Welfare effects of health insurance in Mexico: The case of Seguro Popular de Salud

Abstract

This study contributes with original empirical evidence on the distributional and welfare effects of one of the most important health policies implemented by the Mexican government in the last decade, the Seguro Popular de Salud (SPS). We analyze the effect of SPS on households' welfare using a decomposable index that considers insured and uninsured households' response to out-of-pocket (OOP) payments using both social welfare weights and inequality aversion. The disaggregation of the welfare index allows us to explore the heterogeneity of the SPS impact on households' welfare. We applied propensity score matching to reduce the self-selection bias of being SPS insured. Overall results suggest non-conclusive results of the impact of SPS on households' welfare. When we disaggregated the welfare index by different sub-population groups, our results suggest that households' beneficiaries of SPS with older adults or living in larger cities are better protected against OOP health care payments than their uninsured counterparts. However, no effect was found among SPS-insured households living in rural and smaller cities, which is a result that could be attributed to limited access to health resources in these regions. Scaling up health insurance coverage is a necessary but not sufficient condition to ensure the protection of SPS coverage against financial risks among the poor.