And who controls the prices of private medicines?

December 11, 2020 | 9:13

From: Verónica García de León *

The less we are able to wonder, the less exposed we are to bad news. But recently, some of the data has surpassed my threshold of surprise and concern: the index of private medical inflation, ie the increase in the cost of hospitals, medicines, treatments and consultations.

This year this indicator will close with an increase of 17%, and for the next one, the forecast is 16%. The first information comes from Gabriela Ruiz, deputy director of benefits at Mercer Marsh Benefits Mexico, and the second was mentioned by Daniel Bandle, CEO of AXA Mexico.

The summary numbers reflect higher prices for private health services, which have a direct impact on our pockets, and more in a context of unemployment and more infections. To better understand the scale of the problem, it must be said that the level of medical inflation is more than five times higher than 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 medicines is explained by an increase in the exchange rate compared to 2019, because many medical consumables are priced in dollars. But it also has to do with the health emergency.

And yes, the increase in medical inflation this year contrasts with that of 2018 and 2019, by 13 and 14%, respectively, when the new coronavirus was not yet known. And how could it not have an 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 insurance for major medical expenses exceed this level, because they had to be taken to intensive care where the average cost is 920,000 pesos, according to the Mexican Association of Insurance Institutions (FOR MY )

Who loses from medical inflation?

Such an aggressive rise in the price of health care is worrying in itself in a country like Mexico, where the population is forced to turn to private medicine because of the inadequacy and poor quality of public services, in addition to the fact that out of 100 Mexicans are affiliated with any public health institution. That explains why spending on this issue in Mexico is one of the highest in the world.

Honestly, there are a lot of reasons to opt for private medicine, but for now it is enough to know that the fatality due to Covid in a public hospital is 10% compared to 5% in a private one, according to AMIS. Which one would you choose?

Another important impact of medical inflation is to insure the major medical expenses that 11 million Mexicans have. According to Daniel Blande, director of AXA, an injury is inevitable. “We need to pass on such significant increases in health services to our policyholders through an increase in premiums,” he told me in an interview. Next year they could be expected to grow to double digits.

Finally, insurers pay for the hospitalization and treatment of their customers in the event of an accident or illness, and higher prices for services involve higher costs and less utility, because although they can increase their premiums, they cannot do so in the same way. proportion.

For Blande, it is essential to control medical inflation and for this he suggests that there should be a body that regulates the private health system, that there should be “a health Profeco”, he says. In addition, it is more transparent in the tariffs it manages, it opens to the public how much its treatments are worth and how prices evolve. It also suggests that the most common conditions have a maximum price.

Any kind of control of medical inflation at this time should be a priority. And while this is happening, it would not be a bad thing for hospitals and insurers to punish their profit margins more for the benefit of the population or for the government to allow an additional deduction for out-of-pocket expenses in private medicine. finally completes the public health services.

* Verónica García de León is a journalist specializing in economics and finance. You are interested in explaining and analyzing economic problems with social impact. He studied Economics Dissemination and won the IE Business School Award for Business Journalism. He was editorial director at Fortune in Spanish.

Twitter: @vgarciadeleon

This text is an opinion blog. Its content is the responsibility of the author and does not necessarily represent the position of the CEO.