December 11, 2020 | 09:13
By: Verónica García de León *
Our capacity for surprise is less the more exposed we are to the bad news. But recently one fact exceeded my threshold of surprise and concern: the index of private medical inflation, that is, the increase in the cost of hospitals, medicines, treatments and consultations.
This year this indicator will close with a rise of 17% and for the next one, the forecast is 16%. The first data comes from Gabriela Ruiz, Deputy Director of Profits at Mercer Marsh Benefits Mexico and the second was mentioned by Daniel Bandle, CEO of AXA Mexico.
The numbers in summary reflect higher prices for private health services, which directly impacts our pockets, and more in a context of unemployment and more contagion. To better understand the size of the problem it must be said that the level of medical inflation exceeds by more than five times the level of general inflation, which in November was 3.3%, at an annual rate.
Gabriela Ruiz explained to me that part of the increase in the costs of private medicine is explained by an increase in the exchange rate compared to 2019, as many medical inputs are quoted in dollars. But it also has to do with the health emergency.
And yes, the rise in medical inflation this year contrasts with that of 2018 and 2019, of 13 and 14% respectively, when the new coronavirus was not yet known. And how would it not impact if the average cost of hospital care for COVID-19 is 390,000 pesos. And not only that, more than 60% of hospitalized cases with higher medical expenses insurance exceed this level, as they had to be taken to intensive care where the average cost is 920,000 pesos, according to the Mexican Association of Institutions Insurance (AMIS)
Who loses with medical inflation?
Such an aggressive increase in the price of medical services is worrying in itself in a country like Mexico, where the population is forced to resort to private medicine due to the insufficiency and poor quality of public services, in addition to 17 out of 100 Mexicans are not affiliated with any public health institution. This explains why out-of-pocket spending on this issue, in Mexico, is one of the highest in the world.
Honestly there are plenty of reasons to opt for private medicine, but first it is enough to know that the lethality for Covid in a public hospital is 10% against 5% in a private one, according to AMIS. Which would you choose?
Another major impact of medical inflation is on the larger medical expense insurance owned by 11 million Mexicans. According to Daniel Blande, director of AXA, an affectation is inevitable. “We need to pass on such significant increases in health services to our policyholders through an increase in premiums,” he commented to me in an interview. Next year they could expect them to go up in double digits.
Insurers ultimately pay for the hospitalization and treatment of their clients in the event of any accident or illness, and higher service prices mean higher costs and less utility, because while they can raise their premiums, they cannot do so in the first place. same proportion.
For Blande it is essential to control medical inflation and for this he suggests that there should be some body that regulates the private health system, that there should be “a Profeco of health,” he says. In addition, make it more transparent in the rates it handles, open to the public how much their treatments are worth and how prices evolve. It also suggests that the most common sufferings have a maximum price.
Whatever the way to control medical inflation right now should be a priority. And while this is happening it would not be bad for hospitals and insurers to further punish their profit margins for the good of the population, or for the government to allow an additional deduction for out-of-pocket spending on private medicine, as it ultimately complements the public health services.
* Verónica García de León is a journalist specializing in economics and finance. He is interested in explaining and analyzing economic issues with a social impact. He studied Economics and won the IE Business School Economic Journalism Award. She was editorial director of Fortune in Spanish.
Twitter: @vgarciadeleon
This text is an opinion block. Its content is the responsibility of the author and does not necessarily represent the position of the CEO.