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MEXICO CITY-Consultants and other vendors expect the number of private health plans among employers in Mexico to rise, despite new research showing that private health care costs are increasing, while public health costs are declining.

Proposed reforms of the nation's social security system, which provides medical and retirement benefits, will help push more employers to offer private health care benefits, especially if they also have managed care cost containment features, said Beatriz Bojorquez, health consultant for Watson Wyatt Worldwide in Mexico City.

Most Mexican employers are required by law to participate in the social security system, but many large and sophisticated employers already opt to also offer private medical benefits because of perceived inefficiencies with the government health care program (BI, Sept. 16, 1996).

The private health care system is not without its problems, too, including soaring costs. Those problems-along with social security premium reductions scheduled to begin in July-could keep employers from further embracing private health care plans, some observers say.

"Vendors are looking to make money, but I think they have higher expectations than what is really in the market. . .and I think buyers are being very cautious, and they are right to be cautious," said Beatriz Zurita, health policy assessment coordinator for the Center for Health in the Economy, a unit of the Mexican Health Foundation. The foundation is a Mexico City think tank and policy research organization created by 135 Mexican businesses.

Center for Health researchers found that private sector health care costs in Mexico have increased a total of 70%, after factoring out inflation, over the past 16 years, said Ms. Zurita earlier this month, during a two-day conference on Health Service Strategies for the 21st Century sponsored by Watson Wyatt Worldwide in Mexico City.

The research is contained in a report on Mexico's medical cost trends from 1980-1993 that is scheduled for release April 1. Portions of the report were presented at the conference.

Ms. Zurita is among those who believe that higher private medical costs will discourage employers from seeking options outside the public system.

While private sector health care costs have grown, public sector costs have been declining about 3% per year because of salary decreases for doctors, nurses and other workers in the social security system, the center found.

Although the public vs. private cost trends were expected, researchers were startled by the magnitude of their findings, said Ms. Zurita, in part because data for such a study has been hard to obtain in Mexico.

"Looking at the behavior of the private sector is a surprise," she said in an interview after the conference. "It makes sense, but it has never been studied before. I wouldn't have expected that 70% growth. That was a real, real surprise."

In fact, a general lack of health data is one of the biggest obstacles to system reforms and employer restructuring of health care plans, said several speakers at the Watson Wyatt conference.

In Mexico, there is no government or private organization overseeing quality of medical care or collecting cost data. In addition, data from the private sector is poor because the majority of private hospitals are small facilities with fewer than 15 beds.

"So you have to be a very good buyer with information in order to get the good things that the private market has to offer," Ms. Zurita said. "And as it is now, there is a lot of imperfect information for the purchaser."

Another disincentive to switching to private health care, she said, is that as of July 1, employers and employees will pay, on average, 30% less in social security health premiums.

However, after the initial reduction, social security premiums are likely to begin to gradually increase, rising by more than 20% over the next 10 years, predicted Watson Wyatt's Ms. Bojorquez. She also expects there will be additional reforms providing employers with rebates for purchasing private health care benefits for workers. That change could come within a year, she said.

Such a reform, along with employer dissatisfaction over social security care and more preventive care, will push many employers to the private sector, especially if managed care cost containment practices are introduced, she and other consultants predict.

Already, insurers, medical groups and new managed care companies in Mexico are positioning themselves to help employers make the transition. One is Maximed, a new managed care unit of insurer Seguros Monterrey Aetna S.A.

Jorge Carrera Prieto, director of operations for Maximed, said that he is counting on a growing employer need to monitor medical providers, introduce quality treatment protocols and arrange contracts that allow medical organizations to share in coverage risks. But there still remains plenty of work to pull the medical organizations together.

"Service suppliers (including medical providers) must have a change in attitude, because they are not used to working as a team in the private sector," he said.