Draft Speech for the Release of the Review of the Mexican Health System

Media briefing to present the OECD Health Review of Mexico

OECD Mexico Centre, Mexico City.

10:30 – 11:30 April 6th, 2005

Opening remarks

Donald J. Johnston

Secretary-General of the OECD

Minister Frenk, Ambassador Elizondo , Members of the Press, Ladies and Gentlemen

Let me begin by saying how pleased I am to be back in Mexico and to be present at the release of the OECD Review of the Mexican Health System. I would like to take this opportunity to thank my friends Julio Frenk and Carlos Elizondo for their unstinting support for this project. I hope that the report lives up to their high expectations.

This report -- as some of you may recall -- was prepared during the course of last year. A first draft was discussed at a seminar here during my last visit in October at the time of the OECD/Mexico 10th Anniversary Forum. The OECD Secretariat received many helpful comments in reaction to that draft from various stakeholders, academics and others, and we believe that the report that we are releasing today [in its Spanish version] has been greatly improved as a result.

We believe that this study provides a balanced view of the Mexican Health System and we hope that it can contribute to the implementation of current reforms and focus attention on unfinished business that will need to be addressed over coming years.

Let me turn briefly to some of the highlights of the report, which identifies three main challenges for health-care policies in Mexico:

First, while Mexico has a number of areas where it excels – perhaps most notably in the area of prevention – there are marked inequalities in access to health care across the Mexican population. The social security system covers less than half of the population and then not the worst-off members of the society, as typically those covered are wage-earners in formal jobs. Thus, health insurance coverage in Mexico is very low compared with virtually all other OECD countries, where there is full or nearly full coverage.

Overall, approximately half of health-care spending is paid by individuals from their own resources. This compares with less than 20 per cent for the rest of the OECD. As a result, the poor face bear a higher risk of facing catastrophically high medical bills or of not receiving adequate care. Achieving wider coverage would appear to be the key health policy challenge facing the Mexican authorities.

Second, the public health care system appears to be under-funded. Total spending on health care in Mexico stood at 6 per cent of GDP in 2002 compared with an OECD average of 8 ½ per cent. At only 2.8 percentage points of GDP, the level of public health-care spending is amongst the lowest in the OECD area, and represents less than half of total health spending in Mexico. By way of comparison, public health care spending accounts, on average, is only around for three quarters of total health spending in of the average for other OECD countries. This partly reflects the lower living standards in Mexico, but also fiscal constraints arising from limited (and volatile) budget revenues. In addition, on a per capita basis most of the existing public resources go to the better-off states rather than to those where the health needs are the greatest.

Third, the available data suggest that there are serious inefficiencies in the provision of health care. Perhaps the most notable manifestation of this is the high administrative costs of the system, representing 9.5 per cent of total health care spending, the highest among OECD countries for which data are available. Clearly, re-channelling administrative spending towards more effective uses -- and improving the efficiency of healthcare provision more generally -- should help improve services, even within tight fiscal constraints.

Happily, Mexico is responding to these challenges.

The current and previous administrations have taken steps to address a number of these issues. A range of policy changes have been introduced and these are detailed in our report. I would like to focus my remarks to-day on the flagship reform – the "Sistema de Protecion Social en Salud" (or SPSS), as a this reform addresses, amongst other things, the key challenge of ensuring much wider access to health care services.

The OECD Secretariat sees the SPSS as an important and well-designed response to some of the key challenges that I just mentioned. If implementation goes forward as planned, the entire Mexican population should have access to affordable health insurance – in the form of the "Seguro Popular" – by 2010. This would be a great achievement.

In addition, the reform will bring broad equality in public healthcare funding per capita across all states. It will also, by providing better insurance coverage to those not covered by social insurance, bring more equality in the available public resources for care for those covered by social insurance and those who are not. (I didn’t understand this sentence – if you have private insurance, why would you need equal public resources as for those without insurance??)

Finally, the new arrangements for channelling new financial resources to the states provide them with incentives to enrol the uninsured on the new programme and to improve both the quantity and quality of the health-care services provided.

But a successful reform requires successful implementation and the OECD sees important challenges here for Mexico:

 Efficiency of service provision needs to be increased, particularly in the State Health Services. This requires improving the managerial capacity of the system, better monitoring and ensuring that the providers face appropriate incentives – for example, through contracts where providers are financed on the basis of their outputs. Administrative costs need to be trimmed in all parts of the public system.

 Further attention to the quality of health care is required. In this context the accreditation programme needs to be extended to a wider number of providers, and State Health Services need to have sufficient qualified staff, pharmaceutical drugs and other materials they need to treat, effectively, the newly insured. In some cases, this may require new investment.

 And, last but not least, additional and more predictable fiscal resources must be found. Moving forward with the reform of the tax system to strengthen public sector revenues would help enormously here. This is an issue that the OECD has raised in other contexts (e.g. EDRC reviews of the Mexican economy).

My final thought concerns unfinished business.

The report stresses something that you are all aware of: the health care system in Mexico remains highly fragmented institutionally between the various social insurers, the Ministry of Health and the State Health Services. This has implications for the overall efficiency and effectiveness of the system. A longer-term goal must be to break down the barriers between the institutions, improve coordination and to create a common institutional framework to oversee and regulate the health system.

Thank you.