Chapter 3. Impact of administrative simplification processes in the Mexican Institute of Social Security
This chapter presents the impact of reducing administrative burdens generated by the Institute’s procedures. The decrease in burdens is a result of simplification and digitisation processes, which started in 2012. A decline in information requirements, accompanied by improved formats and submission of information through a computer or smartphone led to less person-hours devoted to carry out formalities. The impact is measured as an aggregate for the IMSS and is shown by administrative co-ordination for 84 procedures analysed in this report.
For more than a decade, the IMSS has undertaken actions to simplify its procedures, benefiting users, such as citizens and companies. The benefits of this simplification have led to reduce the number of requirements demanded to the rights-holders or companies when carrying out a procedure; simplify formats, and use ordinary citizen language, among others. Furthermore, since 2013, the IMSS enabled users to conduct procedures remotely through the Institute’s website or through the mobile application, freely available to any person in possession of a smartphone. Therefore, the Institute created the IMSS Digital Strategy, in order to facilitate the provision of social security services to rights-holders, employers, retirees, pensioners and citizens in general, offering digital solutions through modern attention channels.
This chapter introduces the results of the impact measurement of IMSS procedures simplification and digitisation efforts, obtained by measuring the savings in burdens due to procedure improvement. The source of this burden reduction is the decrease in person-hours that citizens, corporate employees, and even company owners must invest, since requirements mitigation, formats improvement, or the possibility of sending information from home or from the office through a computer or smartphone require less time. The SCM methodology assumes that the person-hours released, monetised by the value of the person or employee’s opportunity cost, are re-inserted into the economy in more productive activities compared with mere procedure handling. Indeed, reducing administrative burdens releases resources to the economy, which will have a greater impact on productivity and growth.
Aggregate impact of IMSS simplification and digitalisation
Figure 3.1 shows the results of IMSS procedures’ simplification and digitisation impact measurement. Depending on the foreseen scenario, the IMSS total administrative burden decrease is estimated to amount to 25%-40%.
This report shows a savings range as it was impossible to accurately define the initial conditions of IMSS procedures, due to the lack of the formats used before the simplification reported by the Institute.
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Scenario 1: Non-digitalised procedures. This scenario estimates how much would the burden amount to if the 31 digitised procedures were only carried out in person. In addition, it is assumed that the remaining in person procedures had no improvement whatsoever in terms of requirements reduction. Under this scenario, it is estimated that the burden would amount to MXN 18 732 million.1 Thus, the IMSS procedures’ improvement impact —that is, total administrative burden decrease with regard to current situation— is 25%.
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Scenario 2: Non-digitalised procedures + 10% simplification. This scenario estimates the burdens based on two assumptions:
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The 31 digitised procedures are only conducted in person.
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In person procedures were improved through administrative simplification – requirements elimination; formats improvement; use of ordinary citizen language – that results in a 10% reduction of administrative burdens.
Under this scenario, total administrative burdens would amount to MXN 20 814 millions.2 Therefore, under scenario 2, the IMSS procedures improvement impact would mean a 32% decrease of total administrative burdens.
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Scenario 3: Non-digitalised procedures + 20% simplification. This scenario considers the same assumptions of scenario 2, but with a 20% savings in the in person procedure burdens due to simplification. Under these assumptions, the IMSS procedures’ improvement impact would account for a 40% total administrative burdens reduction, meaning MXN 23 415 million.
According to these scenarios, the range of savings generated for IMSS users —citizens and entrepreneurs— amounts to 25%-40%. It was necessary to estimate a range because, although the procedures digitisation proved to result in the decrease of significant administrative burdens for their users, it was reasonable to foresee that the decrease was higher than that arising from the use of information technologies, since the collected evidence suggests that the IMSS undertook simplification actions. Therefore, 25% should be considered as a “lower bound” and it is likely that actual savings are above this lower limit.3
Considering the above, a reduction of at least 25% in the IMSS administrative burdens through the procedures’ improvements favourably compares with the international experiences reported by OECD countries, which set out as a target decreasing procedures burdens in 20%- 25%, see Box 5.1.
Impact of improvements in IMSS procedures by administrative unit
Comparison of savings between administrative units
Figure 3.2 shows the results by IMSS administrative unit of the administrative burdens estimations under the scenarios described above. The only savings percentage reported in burdens refers to scenario 1. The following section shows the percentage savings of each scenario. It is worth noting that the three co-ordinations with more percentage savings are those that have digitised the biggest share of their procedures: the Co-ordination of Affiliation (CA) (at least 78% savings), the Co-ordination of Companies Classification and Validity of Rights (CCEVD) (at least 35% savings), and the Co-ordination of Day-care Services for Comprehensive Children Development (CSGDII) (at least 14% savings).
Note: The Co-ordination of Collection (CC) has two additional procedures in the current burden measurement (SIPARE and Opinion 32D) that did not exist in the past, so the current administrative burden is higher than the burden existing before any improvement.
The CA stands out as the unit that has provided more benefits to its users in relative terms, through the procedures improvements process with at least 78% savings in administrative burdens. The CA improved three procedures (IMSS-02-001-A, IMSS-02-001-C and IMSS-02-008) between January and October 2016, and they are mostly carried through digital means.
The CC manages procedures conducted by entrepreneurs or commercial businesses employers, which facilitates the introduction, promotion and penetration of digital means. In fact, in March 2015, this co-ordination introduced the Opinion on the fulfilment of fiscal obligations in the Social Security area (32D), the first digital IMSS procedure since its creation. It is worth mentioning that no estimations were made for Opinion 32D or for the Benchmarked Payment System (SIPARE) regarding their cost before digitisation. In relation to Opinion 32D there was no need to perform this exercise since it was initiated in the digital version. However, it stands out that with the digitisation of IMSS-02-096 procedure Request for information on debit status, the CC generated at least 83% savings for its users (see Table 3.4 below).
On the other hand, five of the analysed co-ordinations (CBS, CCVVUCT, CES, CPE and CST) have not digitised any of their procedures,4 so the administrative burden pertains to the burden in scenario 1.
The following section introduces current and estimated administrative burdens for each co-ordination under each scenario.
Co-ordinations with savings due to procedures digitising
Savings in co-ordinations that have not digitised any of their procedures5
For the CBS, CCVVUCT, CES, CPE and CST co-ordinations, savings in administrative burdens are estimated in a 0%-20% range.6 All these co-ordinations reported improvements in their procedures, reducing administrative burdens for their users; therefore, the savings percentage is positive. However, as in the remaining co-ordinations, there was not enough evidence available to quantify these improvements accurately.
Summary of the key messages in this chapter
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Since 2012, the IMSS has undertaken actions to simplify its procedures, benefiting users, including citizens and companies.
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In 2013 the Institute implemented the IMSS Digital Strategy responding to the need to simplify and facilitate procedures and services to rights-holders, pensioners, retirees, employers and citizens in general. This made it possible to carry out procedures remotely, through the IMSS website and/or the mobile application, freely available to any person in possession of a smartphone, offering digital solutions through modern attention channels.
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The benefits of the simplification have led to reduce the number of requirements demanded to the rights-holders or companies when carrying out procedures, simplify formats, and use ordinary citizen language, among others.
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The IMSS procedure simplification and digitisation impact is estimated as a 25%-40% decrease of total administrative burdens, according to the analysed scenario.
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The reduction of burdens due to the simplification and digitisation of a procedure is reflected on the decrease of person-hours that the citizen, the companies or the companies owners themselves must invest since requirements mitigation, formats improvement or the possibility to send the information required for the procedure from home or the office using a computer or a mobile phone, demand less hours.
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The SCM methodology assumes that the person-hours released, monetised by the value of the person or employee’s opportunity cost, are re-inserted into the economy in more productive activities.
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This document reports a range of savings on the simplification and digitisation efforts achieved by the IMSS before the procedures digitisation process. It was necessary to estimate a range because, although the procedures digitisation proved to result in the decrease of significant administrative burdens for their users, it is reasonable to foresee that the decrease was higher than that arising from the use of information technologies, since the collected evidence suggests that the IMSS undertook simplification actions. Therefore, 25% should be considered as a “floor” and it is likely that actual savings are above this lower limit.
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The reduction of at least 25% in the IMSS administrative burdens through the procedures’ improvements favourably compares with the international experiences reported by OECD countries, which set out as a target decreasing procedures burdens in 20%- 25%.
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The three IMSS co-ordinations with more percentage savings are those that have digitised the biggest share of their procedures, that is, the Co-ordination of Affiliation (CA) (at least 78% savings), the Co-ordination of Companies Classification and Validity of Rights (CCEVD) (at least 35% savings), and the Co-ordination of Day-care Services for Comprehensive Children Development (CSGDII) (at least 14% savings).
Reference
SCM Network (n.d.), “International Standard Cost Model Manual, Measuring and reducing the administrative burdens for businesses”, Standard Cost Model Network, http://www.oecd.org/gov/regulatory-policy/34227698.pdf.
Notes
← 1. In general terms, the methodology used to obtain this figure included the following steps: i) regarding the 31 digitised procedures, the corresponding unitary burden measurement for each in person procedure was multiplied by the population that carried out the procedure online, and ii) this result was added to the administrative burden of the remaining procedures. Only 82 procedures were included in this scenario since, compared to the current situation, two procedures are newly created.
← 2. In general terms, the methodology to obtain this figure included the following steps: i) unitary administrative burdens of in person procedures were increased by a factor equivalent to (1/(1-0.1)); ii) this modified unitary burden of each in person procedure was multiplied by the relevant population; iii) this result was added to the total administrative burden that would result from multiplying, for the 31 digital procedures, the modified unitary burden of the corresponding in person procedures by the population that carries out the digital procedures. Only 82 procedures were included in this scenario since, compared to the current situation, two procedures are new.
← 3. An accurate estimation of the simplification impact required detailed information about the improvement procedures actions undertaken by the IMSS since 2012. The information gathered was not enough to reach a robust calculation.
← 4. In some instances full digitisation of procedures will require to solve the need for the rights-holder’s presence at the IMSS offices, such as in the disability pension procedure.
← 5. As mentioned before, full digitisation of procedures will require to solve the need for the rights-holder’s presence at the IMSS offices, such as in the disability pension procedure.
← 6. Administrative burdens by co-ordination of the CBS, CCVCTVT, CES, CPE and CST co-ordinations under savings scenarios result from multiplying the burdens of these co-ordinations included in Chapter 2 by a 1 factor for Scenario 1, since in this scenario there are no savings due to digitised procedures; by a factor of (1/(1-0.1)) for a 10% savings in burdens due to the administrative simplification for Scenario 2; and by a (1/(1-0.2)) factor for a 20% savings in burden due to administrative simplification. Due to the mechanical nature of results, these are reported in Annex 3.A.1.