1 Binational Health Insurance Models APHA 2008 Annual Meeting William H. Dow Henry J. Kaiser Associate Professor of Health Economics UC-Berkeley

2 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.

3 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.

4 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.

5 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)

6 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.

7 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.

8 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.

9 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.