This is the OECD’s second Health System Review of Mexico, published as reforms to Mexico’s Ley General de Salud are being debated. Much progress has been made since the first review, a decade ago. Public investment in the health system has risen from 2.4% GDP to 3.2%; the publicly-subsidised health insurance plan Seguro Popular now covers around 50 million Mexicans, and reports of recent impoverishing health expenditure have fallen from 3.3% to 0.8% of the population. Many of Mexico’s policy innovations are studied and emulated across the world, particularly in the field of prevention. Infant and maternal mortality rates have fallen, and life expectancy is now just under 75 years.

Ten years after the introduction of publicly-funded universal health insurance, and its first OECD Health System Review, the Mexican health system has unquestionably made progress. With the introduction of Seguro Popular in 2004, some 50 million Mexicans previously at risk of unaffordable health care bills now have access to health insurance. Reports of recent impoverishing health expenditure have fallen from 3.3% to 0.8% of the population and key parameters such as infant mortality, and deaths from heart attacks or stroke, have improved. Serious and urgent challenges, however, have intensified. Between 2000 and 2012, rates of overweight or obesity increased from 62% to 71% of the adult population; one in three children is already overweight or obese. More than 15% of adults have diabetes - more than double the OECD average of 6.9%.

Ten years after the introduction of publicly-funded universal health insurance, the Mexican health system finds itself at a critical juncture. Unquestionably, some measures of health and health system performance have improved: those previously uninsured now use health services more often, whilst numbers reporting impoverishing health expenditure have fallen from 3.3% to 0.8%. Infant mortality fell to 13.0 deaths per 1 000 live births in 2013, a 38% reduction since 2000. Other indicators, however, remain worrying. Rates of survival after heart attack or stroke are markedly worse than in other OECD countries. Failure to modify lifestyles which harm health is a particular concern: with 32% of the adult population obese, Mexico ranks as the second most overweight nation in the OECD and almost one in six adults are diabetic. Other key metrics imply deep-rooted inefficiencies in the system: administrative costs, at 8.9% of total health spending, are the highest in the OECD and have not reduced over the past decade. Likewise, out-of-pocket spending is around 45% of total health spending1 – the highest in the OECD.

Mexico has achieved significant improvements in many measures of population health in recent years. But gains have not been as fast as in other OECD health systems. Of particular concern, the gap in life expectancy between Mexico and other OECD countries has widened from about four years to six years.

Current health care arrangements are failing to meet Mexicans’ health needs. In order to decisively raise health and wellbeing standards of the Mexican population, sustained and comprehensive structural reforms of the health system are necessary.

This chapter explores how the service delivery model in Mexico’s health system can evolve to meet individual and population health needs more equitably. Working towards an equal package of services across all insurers is an important commitment that must be met. Steps must also be taken to ensure that ease of access and quality of care are demonstrably equal.

Mexico’s fragmented approach to health care financing reinforces the patchwork nature of the health care system, impeding both the effective generation and allocation of resources. A more unified approach is of particular urgency given that large numbers of individuals transfer between the social security institutes and Seguro Popular each year due to changes in employment, which disrupts continuity of care. Steps towards more pooled funding – or the functional equivalent – would enable care to be more easily transferrable across insurers and potentially lead to efficiency gains.

This chapter discusses the steps Mexico could take to promote more efficient functioning of its health system. The implementation of an effective separation of functions, particularly regarding purchasing and provision of services within the social security institutes, should be a priority. This would lay the foundations for a wider use of selective contracting, user choice of provider and more innovation at the provider level. The Ministry of Health should focus its efforts on providing effective co-ordination, regulation and oversight of both purchasers and providers.