dow

							  Binational Health Insurance Models

              APHA 2008 Annual Meeting

                    William H. Dow
Henry J. Kaiser Associate Professor of Health Economics
                     UC-Berkeley




                                                          1
     Binational Health Insurance
             Background
• What is it?
  – Insurance that provides benefits across 2 countries
    (U.S., Mexico)


• Why important?
  – Uninsurance leads to catastrophic expenditures,
    stress, worse health
  – Of ~11 million Mexican-born in the U.S., ~6 million
    are uninsured.
     => Need new initiatives.

                                                          2
       Potential Benefits of
   BINATIONAL Health Insurance
• Binational service delivery:
   – Cost savings from contracting providers in Mexico. [30-50%?]
   – Health benefits of better, culturally competent care, and
     potentially integrated care for migrants. [Unlikely?]
   – Labor market efficiency, by facilitating worker and family mobility.

• Binational financing:
   – Health system efficiency: Take currently fragmented financing
     for separate care delivery systems, and redirect toward an
     integrated insurance product with more preventive care, etc.
   – Health financing equity: More explicitly planned approach to
     sharing financing burdens.



                                                                        3
        Binational Health Insurance
                Challenges
• Financing:
    – Most uninsured will need premium subsidies.
    – New funds needed from outside system.
• Low demand for insurance:
    – Need large subsidies, well marketed, easy to understand, and non-
      threatening for undocumented.
    – Geography: lower expected benefit if do not live near border.
    – Adverse selection expected. Role of mandates?
• Regulatory barriers:
    – Insurance, credentialing.
• Administrative barriers:
    – Few promising models for well-integrated care across systems…so
      unlikely to be realized soon.
• Political barriers:
    – Resistance to financing care of immigrants or emigrants. Migrants fall
      through cracks without international agreements.

                                                                               4
 BHI Potential Varies by Group
• Groups with current BHI take-up:
  – Non-poor documenteds living in border areas (lower
    premiums, scale economies).
  – Circular migrants with large employers (farmworkers).


• Groups with low potential take-up:
  – Low-income: Unless highly subsidized.
  – Undocumenteds (unless subsidized or employer
    mandated).
  – Living far from border (if seriously ill, they can return
    to Mexico and enroll in Seguro Popular at that time)
                                                                5
           Building Blocks for BHI:
                United States
• Insurance:
   – Employer-sponsored insurance:
       • Premium tax subsidies of 15%-35%.
       • Large firms: administrative savings, high take-up, low adverse
         selection.
       • But insurance paid with lower wages.
   – Individual insurance:
       • inefficient, with selection problems. Bad model for BHI?
   – Medicaid/SCHIP:
       • low-income pregnant women, documented children.
   – Kaiser:
       • $8 PMPM for undocumented kids < 250% FPL in California.
• Fragmented safety net for uninsured:
   – Hospitals, clinics funded by: federal DSH and FQHC, state,
     counties, non-profits, pharma drug discounts.

                                                                          6
        Building Blocks for BHI:
                Mexico
• IMSS: social security insurance for formal
  sector workers.

• Seguro Popular: new government
  insurance for non-IMSS, highly subsidized.

• SSA Ministry of Health: safety net clinics,
  hospitals.
                                                7
      Some Options for Financing
           Subsidized BHI
• Redirect existing subsidies for uninsured:
   – DSH, FQHC, state, county, Mexican SSA, private pharma, etc.
   – Negotiate explicit financing responsibilities. E.g., U.S. govt pays
     larger share, the longer migrant is in U.S.?
• Reduce costs via:
   – Strong incentives for using lower cost providers
   – “Medical tourism” contracts for expensive care.
   – Medical home to coordinate chronic care.
• Role of mandates in migration reform?
   – Individual mandate for immigrant health insurance (with sufficient
     subsidies): can reduce adverse selection, raise political will.
   – Employer mandate can reduce costs (at risk of labor market
     distortion): lower admin costs, AND capture tax subsidy.

                                                                           8
      Piloting Subsidized BHI
• Estimate demand increases, cost offsets.
  – Need large subsidies for initial pilot
    (foundation)?
• Choose border area:
  – Economies of scale
  – Allow to test how border-crossing varies by
    distance (interacted with cost-sharing, quality)
• Detailed study of changing safety net
  financing.
                                                   9