Box 2.3Inclusive National Health Accounts: The Case of Mexico
National health accounts (NHAs) show that Mexico spent 5.7 percent of its gross domestic product (GDP) on health in 2015. This share is low compared with an average of 9.3 percent among Organisation for Economic Co-operation and Development countries and an average of 8.2 percent for the Latin American region. However, the real figure is probably much larger because a significant part of health-related economic activities, in particular those related to long-term illness and injuries, goes unreported or unaccounted for by official NHA figures.
The National Institute of Statistics and Geography (INEGI) acknowledged this concern by producing satellite accounts to estimate the value at market prices of informal health activities generated by economic agents. These satellite accounts are sizable: the value of unpaid work related to health care performed by households alone can add an extra 18.6 percent to the traditional GDP estimates for the health sector. An even more inclusive figure of the costs of ill health would add income transfers of voluntary and legally mandated sick leave and disability insurance. Figures from the main social security institutions would add another 9.2 percent, bringing total health spending estimates closer to 7.3 percent of GDP.
Conservative estimates from the satellite accounts of the combined value of (a) unpaid household members’ activities aimed at preventing ill health and caring for and maintaining health both within and outside the household and (b) the volunteer work for nonprofit organizations averages 1 percent of GDP over the past 10 years (INEGI 2017). According to INEGI, the value of 69 percent of total hours and 82 percent of unpaid work comes from household members undertaking mostly specialty care of chronic ailments. Moreover, 70 percent of unremunerated caregivers are women (INEGI 2017).
A more inclusive approach toward NHA also helps estimate the economic consequences of ill health that are increasingly being borne outside of institutional settings. In 2015, approximately half of the burden of disease in Mexico was related to years lived with disability, out of which mental and substance abuse and musculoskeletal disorders accounted for 40 percent (Kassebaum and others 2016), and an estimated 16 percent of the adult population had diabetes (OECD 2016). This burden has not only increased pressure in an already overwhelmed and underfunded public health care system but also created significant pressure on social security institutions. Not surprisingly, about half of total health spending is from private sources, most of it paid out of pocket. Moreover, figures on the value of cash benefits for temporary disability (resulting from illness or accident, whether work or nonwork related, and maternity leave) paid through the main social security schemes—the Mexican Social Security Institute and the Institute of Social Security and Services for State Workers—amount to at least 9.2 percent of total health spending. Adding pensions for permanent disability would include this value. None of these figures are currently being accounted for as health-related spending neither in the NHA nor in the satellite accounts.
Naturally, families also face increased pressure as they seek ways to care for these patients, whether by reorganizing household members’ roles and timetables, investing to adapt their homes to better suit their needs, hiring nonfamily caregivers, or sometimes even quitting their own jobs or reducing work hours. Because long-term care for the elderly or the chronically ill is not reimbursed by social or public health insurance schemes, families must step in and find ways to provide care, sometimes for long periods of time. The institutional response from the health system has been slow regarding long-term care. Elderly or chronically ill patients receive hospital care for acute events, but the supply of publicly funded long-term care or nursing homes to care for them over longer periods is very limited, and services provided by existing private nursing homes need to be paid for out of pocket.
Although social security institutions and other social assistance programs run day centers, which can include meals, families are by far the main provider of long-term care for the elderly (OECD 2007). Mexico’s omission in reporting expenditure on long-term care only reflects this institutional void. Part of the value of the informal long-term care provided by families is included in the satellite health accounts, but a significant amount of nursing home services paid for out of pocket by families possibly still goes unregistered.
As health needs become more complex and require care that goes beyond the traditional clinical and acute care settings, a broader perspective is needed to tease apart the economic and organizational implications. Mexico’s satellite accounts illustrate one step in this direction, highlighting the need to broaden the range of types of care and providers considered when estimating the production value of the health sector’s share of GDP is necessary. Informal care undertaken by families and by nursing homes and other types of long-term care facilities needs to be accounted for, even if this means considering a mix of medical and other services (such as psychological and nutrition services). Yet the indirect costs of illness are also important, as confirmed by the large value of income transfers for temporary disability. These should also be considered for a more inclusive NHA. More comprehensive estimates of the production value of the health sector would increase awareness and inform policy formulation to better prepare for the long-term care transition.