When you think about retiring in Mexico one question is the hardest.

What about Medicare?

For Americans 65 and older, the question is the biggest single obstacle to becoming a retiree in Mexico.

Most retirees can't conceive of NOT having Medicare coverage.

Yet that is exactly what happens if you move to Mexico. Your coverage stops at the border.

With no coverage, retirees are confronted with the need to return to the United States if they have a long-term medical problem or a major emergency. That can be an expensive proposition.

What are the alternatives? It's a short list and each alternative has a major worry factor.

(1)  Take a chance and self-insure. (Sorry, we'll stay in Cleveland.)

(2)  Take a chance and pray that the foreign travel coverage in your Medigap insurance applies. (We might have been that dumb at 25 but not at 65.)

(3)  Join the Mexican health care system, IMSS. It provides the Mexican equivalent of Medicare. (Sorry, moves are one thing; major leaps of faith are another.)

(4)  Buy a private health insurance policy that will insure against major medical expenses. (OK, but the cost is high and what do I do if the company drops me?)

David Warner, a professor at the LBJ School of Public Affairs, University of Texas, has managed two research projects on Americans living in Mexico and the possibility of extending Medicare into Mexico. In a recent telephone interview he observed that many people who would benefit from extending Medicare coverage into Mexico.

Former American military service veterans, he said, are no longer covered by CHAMPUS after they turn 65 because it is assumed that Medicare covers them. In fact, they aren't covered if they live outside of the United States.

Similarly, Professor Warner observed that thousands of Mexican-Americans who worked their entire lives in the United States and contributed to Medicare return to Mexico when they retire. The only way they can get Medicare is to return to the United States.

Ironically, extending Medicare into Mexico could actually work to save money for the Medicare program. Why?   Medical care is much less expensive in Mexico, even when doctors trained in the United States deliver it. While estimates of potential cost savings vary from twenty five percent to fifty percent, the figure is enough to get everyone's attention. In effect, medical costs in the United States provide a huge "umbrella" for alternative arrangements outside the country.

Skeptical?

Then consider this. A long-term resident of Mexico can register for their health insurance program for $225 a year. "A number of people actually buy into the Mexican Social Security system of healthcare." Professor Warner told me. "In the locations where there are a lot of Americans I think they've been beefing up their services as a way of attracting U.S. retirees. A number of people (in our survey) remarked on how happy they were with the system."

Similarly, a number of companies sell private health insurance for long-term travel. (You can find a list of them on the web at http://www.mexconnect.com/mex_/healmed.html )

Sanborn's, an insurance agency better known for its across the border automobile insurance, markets a policy from the International Medical Group in Indianapolis that provides up to $500,000 of coverage for 65 to 69 year olds for $160 a month. In Mexico, that's a lot of coverage. The cost rises to $350 a month for those 70-79 and to $420 a month for those over 80. You can check on age-specific policy costs by visiting the IMG website at http://www.great-sw-brokerage.com/products.htm.   Writer Scott Michael Long suggests getting a health insurance policy from Segoros Monterey Aetna through the Lake Chapala Society in Ajijic.

It is also possible to buy policies from companies based in Canada and Britain.

And more is coming.

Pablo Schneider, President of ACTI/BXBSMX in Dallas, is about to launch Blue Cross/Blue Shield insurance coverage in Mexico. "We're just in the process of starting up. We've got plans to develop coverages specifically with U.S. retirees in mind."   The coverage will be part of a national Blue Cross plan for Mexico--- and part of the developing cultural transparency of the U.S./Mexico border.

Right now, however, many retirees make other arrangements that may serve their needs. The Americas hospital in Guadalajara, which is close to the big American retiree community at Lake Chapala, accepts Blue Cross Blue Shield insurance and the staff was trained in California. Similarly, retiree residents of San Miguel can insure through a plan offered by the Hospital San Jose in nearby Queretaro. The hospital also operates a 24-hour emergency clinic in San Miguel.

Bottom line: Replacing Medicare isn't easy or free. While it can be done, it's still the largest single obstacle to retiring in Mexico.

Next Sunday, March 18: Being an Expatriat