On health insurance and the structural problem of health inflation

The increase in prices triggered by the pandemic is a delicate world situation, but in particular in the health sector it is something that worries us too much, since rising inflation has been going on for years and has become a structural problem that is not seen by where will it stop?

The point is that the increase in treatment and hospital care costs is added to the constant incorporation of new technologies and population aging, which is also added as a risk factor that pushes prices up.

The insurance industry in Mexico reports that the average cost of claims in the last year increased 17%, that is, practically 10 points more than the general inflation reported at 7.3% in 2021, and the worst thing is that the way things are going for 2022, expected to be even higher.

We talked about it with Germán Aguado, general director of medical, life and auto insurance at GNP, who points out that Covid-19 has disruptively increased the cost of treatments, but the reality is that the upward trend has been going on for years.

It is well proven that treatment costs grow year after year faster than people’s economic capacity. And the serious thing about all this is that this higher cost is covered by family spending, that is, patients and policyholders.

Germán Aguado recognizes that it is an unsustainable situation because, in the end, this constant increase in prices in the private sector -which in Mexico already represents more than half of health spending- has been solved in two ways: by increasing the price of premiums and/or reducing benefits or coverage to the insured.

In the case of GNP, he assures that it is the one that has been able to best control its premium costs and, thanks to this, plus the work it has done in attention and service, has been registering a notable growth in the number of insured. Between 2019 and 2021, GNP raised from 530,000 to 647,000 the number of its insured individuals, and from 945,000 to 1,134,000 insured in collective medical insurance, which is the one that companies hire their employees.

Hence, in 2021 GNP increased its medical insurance business in double digits, no less than 19%. With this, GNP reaffirmed its leadership in this area, especially in individual medical insurance where it has a 28.7% share, followed by Axa, which covers 21.5%, and Seguros Monterrey, which covers 12.7% of this market for major medical expenses. In group health insurance, the leader is MetLife, which has 24.4%, followed by GNP with 20.6% and Axa with 13.2% of the business health insurance portfolio. Returning to the price increase, it is good news that medical expense insurance contracted in Mexico is rising, but it is not sustainable, and in the long run they will tend to decline if the issue of costs is not resolved. A strategy that the Mexican Association of Insurance Institutions (AMIS) is testing is that of consolidated purchases of medicines and other supplies, and in which GNP is still evaluating whether to participate because it considers that the result is marginal and does not solve the problem above all. in light of the fact that 70% of the cost is focused on hospital services.

Germán Aguado comments in this regard that where there is much to be done is in transparency of hospital costs so that, for example, the insured knows the costs of treatment when there is insurance and when there is no insurance, and that they also find out what they are paying for. your insurance because normally the insured only knows what he has to pay (deductible and coinsurance) and does not know what his insurance paid him.

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Maribel Ramirez Coronel

Journalist on economics and health issues

Health and Business

Communicator specialized in public health and the health industry. She is studying a master’s degree in Health Systems Administration at FCA of UNAM.

Founder in 2004 of www.Plenilunia.com, a concept on women’s health. I am passionate about researching and reporting on health, innovation, the industry related to science, and finding the objective business approach to each topic.

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