#60 – The Expat Files: Maternity Care, Legal Risks, and Raising Kids in Latin America

Automatically transcribed from the original recording; names and wording may contain errors.

[00:01] South of the border, down Mexico way. That's where I fell in love when the stars above came out to play. Hi everybody, I'm Johnny Mueller. And you're listening to the Exped Files. Living in Latin America. The one of a kind show that tells you what it's like to live, work, play and or retire in Latin America. So let's get started. Now lately I've been trying to give you an idea of the cost of living down here. And I've given you a lot of examples in the last few shows. Including most recently, the cost of certain medicines, medical clinics and some medical procedures. Now that discussion triggered some emails. And a group of emails came in asking me what it cost to have a baby down here.

[00:47] That is in a private first world style hospital. And by the way, private hospitals are the only ones I recommend for expats. And never public hospitals. And I'm getting emails about maternity costs. Even though you must know by now my opinion about having or raising children down here. Especially in the much more dangerous Central American countries. Which includes all the Spanish speaking countries north of Columbia. However expats, if you really have your heart set on having children and a family. And even if you don't, if you end up coming down and marrying a Latin or a Latina down here. There's almost no way you can talk them out of it. Since Latin American countries are about 85-90% Catholic. And the rest unfortunately, Evangelical Christians. So you got about 98% of the population who firmly believe that you have to populate the world with more Christians.

[01:37] So expat men and women, even if you're dead set against having babies. If you end up with a Latin husband or wife. You'll not only have your better half pressuring you to have kids. But you'll have every member of his or her family wearing you down on that subject every chance they get. And believe me, those Catholics down here really know how to throw that guilt around. And I ought to know since I went to Catholic school all the way up through high school. Which means technically, I have a master's degree in guilt. Whether I like it or not. So if you're marrying a Latin or a Latina, even if they have kids from a previous marriage. They'll be wanting some expat offspring in the family. So be forewarned. And if you think like in the first world, there's a pretty active subset of atheists and or agnostics running around down here. You'd be wrong.

[02:22] Because in such a thoroughly Christian society. Albeit a very hypocritical one. As judged by the very high alcoholism, infidelity and crime rates. Anyway, if a Latin person was to come out and admit he was an agnostic or God forbid an atheist. Pun intended. He might as well have the black plague. And people would surely keep their distance. Because any second, of course, he's going to be struck by lightning. And what God-fearing Christian wouldn't want to see an atheist fry. Because remember, this is a place where practically every street, corner, town, city, highway and pool hall. Is named after a saint or some other biblical figure. Anyway, extreme Catholicism and Christianity in general. Is one of the reasons why the population bomb has been blowing off for some time down here. And that might be one of the reasons why having a baby is so cheap.

[03:09] Even in a private first world style hospital. Now listen to this. I'm holding a newspaper from Panama in my hands right now. And there's a private hospital slash clinic advertising complete maternity packages for only $500. In other words, if you plan on having a kid. If you buy this maternity package in advance for $500. It includes all the doctor's expenses and visits. Complete hospitalization coverage and all necessary medicines. Now compare that with having a baby up in the first world. Where the average cost for a traditional pregnancy in a hospital is $7000. And a cesarean section comes in at about $11000. It's hard to believe that down here. In a first world style private hospital, they can do it for less than 10% of that.

[03:56] Now I know this might be awful hard to believe, but I'm holding the advertisement right in front of me. And it turns out that the two main reasons, they can keep the prices so very low. Are of course those rock bottom salaries for hospital personnel. Where a very qualified registered nurse makes about $500 a month. About 1 8th to 1 10th what a registered nurse makes in the states. And a nurse's aide makes about $300 a month. Which is about 1 6th to 1 8th of what a nurse's aide makes in the states. And it's the same with all the hospital staffing positions from management and administration to maintenance. And the average MD down here makes between $1500 and $3000 a month. Which puts him or her solidly in the upper middle class. At least by Latin American standards. But by first world standards, on that kind of salary you'd barely be able to afford a mortgage on a double wide trailer.

[04:46] Now the second reason why hospital rates and doctor's salaries are so low down here. Is because malpractice insurance and malpractice suits in general are so rare that it's basically not a concern. Oh sure, malpractice insurance is available. But it's the rare doctor that carries it. Because the truth is, so few doctors are sued for malpractice down here, that it's pretty much a non-issue. And in fact there are no lawyers or groups of lawyers that specialize in malpractice or even advertise that they do. There's none of those crude ambulance chasing tactics like you see up in the first world, at least not yet. The fact is, if you pick up any newspaper down here and read the public opinion page, that is the letters to the editor. You'd think just the opposite, that doctors are being sued left and right down here.

[05:32] It seems like every few days there will be someone complaining about some botched medical treatment or some horrible result that came after some kind of operation. But almost no one ever sues the doctor. And there's a very good reason for that. And that's because 99% of these complaints that you read about in the paper, all of those botched surgeries and treatments are taking place in the public hospitals, not the private ones. You know, the Latin version of the national health care system, those free hospitals that every citizen by law has a right to if he or she needs medical care. And like I said in the past show, all the doctors in the country, even the very best ones that have done their surgical specialties up in the first world, are required to rotate through these broken down public hospitals. So theoretically, you should be able to get very good health care.

[06:19] But because the public hospitals are so underfunded and basically devoid of even the basics, like rubber gloves, disposable syringes, toilet paper and sometimes even running water, it's possible to get the job done and the patient cured, even under medieval conditions like that. But it's always a roll of the dice. And that's why practically every day you see complaints in the local newspapers in the letters to the editor. But it's rare that you see complaints about the doctors themselves. It's always about the shortcomings in the public hospital and the lack of facilities. And down here in Latin America, it's virtually impossible to sue the government. And when you check into one of those free public hospitals, you have to know that you've pretty much lost all your rights and that anything goes. And the government, of course, runs the public hospital system.

[07:05] And it turns out that between 70 and 80 percent of Latin Americans do use those free public hospitals because they don't have medical insurance and they don't have discretionary income. And because the average guy who uses the public hospital is only making a few hundred dollars a month, if something goes wrong, it's a sure bet he'll never be able to afford a lawyer. And that's one big reason why malpractice claims are way under the radar. And one lawyer I talked to down here says, there's no legal specialists in that field, not yet anyway. And he knows of no other lawyers that have actually made any serious money off of those kind of claims. Man, that's a far cry from the way it works in the first world, isn't it? I mean, everybody knows what an ambulance chaser is. It's been in our vernacular for years. But there is no equivalent word like that in Spanish, but I suppose someday there will be.

[07:53] In fact, some years ago, I was at a funeral up in Chicago where a friend of mine died in a car accident. And there was a malpractice attorney in the lobby handing out business cards. Now, down here, that would never happen. Well, I shouldn't say never. Give them a little time because they're always a few years behind. So if malpractice insurance and malpractice lawsuits practically don't exist down here, you might be wondering how they weed out the good doctors from the bad. Well, down here, the doctors, too, have their medical organizations, like the Society of Plastic Surgeons and the Nephrology Society and the Radiology Society. And they have their monthly dinners and meetings just like the Elks, the Masons, and the Rotary Club. And supposedly, I've been told, they have a disciplinary board, which naturally, because it is the third world, doesn't discipline anyone.

[08:39] And in fact, these boards are supposed to be on the honors system because there's no government oversight at all. And oh yeah, another thing, you might have heard of continuing education credits. It's a mandatory requirement in the first world that doctors accumulate so many credits over so many years to keep current in their field and to keep their licenses valid. And for doctors up north, that system is strictly monitored. Though I understand in the first world, you can sometimes get continuing education credits for golfing in Maui, especially if a giant pharmaceutical company like Astra or Burroughs Welcome is sponsoring it. But that's another subject. So if in Latin America, nobody's mining the store, the disciplinary board doesn't discipline, and there's no government oversight, how's an expat go about selecting a good doctor and weed out the good from the bad?

[09:27] Well, like I said in the past show, it's simple. Just look and see where he or she did the specialty training. If you did it in Europe or the United States at a reputable high class medical school or teaching hospital, you're more than halfway there. And next, you should look at the wall at the doctor's diplomas. Now, professionals down here are very proud of their diplomas. And they're proudest of the diplomas they got in the first world, which will always be prominently displayed for everybody to see, including the garbage man. And first world courses and diplomas will always be printed in English. So take a look and see if he's going for extra training in his field. So even if he went for a weekend course on Botox in Pennsylvania, his diploma will be placed prominently on the wall. So have a look and see how current he is in his own field.

[10:12] Read the dates on the diplomas and the things he went for. I mean, you don't want to go and have surgery on your foot from a doctor who hasn't been to a continuing education seminar since 1968. I mean, things have changed a little in foot surgery in 40-something years, don't you think? Anyway, even down here, some doctors are absolute workaholics and are obsessed about their own field. And these guys will have their offices just wallpapered with diplomas and degrees that they've gotten over the years. And it'll probably take you 20 minutes just to scan them all. And all the better for expats. Those are the doctors you want to hook up with. And there's plenty of them out there in every city in Latin America. And then, of course, the last thing you should do, go on the Internet and plug their name in. All the doctors, the good ones, and the ones that keep up with things have their own websites, just like docs up in the first world.

[11:00] And of course, on their profile and CV page, you can see every little continuing education course and diploma that they've ever gotten. They aren't shy at all about posting that stuff, and they shouldn't be. And that's one way for you to check up on the schools they went to, too. Let's say the doctor you're checking out's website says he got a specialty in neurology from Northwestern University in Illinois in 1981. Well, just Google Northwestern University and the doctor's name on the same line and see what comes up. You get the idea. Not that these guys are going to lie about something like that, but just remember, it's the honor system down here, and nobody's checking. And we all like to pump up our resumes now, don't we? I mean, men always add an inch or two to their height, and women always subtract from their age and shoe size and add to their bust size.

[11:47] All my ex-girlfriends are guilty of that. And of course, we all like to slice a few pounds off our actual weight, don't we? Anyway, if you do that kind of Googling on a doctor, you might discover that he did go to Northwestern, but not for a neurosurgery fellowship. Instead, he took a weekend course on carpal tunnel syndrome. Big difference. You get the idea. And one thing you should know about doctors who do get sued for malpractice down here. Although there's scant few cases, even in a city of maybe two million people, you might only see three or four cases in a whole year show up in the press. And when there is a malpractice case, believe me, the press is all over it. In fact, it is so unusual, they make a big deal out of it. In fact, lately, when I was down in Lima, Peru, when one plastic surgery malpractice case hit the paper, there was such public interest,

[12:34] and they made such a big deal out of it, that they ran a full-page spread and three or four follow-ups, and still, the case never got to trial. In fact, I should mention that malpractice cases, just like in the first world, almost always get settled out of court. And while I originally started talking about having babies down here in maternity hospitals, another first world trend that's hit down here in a big way is deliveries by C-section. Now, recent stats indicate that up in the first world, about a third of all births are by cesarean. And down here in Latin America, it's about the same. Though even 10 or 15 years ago, it was less than 10%. Now, I don't know if obstetricians are just lazy down here, or they're knife-crazy. But the fact is, doing a C-section down here is not the big moneymaker for doctors and hospitals like it is up in the first world.

[13:22] Up north, an operation by C-section is about three to five thousand dollars more than your traditional birth. Whereas down here, it might cost you an extra three to five hundred bucks. And the doctor probably only gets half of that. So, up in the first world, if a doc does a C-section and gets half of the extra four thousand bucks, which is two grand more in his pocket, well, that makes for a nice profitable morning's work before the doc heads off to the country club, right? And a doctor down here in Latin America, if he splits that extra four hundred bucks for a C-section with the hospital, he's only getting about a tenth of what a doc in the first world gets when he does one. So, down here anyway, it doesn't seem like it's about the money. I mean, putting a woman under general anesthetic and a knife for an extra couple hundred bucks, I don't think so. But who knows?

[14:07] And by the way, when I first started this program today and mentioned the ad for this maternity hospital, I forgot to tell you, in this ad, a private consultation and exam by an OB-GYN will set a woman back a whole six bucks. Now, I guess you can see why a lot of people don't carry health insurance down here, when you can buy a complete maternity hospitalization package for around five hundred dollars. And to some people, even the ones that can afford it, it hardly seems worth it to spend a thousand dollars a year and get an individual insurance plan. At least that's the general opinion I get from talking to middle class Latins. And by the way, since we're on the subject of kids down here, if I didn't say this before, if you do insist on having them or bringing them down to raise, do have them in South America and settle there.

[14:54] Forget about raising kids in Central America. Because if you do, as soon as they get old enough to walk out that door and hang out with friends their own age, you'll be worrying all the time and you'll be waiting up every night for them to come home safely. And in general, you'll be in for a world of grief. But if you choose to have children in South America and down there, like I said in the past show, you should avoid Brazil, Venezuela, the Boonies and rural areas of Colombia, though Colombian cities are A-OK. And I also warn against living in Lima, Peru, which is really just as dangerous, even more so than any big city in Central America, like Tegucigalpa, San Pedro Sula, Managua or Guatemala City, all of which, by the way, are very good places for expats to live, work, play and or retire,

[15:40] and very bad places to raise kids. So why am I saying now that it's okay to have kids down in South America, except of course for those few places I just mentioned? Well, the thing is, my feeling in general, which can be backed up by a lot of facts, is that within the next year or two or three, the entire world is in for a double-dip financial crash, a virtual meltdown, and the US dollar is just going to turn into toilet paper. So if you're counting on a social security check, even if they pay out, or what you might consider in today's dollars, a good fixed pension, well, it's going to be every man for himself when the next shoe drops, and you're going to have to take care of yourself and your family. So when food prices double or triple and water gets really scarce, and oil goes up to two or three hundred dollars a barrel, I'm asking you,

[16:26] is this a good time to have kids? Should you be planning to expand your family and your dependents, and take on the extra worry and responsibility wherever you are on the planet, not just in Latin America? I don't think so, and if you're a regular listener to PRN radio, I really don't have to go into the details, because you know what I'm talking about. Now, if we were talking about normal circumstances, and the next five or ten years are going to be anything but normal, believe me. Anyway, I would pick South America as one of the best and cheapest places to raise kids. Aside from those few places that I just mentioned, crime in general and delinquency is much lower than it is in the United States, which means most places in South America are very good places to raise kids. Besides the fact that because it's Latin America, an expat can still have a first world lifestyle on less than half of what it cost up in the United States or Europe,

[17:16] no matter how much the dollar or the euro crashes. Because all the Latin currencies are unbacked fiat currencies just like the US dollar. But in the next few years, all bets are off, especially for expats who are counting on a fixed income coming from some kind of pension plan or social security. You get it? When the next shoe drops and prices double or even triple, that nice pension plan check or social security check that you had are going to remain fixed. Okay, let's switch topics a bit now. I've gotten a few emails lately asking me about business taxes down here, corporate taxes, and corporations down here are called societal anonymous, which means anonymous societies. In other words, when you see the name of a company down here like Blue Water S.A.

[18:02] That's S.A. after the name. That means societal anonymous, which is the same thing as a corporation up in the first world. Now, just like in the first world, a lot of people use corporations down here to shelter things, like property, businesses, and other capital. And it's very, very smart for an expat to do that if he plans on buying anything of real value down here. And that especially goes for buying cars, houses, and land. Now, for example, suppose an expat is semi-retired up in the States, comes down here and buys a house for $200,000. And after the sale takes place, of course, the property will have to be legally registered in the Ministadio Publico, which is the public ministry or register of deeds. And the expat's name's going to be on that document and nowadays,

[18:48] available for almost anybody to check on in the Internet. Yes, even in Latin America, that kind of technology is already here. Now, suppose a couple years later, up in the United States, somebody sues this expat or his wife files for divorce. Now, because he's got a property legally registered in his name, let's say down in Costa Rica, his angry wife or his creditors, whoever's filed suit on him, can attach his property down here, which for a lot of expats turns out to be a huge mess. Because when somebody from another country, let's say the United States, files a lien against somebody's property, let's say down here in Costa Rica, often time judges down here will put an embargo on the property, which means the title is no longer clear and the owner can't sell or lease or borrow against that property until that embargo is lifted.

[19:33] And in court especially, things move so slowly down here that some expats give up before the fight even starts. Because first of all, all the legal documents coming from the United States have to be translated into Spanish and certified by a lawyer and notary appointed by the court. And that's just for starters before you even get to court. So, to avoid the possibility of that kind of hassle, or any dark clouds that in the future might hover over some of your business deals, an expat should always set up an SA corporation and at least put his house and cars under it. And that way if he's sued by anyone within the country, and in this case it's Costa Rica, or outside the country, whether Europe, United States, Canada, or whatever, since in the public registry, the Register of Deeds, he's not the owner,

[20:19] but the SA company is the owner, well he's off the hook, and nothing can happen to his property. And if done correctly, it's completely protected from outside creditors too. And in that case, the only difficulty he might have is that in the registry, the paperwork will have his name as a director of the company or as a member of the board of directors, so he will be linked by name and passport number to any of the properties that might be held by that company. So if he's having a big legal war in the United States, let's say against the IRS, the US government can put pressure on little Costa Rica in various ways and make things a bit tougher than expats whose name is in the registry. I mean he could run into real trouble if he ever tries to sell, lease, rent, or transfer that property,

[21:06] because whether we like it or not, and we don't, the IRS always suspects that there's some kind of hanky-panky going on, especially with little guys like us own foreign corporations. They always suspect that there's some income being derived or some capital gain realized from something that's being held within that corporation, because you know the United States is the only government in the world that taxes its citizens on their foreign income. And it's easy enough if you're just receiving a salary from a transnational corporation like 3M, let's say. Then in that case, it's quite easy to fill out your US tax forms and you actually get a foreign worker exemption of about $80,000 a year. But if you've opened up a corporation in a foreign country, that complicates things. And as it is with the IRS, you're always guilty until proven innocent.

[21:53] But there is a way to stay way below the radar, and it's a neat little trick that a lot of expats use. So pay attention. The first thing you do is you go ahead and get your lawyer to open up a society anonymous, an essay corporation for you. And that, by the way, might only cost you between $400 and $700. And to maintain it year after year, and to keep it current, you'll have to pay an accountant to file quarterly forms to the local tax people down here. And that might run you $200 or $250 a year. And believe me, it's worth it. Or you can save that money and do it yourself if you know enough Spanish to fill out the forms. Or, like most expats I know do, they just have their lawyer's legal assistant or accountant do it. Anyway, back to the trick. Here's what you do. You open up that essay corporation, have your lawyer do it,

[22:40] and you, my friend, don't let your name appear on the board of directors at all. Not in any of the paperwork that gets filed with the public registry. So in effect, you are completely anonymous. And who are those people listed on your phantom company's new board of directors? Well, the main one, of course, will be your lawyer. And the rest of the board members will be his accountant and maybe his legal secretary, and maybe another auxiliary person or two he has employed in his office. Usually, Latin law will dictate that you need at least three members on a board of directors. Now, there'll be one person on that board of directors who'll be the legal representative or the signatory for any of the paperwork that needs to be signed. For example, title papers that have to be signed if you need to buy a house, a car, or some land. And again, that legal representative with the power of attorney could be anybody,

[23:28] but usually it'll be your lawyer. And of course, it shouldn't be you, the expat, because like I said, you don't want your name to appear on any of the legal paperwork. So I know what you're thinking now. How can you be sure that your lawyer just won't steal everything out from under you because you didn't sign anything and you have no power of attorney, correct? The fact is, your name's not on anything. Well, here's the other half of this trick. When you open up an essay corporation, just like a corporation in the first world, shares are issued, let's say 100 shares. And they're physical colored sheets of paper all printed up really nice, like flowery, embossed, and watermarked stock certificates. Only you don't get 100 actual certificates. You just get one that says it has the value of 100 shares and that 100 shares were issued by this company.

[24:14] Now, can you see where I'm going here? Yes, you expat hold those shares. That means you physically own that company as long as you're holding those shares. And on the back of those shares, there's a place that you can sign your name if you like. But it doesn't matter because as long as you physically hold those shares, that company and whatever it owns is yours. And those expats are called bearer shares. You probably heard that word before. That means the person who holds or bears the shares is the owner. And that also means if someone breaks into your house and steals those shares, he's the new owner. And if you go to his house and steal them back, well, then you're the owner again. You get the idea? So if you have shares, you better hide those things in a very good place. And yes, you do have to have quite a bit of faith in your lawyer to do a deal and make a fandom company like this.

[25:02] But it's done all the time. I know dozens of expats who've done it. And by the way, no one's ever mentioned to me that he's been screwed in the deal. But I repeat, you're placing a lot of faith in your lawyer. So you should have a good feeling for the guy. Because after all, he does have complete power of attorney over the company and everything it owns. And if he wanted to be a real jerk, he could probably sell that house and car right out from under you and you wouldn't even know it, especially if your Spanish sucks. And that's why you need another little piece of paper, a paper signed by both you and your lawyer in the presence of a witness. And basically, it'll say that although he has power of attorney over that new essay company of yours, he can't use that power of attorney unless you authorize it in writing first. And that's your check on the system. Because in the future, if there was any hanky-panky going on,

[25:50] he'd have to produce a piece of paper saying that you gave him permission to use his power of attorney. And of course, your signature would be on that paper, his signature, and a witness. And that's pretty good protection. And in fact, even though 99% of the lawyers down here would sell their own mothers, any expat gringo or European is a very valued client for a lawyer. Because like I said in a past show, we pay our bills on time, we start businesses, we get involved in big land deals, and most of all, we're a good source of new expat clients. Most of us have friends from the first world who want to come down and start a business or buy some land. And who do you think wants to be their lawyer? Your lawyer, of course. Well, one hand washes the other, as they say. So understand that I'm not advocating you do anything illegal here, but if you want to hide things from the prying eyes of the rest of the world,

[26:38] Latin American lawyers know just how to do it. Anyway, down here, the main way lawyers scam expats, and other clients too, is through the misuse of escrow accounts. In other words, you write a check or send some money down to your lawyer and he puts it in an escrow account for you, and that money's supposed to be untouchable, because it's for a certain project or a deal that you're planning to move ahead on. Well, just like in the United States, a lawyer who's in a tight spot for money sometimes gets caught dipping into his client's funds. And though I've heard stories about these things myself, I don't know of any expats who've actually been ripped off in that way. Though I know of some other lawyer scams that have gone down, and I myself got stuck for 20 grand in a lending scheme proposed by my lawyer. But I'll talk about that in another show.

[27:24] Well, it's getting near the end now, and I never did get to talk about business taxes. As usual, I veered off a little, but I'll talk about that next time, I promise. South of the border You've been listening to The Expat Files, living in Latin America. And don't forget you can email me on anything at all about Latin America. The Expat Files at gmail.com. That's theexpatfiles at gmail.com. See you next time. Nos vemos. South of the border