Health financing inequality in fragmented health systems: evidence from Mexico, 2000–2023

Universal health coverage (UHC) depends, among other things, on fair and efficient public financing. In many low- and middle-income countries (LMICs), fragmented health systems entrench inequalities by linking entitlements to employment status. In Mexico, persistent segmentation and institutional fragmentation have shaped the structure and distribution of public health financing, exemplifying this challenge through a dual public system that separates the population with social security from those without. While several policy reforms have sought to improve coverage and financial protection, little is known about the extent to which these efforts have influenced the equity of public resource allocation. To quantify long-term trends and territorial inequalities in the allocation of public health expenditure between populations with and without social security across Mexico’s 32 states from 2000 to 2023. We conducted a retrospective, state-level analysis of public health expenditure (PHE) from 2000 to 2023, expressed in constant Mexican pesos (MXN), using official administrative data. We disaggregated spending by population groups with and without social security coverage and estimated complementary measures of inequality and inequity, including allocation intensity, the Relative Equity Index (REI), the Slope Index of Inequality (SII), the Relative Kuznets Index (RKI), and concentration indices (CI). We then fitted generalised least squares (GLS) panel models to assess temporal and subnational trends in equity. Despite increases in total public health spending, PHE remained below the WHO-recommended threshold and was distributed inequitably between population groups. The population without social security—representing more than half of the national total population—consistently received lower per capita allocations. In 2000, public spending per capita for this group was MXN 2,670, compared to MXN 8,400 for the population with social security—over three times higher. Although the gap narrowed importantly over time, disparities persisted: by 2023, the ratio remained at 1.14 (MXN 4,960 vs. 4,350). REI values rarely exceeded 0.9 and declined after 2008, indicating sustained underfunding of the non–social security population. CI confirmed increasingly regressive patterns in resource distribution, particularly after 2014. Subnational inequities also deepened, with poorer states experiencing more pronounced deteriorations in equity indicators. Temporary gains observed during reform periods (e.g. 2004–2008, 2018–2021) proved fragile and were subsequently reversed. Mexico’s public health financing system remains structurally biased against populations without formal coverage and fails to allocate resources in accordance with demographic weight or health need. Achieving equitable progress towards UHC will require a fundamental transformation of financing architecture, including integrated funding pools, binding redistributive mechanisms, stronger federal stewardship, and disaggregated, equity-sensitive monitoring systems. • In many LMICs, fragmented health systems link access to employment status, institutionalising structural inequalities. • Mexico exemplifies this model through a dual system that separates populations with and without social security into distinct financing and service tracks. • Previous research has focused on service access and health outcomes, but there is limited longitudinal, subnational evidence on how public health expenditure is distributed across these groups. • This is the first study to examine 23 years of public health expenditure allocation across Mexico’s 32 states, disaggregated by social security status and assessed using four complementary inequality metrics. • The findings reveal that modest gains in spending equity during certain reform periods were short-lived, and that financing disparities have re-emerged or worsened in recent years—underscoring the fragility of equity advances in the absence of structural change. • Expanding coverage without restructuring public financing is insufficient to address entrenched inequities. • Achieving equitable UHC in Mexico and similar LMICs requires integrating financing pools and decoupling entitlements from employment. • Robust equity-sensitive monitoring and redistributive transfer mechanisms are essential to ensure sustainable progress.