New market opportunities for U.S. health insurance companies and other healthcare businesses may start to emerge in Mexico after next month's changing of the country's political leadership.
Vicente Fox will assume the Mexican presidency in December, ending 71 years of rule by the left-leaning Institutional Revolutionary Party. Fox's free-market orientation is expected to jump-start efforts to deregulate aspects of a social security system that provides healthcare to nearly half of Mexico's employed population.
"Mexico offers a long-term good opportunity, but the present is somewhat limited by the regulatory environment," says Howard Kahn, Cigna International's senior vice president for Latin America.
Most financing and delivery of healthcare in Mexico is controlled by the government through various social security programs. Proposed reform would allow companies and their employees to purchase healthcare on their own.
"People want to access a private healthcare system," says Recaredo Arias, president of the Asociacion Mexicana de Instituciones de Seguros, which he translates as the "Mexican Insurance Companies' Association."
Kahn and Arias are two of four panelists on the program to discuss "Mexico: Private Health Sector Investment--Opportunities and Obstacles" during the summit.
Mexicans employed in most industries obtain their healthcare through the Mexican Social Security Institute. The institute funds a government-operated healthcare system through mandated employer and employee contributions. Proposed reforms would allow employers and their workers to opt out of this structure.
"I think these (reforms) will bring very important opportunities to (international) insurance companies," Arias says.
Kahn agrees: "Everyone believes that the big opportunity comes when that gets done."
While regulatory change to open up a private healthcare market has been a stated intention under the previous political administration in Mexico, Kahn and Arias agree that its likelihood of occurring is greater under the incoming leadership. "They may very well intend to move on that front," Kahn says of the Fox administration.
Arias predicts that the government-run system will be opened up in about two years.
Kahn says Mexico could become one of the two most attractive Latin American markets for health insurers once employers are allowed to buy healthcare on their own. Chile, which underwent significant healthcare reform in the 1980s, is the other country making Kahn's short list.
While the first opportunity after reform will likely be for the insurance companies, greater privatization of the market is also expected to open up the demand for other healthcare products and services. Kahn said increasing people's ability to buy desired services will have an expansive effect on Mexico's healthcare economy.