Health system reforms that introduce insurance principles into public health systems (such as national health insurance, internal markets, and separation of purchasers and providers) have been popular in the last two decades. Little is known, however, about the political complexities of transforming existing health services into health insurance systems in developing countries. Mexico's Seguro Popular (Popular Health Insurance) program, introduced in 2003, was an attempt to do exactly this: radically alter the country's existing health service and convert it into health insurance. Popular Health Insurance (PHI) has garnered international attention and has been held up as a model for other countries to follow. Yet little has been written about the political process that led to the reform or the difficulties of implementing it. This article fills that lacuna, offering an assessment of the reform context as well as of the process of formulating, adopting, and implementing it. It argues that, while the reform has improved Mexico's public health service, it has thus far failed to transform that health service into a true insurance system. Limited institutional reform has also left PHI severely underfinanced. The Mexican case is a cautionary tale for reformers who want to transform extant health services into health insurance systems.

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