A Mother Lode For Mexico's Hm Os
Eduardo Lara di Lauro has so far signed up only 1,600 people in his seven-month-old managed health-care program, but he is a happy man. As director of managed care for Mexican insurer General de Seguros, he's on the leading edge of what promises to be a surge of private health care in Mexico. Although the government's Mexican Social Security Institute (IMSS) has long dominated health care, that may be changing. "The market has jumped ahead of the government," says Lara, whose initial target is four northwestern states. "People are asking for a new product."
Spurring the demand is Mexicans' rising exasperation with the underfunded, bureaucratic state system. Many would welcome an affordable private alternative such as managed care despite the recent outcry in the U.S. over service cutbacks by health maintenance organizations (HMOS). Within a year, the government is expected to offer incentives--possibly tax refunds--to expand private health services. Insurers General de Seguros and Grupo Nacional Provincial are designing their own plans. Along the border with the U.S., smaller HMOS are offering plans for professional employees in maquiladora assembly plants.
The U.S. health-care industry is joining the rush. Hartford-based insurer Aetna Inc. owns 49% of Seguros Monterrey Aetna, which provides managed care for 90,000 people, mainly employees at Mexico's No.2 bank, Bancomer, and their families. The Blue Cross and Blue Shield associations of Texas and Arizona are looking for a Mexican partner to go into managed care. And HMOS such as Kaiser Permanente, based in Oakland, Calif., see a chance to manage plans or sell their expertise in Mexico and other Latin countries.
The lure is a huge, underserved market. In Mexico, a still evolving government plan is aimed at relieving the overload on the IMSS, which serves 40 million people with a 1997 health-care budget of $5.5 billion. If managed care improves private health services, more middle-class Mexicans will sign up, freeing public funds for poorer Mexicans.
Private employers want to be allowed to opt out of the IMSS system and fund managed care with IMSS contributions, totaling more than 8% of many employees' salaries, that employers and workers now pay. It's unlikely that employers would get the full amount of IMSS payments refunded to them. Still, an estimated 15% of employers, mostly large companies, would opt out of the state system and sign up with private plans.
Banks, which have been exempt from the IMSS since it was founded in 1943, are a kind of laboratory for HMOS. Mediplan, a managed-care partnership based in Guadalajara, has signed up Banca Serfin to cover 6,500 of its employees and their families. The partners are a group of Guadalajara doctors, a Kingston (N.Y.)-based health-care company, Bienestar International Inc., and Denver insurer Safe Passage International. Bienestar CEO Gerardo Rodriguez aims for 100,000 members in two years. "This is a business of volume and very little margin," he says.
DATA DEARTH. In the northwest, where medical expenses are lower than in Mexico City, the average cost to treat each person under managed care is around $36 per month. The full-coverage premium for a typical family of three, General de Seguros' Lara estimates, is about $47 per person per month. The margin covers administrative costs and reserves as well as profits.
Servicios Dentales, a subsidiary of Albuquerque managed-care company Health Care Horizons Inc., operates a dental plan aimed mainly at maquiladoras, which offer it as a perk to managers. "In the past 18 months, we've grown at a rate of 1,000 customers a month," says coo David A. Felix. Many of the new HMOS are also looking at the assembly plants. "A group of maquiladoras could put in a clinic administered by an HMO," says Lara.
There are still plenty of complications. Mexico lacks the sort of records and databases that U.S. managed-care companies use to calculate price and risk. And while HMOS are so new that they are still unregulated, insurers complain that their new units must comply with insurance regulations, such as reserves, that are too strict for health care. Still, "the time to position oneself in the market is now," says researcher Miguel A. Gonzalez Block at the Mexican Health Foundation, a think tank. Managed-care pioneers in Mexico are already acting on that advice.