Room for Growth in California’s Cross-Border Insurance

SAN DIEGO — Nearly one million Hispanic and non-Hispanic white Californians cross the Mexican border each year in search of medical, dental and prescription medication services. Of those, an estimated 150,000 are covered by one of several private insurance companies offering cross-border health coverage. These plans generally provide access to urgent and emergency care in California and routine and hospitalization services in Mexican border towns, such as Tijuana, Mexicali, Tecate and Rosarito.

Cross-border plans are attractive in part because health care costs in Mexico are estimated to be as much as 70% to 90% lower than they are in the United States. Further, many Mexican immigrants prefer to receive care from providers who speak their language and are familiar with Mexican culture.

Changes in health and immigration laws could have significant effects on cross-border insurance, but experts are divided about what those might be.

Health Care Reform and the Cross-Border Market

“It’s uncertain,” said Arturo Vargas Bustamante about changes that might come about in the market as a result of health reform. Bustamante is an assistant professor in the Department of Health Services at UCLA’s School of Public Health.

“It will all depend on whether it’s effective at actually offering better care for those who are currently underserved, even though they have insurance, and also whether it is effective at reducing costs,” Bustamante said.  “If health care is less expensive, employers may be willing to offer you very nice terms to get all of your health care in the U.S.”

Alternatively, says Steven Wallace, associate director and professor at UCLA’s School of Public Health, the new health reform law requires people to have health insurance, which could boost the cross-border market.

“My guess is because low-wage workers and their employers are price sensitive, the requirement to have health insurance might increase the market, especially in San Diego,” Wallace said.

Not surprisingly, studies have shown that the heaviest users of Mexican-based services are those with closest proximity to the border — either people living in Tijuana and commuting to San Diego for work or those who live and work very close to the California-Mexico border.

Because health reform will expand health insurance availability, there is likely to be a greater strain on the growing primary care physician shortage that exists both in the state and across the country.

According to Ana Andrade, vice president of Latino Programs for Health Net of California, the shortage is especially true among U.S.-based Hispanic care providers.

“These plans help meet a cultural need with a growing population,” Andrade said.

Binational Insurance in California

Cross-border health plans first came onto the scene in California in 2000, after the Knox-Keene Health Care Service Plan Act of 1975 was amended to legalize and regulate binational HMOs.

The Mexican-based health plan Sistemas Medicos Nacionales was the first HMO licensed by the California Department of Managed Health Care to contract with California employers to cover medical services provided in Mexico. The plan also serves Mexican nationals legally employed in both San Diego and Imperial Counties, and it remains the only Mexican-based HMO covering health services delivered in the United States.

SIMNSA also contracts its network of more than 200 physicians and two clinics along the U.S.-Mexico border to Health Net and Aetna, both of which offer a cross-border insurance product.

Blue Shield of California’s Access Baja plan, which was licensed in 2000 to cover emergency and urgent services in California and routine services in Mexico, uses its own Mexican-based provider network, members of which are located primarily in Tijuana.

According to DMHC, CIGNA has also filed for approval of a cross-border insurance product, which is currently under review. DMHC regulates all existing plans. 

Poised for Growth, but Barriers Exist

Regardless of health reform’s actual impact, experts say there still is potential for a dramatic expansion of the existing cross-border health insurance market.

A 2008 study conducted by Bustamante and published in Health Affairs found that 62% of people surveyed expressed interest in a reasonably priced cross-border insurance policy.  The strongest predictors of a willingness to pay for such a plan were having dependents living in Mexico and whether immigrants working in California were sending money to family members in Mexico to pay for health services, Bustamante said.

Despite the apparently high level of interest, cross-border plans have not seen the level of growth anticipated a decade ago. One obvious barrier is that crossing the U.S.-Mexican border could prove risky for undocumented workers, who remain largely uninsured and would benefit most from these policies. 

“The real potential of a cross-border plan could come with immigration reform,” Bustamante said.

Wallace and his colleagues recently conducted focus groups in Los Angeles on the topic of cross-border health insurance with Mexican immigrants. “They told us, we can’t go to Mexico for medical care because the risk of [not] coming back is too high,” Wallace says.

In addition, although there is interest among insurers to expand coverage for immigrants further into Mexico, coverage is mostly restricted to towns within 50 miles of the U.S. border.

Bustamante said limitations on coverage areas might make these plans appealing only to people in the San Diego Metro Area. “People in Los Angeles or San Francisco, however, may prefer to fly to either Mexico City or Guadalajara, cities with many more health care options.”

Despite all the challenges, Andrade says that Health Net’s cross-border plan, Salud HMO y Mas, has been performing well, particularly during the economic downturn, because it is more affordable than traditional plans.

For small employers, cross-border plans can be as much as 30% to 40% less expensive, Andrade said. For members of Health Net’s Salud HMO y Mas, copayments for a physician visit in Mexico might be as much as 75% smaller than those in the U.S.  And, instead of paying what is often a steep deductable for inpatient hospital services, the plan covers 100% of hospital stays in Mexico.

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