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Costs Push Americans To Look Abroad for Health Care Services

Globalization of health care is not new. For centuries, wealthy people in developing countries have made pilgrimages to the developed world looking for the best medical treatment money could buy.

But now the tables — and the pilgrimages — are turning. Not-so-wealthy people in industrialized countries, unable to afford high price tags at home, are traveling abroad to get affordable care in the developing world.

An uninsured San Francisco man in his 30s went to Bombay, India, for eye surgery this year. The same procedures in California would have cost more than $10,000. His total bill was $3,000 – about a third of it for medical services, the rest for travel. He’s 20-20 now, has money in the bank and a bunch of new photos and memories.

Hospitals in Argentina, Singapore and Thailand charge $8,000 to $12,000 for a partial hip replacement, about half the cost in the United States or Europe. Even insured Americans are finding bargains in other countries. A patient with a high-deductible policy facing cardiac procedures that can run as high as $100,000 in the United States can save money abroad, even after factoring in travel expenses.

You don’t have to go half way around the world to find a bargain. Mexico and Canada are offering “medical tourism” packages to people looking for all kinds of treatment ranging from cheaper drugs to cardiac surgery.

According to a study released last month by the National Center for Policy Analysis, about 500,000 Americans left the country for medical treatment in 2005 — and the numbers are rising. Most went to Mexico and other Latin American countries, but many Americans were among the throngs of foreign patients seeking low-cost care in Singapore (about 250,000), India (about 500,000) and Thailand (estimated at one million).

Is this a good thing? Will global competition help curb domestic health care inflation?

Depends on whom you talk to.

Implications of Medical Tourism

“We don’t have a free market for medical care in this country,” says Devon Herrick, author of the NCPA study. “If more competition enters the picture and more people are in a position to control their own health care spending, then yes, it can help curb inflation.” Herrick is an economist with the NCPA, a free-market think tank based in Dallas.

Conversely, Steven Hitov — managing attorney of the National Health Law Program, a public interest law firm with offices in Los Angeles and Washington, D.C. — says, “I think it’s a bizarrely distorted view to think that this makes any kind of sense.”

“What it’s basically saying is the rest of the world has a better system than we do, so go there. But it doesn’t take into account the people who can’t afford any of it — no matter where the care is delivered.” Hitov and his organization, which seeks to improve health care for America’s working and unemployed poor, would prefer to see universal coverage that offers quality, affordable care close to home.

“What they’re saying,” Hitov says of medical tourism proponents, “is that we have a system driven by profit, and too bad for those who can’t afford to be part of it. I think that’s nonsense.”

Like Detroit All Over Again

Herrick compares globalization of health care to what’s happened in the auto industry over the past half century.

“Thirty or forty years ago, most of our cars in this country came from Detroit,” Herrick says. “Now, not only do a lot of Americans buy Toyotas and Hondas, they buy Toyotas and Hondas that are made in the United States. I think we’re seeing the beginning of that same evolution in health care.”

Hitov steers the debate around the next bend in the analogy.

“OK, let’s say I offer you a brand new Masserati for $60,000 cash,” Hitov says. “It’s a steal. You’d be crazy not to take it.” (The Italian sports cars usually start above $100,000).

“But if you can’t afford a used Ford for $500, what good will a screaming deal on a Masserti do you?” Hitov says. “It completely ignores the people who need the most help with health care, and that fundamentally is what’s wrong with our system, whether the care is delivered here or elsewhere.”

Effects Felt in Other Countries

Beyond the effects it may have on domestic prices, critics of health care globalization see two potential downsides:

  • Providers in developing countries tend to immigrate to developed countries, causing shortages of physicians and nurses in the countries that trained them, while richer countries, such as the U.S., get a full contingent of labor. More than half the primary physicians in the U.S. came from other countries, according to World Congress statistics.
  • Low- and middle-income citizens of “destination” countries have less opportunity for affordable public sector health care because physicians and nurses who don’t emigrate gravitate to private facilities catering to foreign patients.

Global Whether We Travel or Not

Herrick points out in his study that even if Americans don’t travel abroad, they often are part of an international health care system whether they know it or not.

“Let’s say you have an accident in the middle of the night anywhere in America — California, Montana, Maine, anywhere,” Herrick says. “You go to the hospital in your town and get X-rays taken. There’s a good chance those X-rays will be analyzed by a doctor or technician in Australia or India,” Herrick says. “That doctor or technician is American-certified and most likely American-trained, but there’s a good chance that he or she is not in America.”

Herrick predicts the next step in this evolution will be that U.S. insurers will routinely begin to offer policies that include foreign care options. He points out that many U.S. providers already have working arrangements with providers abroad.

Institutions such as Johns Hopkins, the Cleveland Health Clinic and the Dallas Heart Institute have partnerships with providers in Panama, India and Thailand.

“As insurers begin to realize they can provide quality care for less money, you’ll see more and more offering policies that include foreign elements,” Herrick says.

A couple of sure signs distinguishing between short-lived trend and a bona fide new industry: establishment of a trade organization and publishing of a magazine. The not-for-profit Medical Tourism Association launched earlier this year in Florida and is now publishing Medical Tourism Magazine.

Related Topics

Health Care Costs Health Industry Insight Insurance