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There is a lack of hard data on the exact number of Medicare-eligible retirees residing in Mexico, but it is at least in the tens of thousands and is certainly rising as the baby boom generation reaches retirement. Because Medicare does not cover health services received outside the United States, these retirees must travel to the United States for health care or purchase alternative coverage for health services received in Mexico. There are several arguments for extending Medicare to Mexico — that is, allowing Medicare-eligible beneficiaries to receive their Medicare benefits in Mexico. Medicare-eligible retirees living in Mexico would certainly benefit, and Mexico might benefit from improved quality of care and an expanded health economy. Moreover, American taxpayers might benefit from a reduced total cost of Medicare: To the extent that extending Medicare to Mexico induces Medicare beneficiaries to substitute higher-cost U.S. health care services with lower-cost Mexican services, overall Medicare expenditures might be reduced. The authors outline four options for how this policy change might be implemented and describe a conceptual model that could be used to assess the effects of each option.

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