Managed Health Care Latest U.S. Export to Mexico
Like her parents and grandparents before her, Blanca Renterica grew up getting her medical needs taken care of at Mexican government clinics. But when she and her husband decided two years ago to start trying for a child, she also decided it was time to try for better-quality medical care.
She succeeded on both counts. On a recent day, Renterica perched on the edge of her hospital bed, not in some drab clinic but in a comfortable room with a big pink bow on the door. Her little girl, Daniela, was in a high-tech nursery next door.
Three days old, Daniela was the product of the latest U.S. export to Mexico--managed health care, American style.
With the growing middle class of Mexico and other Latin American countries increasingly disenchanted with the region’s socialized health care systems, more and more employers are competing for skilled workers by offering insurance from U.S. health maintenance organizations. Renterica, for example, qualified for employer-provided health insurance from Aetna by virtue of her job with Bancomer, a bank that prides itself on being cutting-edge.
Aetna, Cigna, Blue Cross/Blue Shield and other U.S. health care giants are responding to the demand. As they rush to sign up obstetricians in Guadalajara and pediatricians in the Mexican capital, however, serious questions are arising about who will enforce the quality of care they provide, and how. For in Mexico, regulations governing medical care are few, and medical malpractice litigation is almost unheard of.
“These new plans are very attractive to the increasingly affluent middle class in Mexico and elsewhere, because the state systems are just no good,” said William Hsiao, professor of economics and social policy at the Harvard School of Public Health.
“But there are truly no regulations on these companies or on the doctors or hospitals who work with them. And when you are asking companies to self-regulate, it is most definitely buyer beware.”
The number of Mexicans using American-style managed care is still tiny. In a country with a population of more than 92 million, the U.S. companies and the Mexican ventures they have entered into partnership with have signed up perhaps 200,000 members, mostly in the more Americanized cities of northern Mexico.
Wealthy Mexicans still pay cash for medical care in the United States or in prestigious Mexico City hospitals, where doctors are trained abroad, cars are parked by valets, and patients can expect to receive a phone call demanding payment in U.S. dollars as soon as their anesthesia wears off.
Middle-class professionals--the bank clerks, secretaries and salespeople who make modern Mexico run--cannot afford such luxuries. Still, they want their babies born and their ailments tended to by skilled doctors in comfortable and efficient hospitals.
Rapid Construction of Health Networks
Enter the HMOs, part of a larger push into Latin America by the U.S. health care industry at a time when managed care companies’ reputations at home are tumbling and they are having trouble finding new customers there. They are busily contracting with prestigious doctors and hospitals across the region to offer care.
Aetna International has already put together health plans with 3.3 million members in seven Latin American countries. Its Mexican venture, Aetna de Mexico C.V., operates out of a glass-walled building on a hilltop in the northern city of Monterrey. It has a network of 4,300 doctor-providers and 390 hospitals in three cities.
Cigna International has 1.5 million members in five Latin American countries. In January, it joined with a Mexican managed health care company to offer U.S.-style managed care to 14,000 people, mostly in Guadalajara and elsewhere in Jalisco.
Blue Cross plans are also looking for Mexican opportunities. Blue Shield of California and the Texas and Arizona Blues are planning an HMO network in Tijuana for Mexican citizens employed by companies across the border.
While the new plans vary in their particulars, most follow the American managed care model. Doctors contract with the managed care companies to offer their services to plan members who make a small co-payment at the doctor’s office. The doctors are reimbursed by the health care companies per patient, and, as in the United States, must obtain approval from the companies for the services they provide.
The doctors get more patients. The managed care companies get the premiums. Ideally, the patients get lower health care bills while frequenting the same doctors and hospitals many had been paying in cash.
National System Hit Hard by Cutbacks
Mexico’s market for what the U.S. companies are peddling is huge. The national health care system, known by its Spanish initials, IMSS, never provided much more than bare-bones care. And it has been hit hard by recent government cutbacks. Funded by mandatory employer and employee contributions as well as by the government, it has long provided basic care to tens of millions of people.
But since 1994, when the Mexican currency, the peso, fell precipitously in value, the cost of medical equipment, nearly all of it imported, has soared. And with less to spend, the Mexican government has slashed funds for medical care.
Last year, IMSS served 40 million people on a budget of just $5.5 billion, down 30% from the year before. The budget crunch left it short of doctors and equipment. The lines at clinics for basic services such as flu shots and gynecological exams have swelled.
The problems with IMSS clinics have middle-class Mexicans fleeing the system in droves.
“At IMSS, you have to get there very early in the morning and sometimes wait all day to see a doctor, and then you really don’t know who the doctor is or whether he is any good,” Renterica said.
“Now I call, I make my appointment by telephone, and they see me. I guess it sounds simple to you. But for me, that kind of service is really something new.”
Renterica’s enthusiasm is what U.S. managed care companies are counting on to enhance their bottom lines.
“Here in the United States, we tend to think of managed care as a cost containment, as a less expensive alternative to other forms of private health care,” said Jonathan Lewis, president of the Academy of International Health Studies, an industry-funded think tank in Davis, Calif.
“In Mexico, in contrast, HMOs represent a real step up in quality in the popular imagination. . . . What the Mexican consumer is buying in an American HMO is guaranteed access to high-quality health care, technology and pharmaceuticals.”
The Mexican government, which has already privatized Mexico’s retirement system, is also looking for alternatives to IMSS. President Ernesto Zedillo had planned to offer employers incentives, possibly tax refunds, to expand private health services.
But in a country where government-subsidized health care is considered a basic right, the plan hit intense political opposition. With Mexico gearing up for what is expected to be the most competitive presidential campaign in its history, observers say it is unlikely that health care reforms will advance before a new president is installed in 2001.
Still, industry observers say reforms of some sort are only a matter of time. In June, the World Bank approved a $700-million loan to the Mexican government to reform the health care system. While the loan does not stipulate privatizing the system, it encourages the trend.
“We believe that the insurance industry will be privatized, and given that, we think there will be some really significant opportunities in Mexico,” said Alan Puzarne, a senior vice president with Blue Shield of California. “It’s kind of the Wild West down there right now.”
It is precisely the Wild West aspect that worries Mexican government officials, physicians and health care workers. They are all too aware of the problems of managed care in the United States, which include disputes over the limits that profit-conscious health plans put on doctors and patients.
In Mexico, where health care regulation is extremely limited, the potential for problems is even greater. Unlike in the U.S., where doctors are closely regulated by the government, medical licenses in Mexico are granted by medical schools, not by the government. And the schools themselves are unregulated.
While many medical specialties try to regulate their own ranks, doctors need not be certified to practice in a particular field. Hospitals must register with the government, but no process exists to ensure that their facilities meet minimum standards. The government regulates neither the safety nor the effectiveness of medical devices or medical equipment.
And while medical malpractice litigation has exploded in the U.S., such litigation is unknown here. Since 1990, the government has established several commissions to handle health care complaints, primarily the National Commission for Medical Arbitration. But the commission has handled fewer than 3,000 complaints.
“In reality, the system of quality control is simple: Patients have no rights,” said Celia Iriart, a visiting professor of public health at the University of New Mexico who has studied managed care in Latin America. “There is no way if you complain that anything will happen. They say that people will regulate the system themselves, that if they are not given good care they will go to another doctor. But what kind of an assurance is that?”
Mexico also has some special barriers to the HMO incursion. It lacks the medical records and databases that U.S. managed care companies use to calculate price and risk. And under current Mexican law, most companies that choose private insurance for their employees must still pay into the IMSS system, limiting the HMOs’ potential market to the few companies willing to pay double to offer better benefits.
Powerful U.S. employers with large operations in Mexico, including IBM, Bristol Meyers Squibb and Hewlett Packard, have formed a consortium to lobby the Mexican government to change the law.
But U.S. managed care companies aren’t waiting.
Aetna is planning a new venture along the U.S.-Mexico border peddling managed care to maquiladoras, the foreign-owned export factories. A small New York company, Bienestar International, has a network of 2,000 physicians and 22,000 members.
Alejandro Caballeros is a family physician in Monterrey who has long relied on wealthy patients who pay him cash for his services. His softly lighted waiting room is filled with Viagra ads and information on weight-loss drugs.
In the last year, he has taken on dozens of new patients--employees of Bancomer whose health care is paid for by their company’s arrangement with Aetna. Before he signed on with the company, consultants paid by Aetna examined his record, his facilities and his credentials. For each patient he sees, Caballero collects a fee from Aetna of about $15. His patients add a co-payment of about $2.
“I think that the arrival of foreign insurance companies will be a big benefit for the middle class,” Caballeros said. “There are lots of open questions, of course, about the fact that they limit their services and all. But the IMSS is saturated. So if foreign insurance companies can take some of the pressure off the system, maybe it can do a better job of serving the rest of the people.”
