MarketWatch Willingness To Pay For Cross - Border Health Insurance

This paper estimates the demand for a binational health plan comprising pre­ ventive and ambulatory care in the United States and comprehensive care in Mexico. The results show that 62 percent of the surveyed population were interested in the product, and 57 percent were willing to pay $75–$125 a month if services in Mexico were provided in public hospitals. Only 23 percent were willing to pay $150–$250 a month for the same plan if services in Mexico were offered through private providers. The strongest predictors of will­ ingness to pay were having insured dependents in Mexico and sending them remittances for health purposes. [Health Affairs 27, no. 1 (2008): 169–178; 10.1377/hlthaff.27.1.169] M e x i c a n i m m i g r at i o n to the U.S. citizens. Low health insurance coverage United States has been growing may be associated with poor health outcomes rapidly in recent years. During the and slower improvements in socioeconomic 1990s, the number of Mexican immigrants status.2 The undercoverage of Mexican immi­ living in the United States rose approxigrants has further implications for U.S. immi­ mately 6.5 million. As a result, nearly eleven gration reform, since Mexicans constitute almillion Mexican-born people resided in the most 68 percent of the total number of United States in 2005.1 According to the Curundocumented U.S. workers. Their eventual rent Population Survey (CPS) of the U.S. legalization will have important conseCensus Bureau, only 61.7 percent of longerquences for health policy. stay Mexican immigrants (more than ten � Health care among Mexicans. Previ­ years in the United States) and 43.1 percent of ous ethnographic work shows that because of recent Mexican immigrants (less than ten geographic proximity, Mexicans living in the years) had health insurance in 2005. People United States usually go back home to receive born in Mexico (both those with longevity some health care.3 The reasons vary, although and those without) have the lowest coverage the most common are related to costs and cul­ among the foreign-born populations in the tural competency. Mexican immigrants in the United States, and their lack of insurance is United States also sent $20 billion to their rel­ about three times higher than for native-born atives back home in 2005.4 It is estimated that Arturo Vargas Bustamante ([email protected]) is a graduate student at the Goldman School of Public Policy, University of California (UC), Berkeley. Gilbert Ojeda is director of the Program on Access to Care in the School of Public Health, UC-Berkeley. Xóchitl Castañeda is director of the Health Initiative of the Americas there. H e a l t h T r a c k i n g 46 percent of those receiving remittances use some share of these funds for health care, which represents the single largest category of the intended use of remittances.5 Most of this spending is out of pocket—the most ineffi­ cient way to pay for health care. This pattern may partly reflect the lack of affordable health insurance alternatives for the Mexican-born population in the United States and for their dependents living in Mexico. � Options for binational insurance. Since the 1990s, several organizations from both countries have been exploring the op­ tions for binational health insurance. Because health care costs in Mexico are 70–90 percent lower than in the United States, cross-border coverage aims to provide more-affordable in­ surance products to the uninsured Mexicanborn population living in the United States by using, at least in part, coverage in Mexico.6 California is the only state where health insur­ ance can operate in conjunction with Mexico. This was accomplished through the amend­ ment of the Knox-Keene Act in 1998. Employ­ ers in California can now purchase insurance coverage for their employees who either live in Mexico or prefer to use health services in that country. In current plans, all services in Mex­ ico are provided by private hospitals in the border cities of Baja California, Mexico. In ad­ dition to Mexican regulations, these providers need to comply with strict regulatory stan­ dards established by California authorities. Three U.S. private insurance companies and one insurance group from Mexico are licensed to offer this coverage.7 Mexican immigrants can also purchase health insurance for their dependents living in Mexico through two public plans in Mexico: the Mexican Social Se­ curity Institute (IMSS), which offers a plan in the Mexican consulates in the United States, and Seguro Popular (Popular Insurance), a prepaid and subsidized plan that is intended to provide universal coverage in Mexico. � Enrollment in cross-border plans. Al­ though cross-border insurance is an option, enrollment in these plans remains low (ap­ proximately 50,000).8 Legal, cost, and geo­ graphic limitations are among its main obsta­ cles. Private plans can be purchased only through employers in the San Diego or Los An­ geles areas, while services in Mexico are avail­ able only in border cities. Such plans exclude self-employed people, who might be interested in buying less costly coverage in Mexico. Those working in California but whose de­ pendents live farther south of the U.S.-Mexico border cannot be covered by the private plans, whereas the IMSS and Seguro Popular offer services in Mexico only. This fails to solve the problem of the uninsured Mexican-born pop­ ulation residing in the United States. � Potential for future enrollment. Con­ sidering these limitations, an expert panel of U.S. and Mexican health insurance representa­ tives estimated the cost of a hypothetical new plan. Taking into consideration the contingent valuation literature, the willingness to pay for this new plan was determined during an event called Copa Federaciones.9 This soccer tourna­ ment took place in Los Angeles during the summer of 2005, providing access to a wide and diverse sample of the Mexican-born popu­ lation residing in California. This paper analyzes the results of this valu­ ation exercise and discusses its future policy implications under the proposed regulariza­ tion of undocumented immigrants in the United States. Our objective is twofold: (1) to estimate the proportion of the Mexican-born population living in the United States that is willing to pay for cross-border health insur­ ance, and (2) to assess the main determinants of willingness to pay, for policy purposes. Background: Previous Research Research in the field has found that willing­ ness-to-pay estimates can be an effective mechanism to reveal real preferences for health treatments and coverage. A comprehensive study reviewed seventy-one willingness-to­ pay surveys on health care to explore the em­ pirical evidence.10 Researchers concluded that willingness to pay enables a more comprehen­ sive valuation of benefits than do traditional survey methods that ask for preferences di­ rectly. The literature in this field has widely dis­ 1 7 0 J a n u a r y / F e b r u a r y 2 0 0 8 M a r k e t W a t c h cussed the different possibilities and caveats of willingness-to-pay estimation. Surveys trying to determine willingness to pay can lack valid­ ity and reliability because of the framing of questions and people’s tendency to overstate the real value of hypothetical goods. In the past, some valuations asked about preferences directly. Yet open-ended questions have lost popularity, because they generally produced biased and erratic results.11 Research in contin­ gent valuation suggests that questions on will­ ingness to pay should be asked in a referendum format to minimize the tendency to exagger­ ate. Closed-ended (yes/no) responses are pref­ erable because they reflect real-world behav­ ior. In health care studies, the closed-ended method has been shown to work better than a referendum, since more respondents answer willingness-to-pay questions with fewer zero responses (“protest” answers) in a “yes/no” format.12 Study Data And Methods � Survey venue. The Copa Federaciones soccer tournament took place in Los Angeles 21 May–13 August 2005. Each Saturday, soccer teams with players originating in twelve Mex­ ican states played each other, and the people from each state organized a folk event after the game. Thus, the gathering attracted not only soccer fans, who might have been overwhelm­ ingly male, but also other family members. This competition also offered a unique (and low-cost) opportunity to access a broad sam­ ple of Mexican-born people. � Price calculations. Professional valua­ tors from a for-profit health insurance com­ pany in California provided three different scenarios for the U.S. preventive and ambula­ tory care insurance component, including ba­ sic stabilization services before the patient was transferred to Mexico. The cost of com­ prehensive health coverage in Mexico and an estimate of pooled transportation costs were added to the cost of cross-border plans in the three scenarios. If this plan were offered in the marketplace, it would be priced in a range of $150–$250 a month, covering the subscriber and two to five dependents in Mexico.13 A relevant assumption of this valuation ex­ ercise was that all subscribers were responsi­ ble for paying only half of the cost of this crossborder health plan, because many employerbased insurance plans split costs between em­ ployers and employees. Different government sources, labor unions, or employers could be responsible for paying the second half. Thus, respondents were initially questioned on their own willingness to pay $75–$125 a month for a health plan. � Strength of preferences. To measure the strength of the preferences for this plan, the survey asked a separate question making explicit that health care was provided by pub­ lic hospitals and clinics in Mexico. Another question inquired about respondents’ willing­ ness to pay for private services in Mexico. Yet the price range for this possibility was doubled to determine the willingness to pay for ser­ vices that are generally more costly and paid for out of pocket ($150–$250 a month). � Responses to the survey. Soccer games have some limitations that hinder the applica­ tion of surveys of any type. Attendees are gen­ erally excited about the game, and it is often difficult to divert their attention to the ques­ tionnaire. To avoid this issue, the interviewers applied most of the surveys before or some hours after the game, when family members were relaxed and eating at the park. They were trained to randomly select possible respon­ dents, screening them based on two criteria: being old enough to pay for health insurance and having some relationship with Mexico.14 The questionnaire was written, administered, and answered in Spanish. In general, the sur­ vey was well accepted, and most of those se­ lected were willing to respond to it. Almost 90 percent of completed questionnaires had us­ able data, providing a sample of 702 responses. � Empirical analysis. In a valuation framework with a closed-ended format, the use of a binary (yes/no) dependent variable can be interpreted as the willingness-to-pay prob­ ability in a multiple regression framework.15 A similar empirical strategy was applied here, but with the willingness-to-pay variables and their determinants fitted into logit regression H E A LT H A F F A I R S ~ V o l u m e 2 7 , N u m b e r 1 1 7 1 H e a l t h T r a c k i n g models. The dependent variables in these spec­ ifications were the following three values: willingness to pay for the product, willingness to pay public providers in Mexico, and will­ ingness to pay private providers in Mexico. It is important to mention that a quadratic term for time spent living in the United States was included in some models, since one’s will­ ingness to pay for cross-border coverage might decline over time. Relevant interaction terms were also included in some specifications. Al­ though attrition was low in the survey, aver­ ages were imputed in some missing cases to avoid power issues. To address the possible bias from sample selection, the probability of being selected into the survey was estimated using propensity scores.16