The Mexican social security system, after operating for over six decades, has managed to provide healthcare for slightly over half the resident population.

There are wide geographical and socioeconomic variations in coverage. To provide wider coverage, the Federal Government created the Sistema de Protección Social en Salud (SPSS) for covering low income family. It becomes the third instrument for the government to cover healthcare in addition to the two important ones: the Instituto Mexicano del Seguro Social (IMSS) and the Instituto de Seguridad y Servicios Sociales para los Trabajadores del Estado (ISSSTE). In the context of SPSS, the Federal Government started the initiative called the Seguro Popular de Salud (SPS). SPS offers medical attention, clinical studies and medicine without cost at the point of service. There are three principal sources of funding the SPS: Federal Government, State Governments and a premium charged on the beneficiaries on a sliding scale, proportional to income – the higher income families pay higher premiums with lowest income paying nothing according to a schedule published in the Diario Oficial de la Federación at the start of every year. The idea of the SPS is to cover the population not covered by the other healthcare institutions with the emphasis on catastrophic illnesses. The goal is a gradual rise in coverage until the universal coverage is achieved in the entire territory of Mexico over a period of a decade.

In this paper, we discuss how the development of the SPS took place, starting with the National Development Plan 2001-2006. We trace the history of the SPS. We address the following principal questions in this paper: (1) Does the incorporation of the uncovered, largely poor population, change the average cost structure of SPS? (2) Does it depend on the types of diseases and medical conditions covered? (3) Will gradual rollout affect the viability of the
system adversely?

It turns out that some of the important diseases and medical conditions are strongly related to income levels while others are not. Using the database of Núcleo de Acopio y Análisis de Información en Salud (NAAIS 2005), we exploit the information about the differences in diseases rates of covered and uncovered population in each federal entity. Our finding is that the relationship is not in the direction that we expect: Covered population has higher incidence of most of the diseases for which we have data.