. Formal jobs were those defined as fulltime salaried workers. About 40% of the population was covered by IMSS in 2003. IMSS insurance is paid for by the employer (9-24% of salary) with employee (2.72%) contributions.
The Instituto de Seguridad y Servicios Sociales de los Trabajadores, or ISSTE was established in 1959 to provide health coverage for public sector employees. ISSTE provided coverage to about 7% of the population. Private health insurance accounted for about 3% of the population. The military and PEMEX each have their own systems but they are included in the ISSTE numbers.
In 2003, the Mexican government wanted to include the missing 50% of its population: unemployed or self-employed. It launched the Sistema de Protección Social de Salud, commonly known as the Seguro Popular. The Seguro Popular is funded by a combination of taxes and federal and state contributions.
Each of the Mexican systems have their own networks of providers and practitioners. There is no mechanism to share resources among the systems.
The Organization for Economic Co-operation and Development (OECD) agreed that México had made great strides in achieving universal healthcare coverage when 50 million citizens were covered in 2016. Today, international organizations generally agree that México has achieved universal coverage.
Both the IMSS and the Seguro Popular is available to anyone in México, including foreigners, regardless of employment status. It is also available to Mexicans who live in other countries, although the services must be delivered in México. The cost to either system is tiered by age group with annual fees about $400 per year. Pre-existing conditions, such as cancer or diabetes, is not covered. However, if an uncovered condition develops while covered and the coverage does not lapse, then it will be covered by the program.
The United States Problem
The problem for the United States is that provisions for healthcare were made based on the assumption that the population would be employed. Thus, healthcare insurance costs were to be paid for by the employer, and sometimes split between the employee and employer. Thus, the cost for private health insurance was subsidized by the jobs. For the poor, Medicaid was instituted and for the elderly, Medicare was made available. Medicare was supposed to be an insurance bank where the elderly could draw from after they retired. As workers they put into the system.
However, no provisions were made for the self-employed, the under-employed and smaller companies were not incentivized to offset healthcare costs.
The problem for the United States has been that healthcare was tied directly to the job. The better the job the better access to healthcare the employee has.
Quality of Care
Obviously, the number one question on everyone’s mind is what about the quality? Many times, quality is equated to technology. The better the technology, the better the healthcare is the belief. Measuring the quality of healthcare is complex and subjective. Correlating mortality rates and elective medical services is impossible because of factors such as demographics, environmental, educational, culture and many other factors that result in different health profiles for individuals. Incidences of diseases and hereditary also play a part in ranking countries by the quality of their medical care. Even in the United States, the challenges of healthcare are different between urban and rural areas as well as between inner and border cities.
A better way to compare health systems is be their efficiency in the delivery of services. The World Health Organization ranked 191 countries by their health care system performance. (Measuring Overall Health System Performance for 191 Countries; GPE Discussion Paper Series: No.30, WHO)
The report ranked the countries by overall efficiency in medical care. It based its rankings on 1997 estimates. The United States was ranked 37 on the list. Canada was ranked 30th and the United Kingdom was 18th.
México was ranked 61st, out of the 191 countries.
There are two likely arguments against this ranking list. The year of the data is 1997. The second is that efficiency may not translate to quality. However, in terms of efficiency, one of the loudest debates against socialized medicine is the notion that the system is inefficient.
Regarding the year for the data set – 1997, it allows us to look at the efficiency of the systems, after Canada had implemented its system, before the US adopted ObamaCare and before México embarked on universal healthcare. In the case of México, as its GDP increases and the country continues to modernize it stands to reason that healthcare rises along with the other metrics.
On May 18, 2017, Elsevier, Ltd. published a report funded by the Bill & Melinda Gates Foundation that attempted to quantify the quality of healthcare by introducing a Healthcare Quality and Access (HAQ) metric. The HAQ scale – 0 to 100 – gave a metric to each country based on mortality rates from “causes that should not be fatal in the presence of effective medical care.”
The report analyzed the data for 195 countries between 1990-2015. The HAQ value is zero for worst and 100 for best.
In 2015, México’s HAQ value was 63 for Healthcare Access and Quality Index. The United States received a HAQ value of 81 and Canada’s HAQ rate was 88. For comparison, Andorra had the best HAQ value of 95 for the countries that were analyzed. Somalia (34), Afghanistan (32) and the Central African Republic (29) were last.
According to their HAQ values, Canada was ranked 17th, the United States was ranked 35th and México was at 101 out of 195 countries.
A new travel phenomenon has been evolving over the last few years. It is U.S. citizens travelling abroad for medical care. Much of it is driven by the high cost of medical care in the United States. According to Business Insider, over 1 million U.S. citizens travelled abroad for medical procedures in 2016. The market was valued at about $439 billion in 2015 and is expected to increase by 25% a year over the next decade, according to a Visa Oxford economic report.
México is a top destination for medical care for U.S. citizens. Costa Rica, India, Malaysia, Singapore, South Korea, Taiwan, Thailand and Turkey are also travel destinations. Interestingly, the United States is also one of the travel destinations for medical care abroad. According to Patients Beyond Borders, U.S. citizens can save 40-65% in costs for medical procedures in México.
The Aging Problem
There is also the issue of the aging problem for each country. The older the population gets, the higher healthcare needs are required, leading to higher healthcare costs. According to The World Bank, in 2015, the United States’ elder population, those 65 and over, was 15% of the population. Canada was 16%. México’s elder population is 6% of its population.
The aging population issue is one reason why it is so difficult to get U.S. citizens on the same page when it comes to healthcare. There is a divergence of priorities. The older population wants to keep what was promised to them in Medicare, and which they paid into, while the younger generations do not want to pay into a system that funds the healthcare of their older brethren. It comes down to a Medicare system that was not funded properly, or was raided by previous administrations. Canada is also facing this dilemma as the older populations do not contribute to the system through taxes.
The U.S. Already Has a Single Payer System in Place
When debating the merits of the Canadian model, something that is usually overlooked is that Medicare is a single payer system. It is used by the elderly in the United States. The objection to healthcare reform centers on the notion of quality of service and delays in receiving care. Most of those that object the loudest are already, or close to relying on Medicare for service.
The Mexican Model
The U.S. debate over healthcare centers on the notion that those that can afford it do not want to lose their ability to access higher cost, or luxury services. They also object to the mandate requiring coverage. México offers coverage that has achieved universal coverage but does not mandate the obligation to pay for health insurance.
Rather, the system incentivizes investment in coverage without the mandate. It also limits the cost through a mixture of the exclusion of pre-existing conditions and services covered. However, under the Mexican scheme, medical coverage is not limited to government providers. Private providers may also be accessed by anyone. Since the system incentivizes the medical professionals to provide their services at the government facilities, many of the medical professionals practice at both the public entity as well through their private facilities. Many patients use public facilities, such as labs and hospital rooms while retaining their private doctors.
Compared to the ongoing chaos of the U.S. system and the Canadian model of socialized medicine, the Mexican healthcare model is something that the U.S. should explore for their own attempt to reach universal healthcare.