Insurers in Mexico Fail to Profit from Expensive Treatments

According to the Reforma newspaper, the provision of high-end medical services (Gastos Médicos Mayores or GMM) has not been profitable for the insurance industry for seven years. In addition to increased costs associated with new modern treatments, patients are also living longer and there has been a sharp rise in hospitalisation costs. The Mexican private medical insurance association AMIS reports that, in real terms, GMM payments rose by 28% between 2000 and 2006. The organisation also notes that while the country's overall inflation rate currently stands at less than 4%, medical inflation is approximately 8.5%.

Chronic illnesses which require continued treatment have been particularly costly, with AMIS noting that 15-20% of GMM pay-outs are for illnesses that originally struck more than two years ago. Increased costs to cover chronic illnesses are partly attributable to complementary pay-outs, which have led to so-called "claim queues".

The insurance industry has also been affected by a 96.8% increase in the number of people taking out medical insurance between 2000 and 2007. Looking over a longer period, medical insurance represented 5% of the overall insurance industry's premiums in 1990, but this had risen to 14.7% in 2006.

Insurance Industry Signs Agreement with Private Hospitals to Lower Prices

Faced with ballooning expenditure, AMIS has signed an agreement with the National Association of Private Hospitals on exploring ways to reduce costs. According to AMIS's president, José Morales, part of the solution may lie in reducing the number of days that patients stay in hospital in cases where they are kept in for longer than is strictly required.

Outlook and Implications

In August last year, AMIS complained that hospitals were overcharging for reimbursable treatments and warned that the inflated costs could lead to a 15% increase in health plan prices in the short term (see Mexico: 22 August 2007: Fraud, Waste Alleged in Mexican Medical Insurance System). AMIS's complaints provoked a robust response from the medical association FENACOME, which claimed that health insurers were seeking to pass on unnecessary costs to consumers (see Mexico: 23 August 2007: Doctors Offer Riposte to Mexican Insurers’ Overpricing Claims).

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