Economics: An improvised threat to public finance
The government’s decision to eliminate from the first day of 2020 the Seguro Popular program and establish a centralizing National Health Institute for Wellbeing (Insabi) is being billed as an initial leap forward in the government’s quest to provide greatly expanded public health coverage. But the move actually poses decidedly adverse implications for the public health system’s ability to sustain the previous trend toward just such a broadening of coverage as well as its capacity to provide access to the sort of proper medical services that had been gradually achieved during the 13 years in which the Seguro Popular program had been built into a large provider of prevention and healthcare services for 53.5 million beneficiaries, or around 14.9 million households.
The dimensions of this abrupt change threaten not only the quality of public health services, but the health of public finance as well, a problem that is likely to become especially apparent beginning in Insabi’s third year of operations.
The new institute that has been introduced does not include any funding mechanism but instead is to work strictly as a service provider. It was initially supposed to charge a fee for services rendered as the Seguro Popular had done (1,463 pesos per participating household on average in 2019, or roughly 25 billion pesos overall), but the government abandoned that approach following some initial criticisms, while offering no alternative revenue sources. The system is also being saddled with what should prove a costly new bureaucracy (Insabi) even as the government’s coverage promises could cost up to an additional 300 billion pesos, 1.3% of GDP.
This approach is clearly not viable as the funds needed to cover such care would greatly pressure public finance or require deep cuts to other public services that were already decimated last year by the extent to which this administration has engaged in under-spending.
Given the dimensions of the problem and the largely incoherent government explanations for how this could possibly work out, we can expect to witness a relaxation of government austerity in the healthcare sector even well before the government starts an expected acceleration of spending in other sectors, which in the absence of any new funding sources would entail a rise in deficit spending.
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