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Living Longer in Mexico: Income Security and Health CHILDREN AND FAMILIES The RAND Corporation is a nonprofit institution that helps improve policy and EDUCATION AND THE ARTS decisionmaking through research and analysis. ENERGY AND ENVIRONMENT HEALTH AND HEALTH CARE This electronic document was made available from www.rand.org as a public service INFRASTRUCTURE AND of the RAND Corporation. TRANSPORTATION INTERNATIONAL AFFAIRS LAW AND BUSINESS Skip all front matter: Jump to Page 16 NATIONAL SECURITY POPULATION AND AGING PUBLIC SAFETY Support RAND SCIENCE AND TECHNOLOGY Browse Reports & Bookstore TERRORISM AND Make a charitable contribution HOMELAND SECURITY For More Information Visit RAND at www.rand.org Explore the RAND Corporation View document details Limited Electronic Distribution Rights This document and trademark(s) contained herein are protected by law as indicated in a notice appearing later in this work. This electronic representation of RAND intellectual property is provided for non- commercial use only. Unauthorized posting of RAND electronic documents to a non-RAND website is prohibited. RAND electronic documents are protected under copyright law. Permission is required from RAND to reproduce, or reuse in another form, any of our research documents for commercial use. For information on reprint and linking permissions, please see RAND Permissions. This product is part of the RAND Corporation monograph series. RAND mono- graphs present major research findings that address the challenges facing the public and private sectors. All RAND monographs undergo rigorous peer review to ensure high standards for research quality and objectivity. Executive Summary | October 2011 1 OCTOBER 2011 LIVING LONGER IN MEXICO: Income Security and Health Emma Aguila • Claudia Díaz • Mary Manqing Fu • Arie Kapteyn • Ashley Pierson Living Longer in Mexico: Income Security and Health was jointly sponsored by AARP, the RAND Corporation, and Centro Fox to encourage the public and private sectors to find solutions for improving the well-being of older persons in Mexico. Library of Congress Control Number: 2011940647 ISBN: 978-0-8330-5945-1 AARP is a nonprofit, nonpartisan organization with a membership that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. The RAND Corporation is a nonprofit institution that helps improve policy and decision making through research and analysis. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. Centro Fox is a non-profit organization whose vision is to develop quality leaders dedicated to serving their community in Mexico and Latin America and to create a group of forward-thinking individuals whose values and ethical standards appeal to citizens committed to the well-being of all. AARP® and RAND® are registered trademarks. © Copyright 2011 AARP, RAND Corporation, Centro Fox Permission is given to duplicate this document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized web posting is prohibited. AARP The RAND Corporation Centro Fox 601 E Street NW 1776 Main Street, P.O. Box 2138, Carretera Leon-Cueramaro Km13 Washington, DC 20049 Santa Monica, CA 90407-2138 San Francisco del Rincon, Guanajuato CP 36440, México URL: http://www.aarp.org 1200 South Hayes Street, Arlington, VA 22202-5050 URL: http://www.centrofox.org.mx Telephone: Toll-Free Nationwide: 888- OUR-AARP (888-687-2277) 4570 Fifth Avenue, Suite 600, Toll-Free TTY: 877-434-7598 Pittsburgh, PA 15213-2665 Telephone: 01 (476) 757 0303 / 0280 Toll-Free Spanish: 877-MAS-DE50 (877- 627-3350) URL: http://www.rand.org International Calls: +1-202-434-3525 Email: [email protected] To order RAND documents or to [email protected] Email: [email protected] obtain additional information, contact Distribution Services: Telephone: (310) 451-7002 Fax: (310) 451-6915 Email: [email protected] PREFACE Mexico is currently undergoing a significant demographic change owing to a declining birthrate and advancements in living conditions, health care, and technology that have increased life expectancy for older persons in Mexico. The present day offers a unique opportunity to reform and adapt social security, saving, health care, and employment policies before the Mexican Baby Boom Generation begins to retire in 2040. To be able to do so, one needs to start with taking stock of the current situation. This study describes the income security, health status, and health care coverage of older persons in Mexico, and presents policy recommendations that may lead to further exploration of specific options. We examined the relevant literature from various disciplines, including economics, demography, and health, and conducted analyses using available data. The introduction of the monograph describes the scope, methodology, and organization of the study; the second section explores the demographic and epidemiological transition that Mexico is experiencing with a focus on poverty in old age. The third section describes the Mexican pension and health care systems for workers in both the formal and informal sectors of the economy. The fourth section of the monograph explores the various sources of income that older Mexicans rely on, including labor income, business revenue, family transfers, remittances, pensions, and asset and property income in order to characterize financial security at older ages. The fifth section discusses the links between health status, health care coverage, and income among older persons in Mexico. The final section presents recommendations for increasing old-age income security and health in Mexico through further research and policy reform in specific areas. This monograph may be of interest to policy makers, the private sector, and residents of Mexico, the United States, and other countries undergoing a similar demographic transition. The work was jointly sponsored by Centro Fox, AARP, and the RAND Corporation to encourage the public and private sectors to find solutions for improving the well-being of older persons in Mexico. The authors of this report are listed in alphabetical order. Questions or comments about this report are welcome and should be directed to the project leaders: Emma Aguila RAND Corporation 1776 Main Street Santa Monica, CA 90401-3208 310-393-0411 x6682 [email protected] Arie Kapteyn RAND Corporation 1776 Main Street Santa Monica, CA 90401-3208 310-393-0411 x7973 [email protected] CONTENTS PREFACE…………………………………………………………………………………………….I EXECUTIVE SUMMARY ................................................................................................................. II Study Purpose, Scope, and Approaches ...................................................................................................................... i Findings ........................................................................................................................................................................ ii ACKNOWLEDGMENTS ............................................................................................................. VIII ABBREVIATIONS ............................................................................................................................ IX 1 INTRODUCTION ......................................................................................................................... 1 1.1 Scope of this Study .............................................................................................................................................. 1 1.2 Methodology ........................................................................................................................................................ 2 1.3 Organization of this Report ................................................................................................................................ 3 2 DEMOGRAPHIC CHANGES AND POVERTY ....................................................................... 3 2.1 Aging: Demographic and Epidemiological Transition .................................................................................... 3 2.2 Poverty in Old Age ............................................................................................................................................ 10 2.3 Summary of Demographic Changes and Poverty .......................................................................................... 17 3 PENSION AND HEALTH CARE SYSTEMS IN MEXICO .................................................. 17 3.1 System for Workers in the Formal Sector ...................................................................................................... 18 3.2 System for Workers in the Informal Sector ................................................................................................... 23 3.3 Private Savings Instruments ............................................................................................................................ 27 3.4 Health Care Provision ....................................................................................................................................... 28 3.5 Summary of Pension and Health Care Systems in Mexico ........................................................................... 33 4 FINANCIAL SECURITY AT OLDER AGES ......................................................................... 34 4.1 Sources of Income for Older Mexicans ..........................................................................................................
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