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The Public-Private Split:
An Overview of Private Health Insurance in Mexico

By November 14, 2018 No Comments
The Public-Private Split: An Overview of Private Health Insurance in Mexico

Mexico has been in the news on a regular basis for some time now. But one of the most notable things about the United States’ neighbor to the south is also the one that often doesn’t receive much media attention: the quality of its healthcare system. In major areas like Mexico City, people can expect to receive excellent medical care services—particularly for serious conditions.

The public-private split in Mexico, however, is not necessarily as clear cut as it may at first appear. For businesses and individuals looking to gain a better understanding of private health insurance in Mexico (and what it may mean for both citizens and expats alike) there are a few important factors to consider.

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Private Health Insurance in Mexico

Under current Mexican laws, everything to which employees are entitled (and everything that employers must provide) is all handled and paid into by way of a single government institution: the Mexican Social Security Institute, otherwise known as IMSS.

In terms of employer-provided care, companies have the option of offering private insurance to their employees. If this step is not taken, those employees will be covered only by the minimal employer withholding obligations. They can then supplement that coverage elsewhere if they so choose.

Currently, about 52% of all Mexican healthcare costs are financed publicly with the rest being sourced privately. This may seem extreme, but it’s actually par for the course in terms of other Latin American countries. Only Colombia has a 75%-25% split, which puts it about average with highly developed nations and the European Union.

All of this strong market activity does come with a downside—a significant one, in fact. A series of rate increases from providers, coupled with periodic bouts of economic volatility, have prevented many citizens and residents who want private insurance from getting it. The penetration rate of private insurance in the country slowed significantly starting in 2011, and has not been able to recover to its pre-economic downturn levels since. It is this slower trend that many experts have factored into their forecasts for future growth.

Additional Considerations About Private Health Insurance in Mexico

The most important thing to understand about all of this is that in Mexico, public and private healthcare plans come with their own unique sets of resources—including not only doctors and physicians, but also pharmacies and health care centers. All of these resources operate independently of one another, and both Mexican residents and citizens are only able to use the services offered within their specific networks.

In terms of care, the country’s private healthcare system is by and large considered to be one of the best—but it’s also the most expensive. Care provided within this system is paid for using health insurance. Therefore, if a citizen of another country who happens to be traveling in Mexico gets sick or injured, they can receive exceptional care—but they will pay more for it as a result.

A wide range of inexpensive and high-quality options do exist through both public and private opportunities. Assuming that they meet the eligibility criteria, they’re also available to expats as well.

The Future of Private Health Insurance in Mexico

Mexico’s insurance and healthcare industries have continued to show strong signs of growth for the past decade, driven in no small part due to the country’s macroeconomic stability. The significant increase in the availability of financial services has also led to both local and foreign companies taking advantage of every available opportunity to increase market share across the board.

Mexico’s insurance market is a strong one that still offers opportunity for growth, exceeding the rates commonly observed in many developed countries. The only caveat is that the potential to bring Latin America into a position of leadership in this field has yet to be truly realized. For the best results moving forward, the sector should continue to focus on creating an agenda related to bringing mandatory insurance rules to the largest possible audience. Offering quality coverage at affordable rates to high-risk populations needs to be a priority, as does offering services like home hurricane coverage and vehicle civil liability insurance.

Moving into Mexico? Grow with an Experienced Partner

Whether your company is considering opening an office in Mexico, or is sending one employee on a short-term assignment, ensuring they have adequate healthcare coverage is a must. Velocity Global has assisted hundreds of companies compliantly expand into over 185 countries—and we can do the same for your expansion into Mexico. Our International PEO (Professional Employer Organization) solution can have you up and running in Mexico in under 48 hours, and up to 60% cheaper than with traditional entity setup. Ready to make the move? Let’s talk.

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