Costly care

Healthcare costs across LatAm are set to increase by double-digit percentages this year and next.

Worldwide inflation and increased healthcare utilisation as Latin America exits the pandemic are contributing to rapidly increasing healthcare costs.

The average price for private family health insurance in Latin America is USD 300 per month. Peru has the lower prices, with a USD 211 average price, while Uruguay is the most expensive country, with prices over USD 400. According to the Latin American Geopolitics Strategic Centre (“CELAG”) an average worker in the region needs to work between 20 and 30 days to pay for the family’s private insurance.

In addition to Peru, Paraguay, Ecuador, Bolivia, and Colombia have lower private healthcare costs that the regional average. Nevertheless, private insurance companies are failing to include the most vulnerable groups of the population in their schemes while governments struggle to limit price increases that depend on the costs borne by insurance providers such as the salaries of medical staff, drugs, and specialist equipment.

Rising global inflation is also severely impacting health insurance premiums and putting additional pressure on the cost of living. For example, Brazil saw medical costs rise by 15% in 2021, the largest under Brazil’s current system, and this figure is expected to climb to 18% in 2022 and 19% in 2023, according to the 2023 Global Medical Trends Survey. Unsurprisingly, this has resulted in many customers cancelling their private health insurance policies.

A private health insurance executive in São Paulo confirmed, “Inflation is a global problem right now and Brazil is not immune. Healthcare costs have increased significantly: medicines, consumables, equipment and salaries are all considerably more expensive than last year and this has driven up insurance premiums.”

“Healthcare costs have increased significantly: medicines, consumables, equipment and salaries are all considerably more expensive.”

Executive, private health insurance company, Brazil

Brazil has the second largest private health insurance market in the world after the United States, covering more than 50 million people. During the pandemic, 2.6 million people in Brazil had their health insurance cancelled either because they lost their jobs and benefits or could no longer afford the premium. It is important to note that the private sector is entirely hospital-based and does not cover primary care which is mostly delivered through low-cost clinics.

The system is quite different in Mexico, where less than 1% of the population have fully private health insurance and instead there are several public or semi-public health insurance systems: the Institute for Social Security and Services for State Workers (“ISSSTE”) provides assistance to 9 million state workers, the Mexican Social Security Institute (“IMSS”) is funded by the employee, employer and the federal government and covers 65 million workers in the private sector, and the Institute of Health for Well-being (“INSABI”) funded by the federal government and means-tested individual members of the scheme offers coverage to 57 million Mexicans who do not have formal employment.

Despite a relatively low penetration of private health insurance, Mexico is facing other challenges, according to a physician in private practice in Mexico City, “The big problem is that INSABI is not ready to meet the excess demand for health services from people who do not have social security or any private service. This is a significant problem for those who have been priced out of the private insurance market and who have no possibility of being served by the IMSS.”

“The big problem is that INSABI is not ready to meet the excess demand for health services from people who do not have social security or any private service.”

Physician, private practice, Mexico City

Whether public or private, the spiralling cost of healthcare will inevitably put strain on government and household budgets across Latin America for the foreseeable future.

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