Club Med Reimagined: Medical Tourism Takes Off

As the world turns.

There was a time when people seeking medical attention came to the United States for the excellent quality of its doctors, techniques and technology. There are still some who can afford the cost and do so. But they are outnumbered by the Americans flying in the other direction seeking less expensive solutions to their medical needs.

As the article below points out, this trend could accelerate dramatically if US health care programs like Medicare and Medicaid are eliminated or drastically curtailed. The impact of such an action for many would be catastrophic. But in the longer term, the rise in medical tourism might rein in US medical costs by causing insurance companies, hospitals and other patient services providers to come to terms with a phenomenon to which they often pay lip service but of which they have heretofore had little experience: competition. JL

James Surowiecki reports in The New Yorker:

This year, a few hundred thousand intrepid American travellers will head to places like Thailand and Costa Rica, in search of something that they can’t find in the United States. They won’t be looking for Mayan ruins or ancient Buddhist temples, but something a bit more practical: affordable medical care. These medical tourists will be getting root canals, knee surgeries, and hip replacements at foreign hospitals.

If health-care costs in the U.S. keep rising—and especially if Obamacare is overturned by the Supreme Court—more of us may soon be joining them

For decades, wealthy people from developing countries have come here for care, but these days medical tourists travel all over the world. And while it’s hard to disentangle the stats from the hype—a number of countries portray themselves as favored destinations—it’s clear that millions of people are now doing this. The Bumrungrad hospital, in Bangkok, treats four hundred thousand foreign patients annually. Malaysia had almost six hundred thousand medical tourists last year. And South Korea had more than a hundred thousand, nearly a third of them American.

For Americans, the attraction is obvious: medical care is a lot cheaper abroad. At CIMA Hospital, in Costa Rica, for instance, hip-replacement surgery costs around fifteen thousand dollars, roughly a sixth of the average here. So far, though, various factors have kept a lid on demand. Logistics can be challenging, and insurance companies have been leery about reimbursements for care overseas: they already get big discounts with U.S. hospitals, and they risk a public-relations disaster anytime something goes wrong abroad. Above all, patients have been wary. We trust the quality of foreign-made televisions and cars, but we haven’t taken that leap when it comes to foreign doctors. People worry about the lack of legal recourse, and the sheer unfamiliarity of medical tourism makes people hesitant to try it. A few years ago, the grocery-store chain Hannaford set up a partnership for the benefit of its employees with a well-accredited Singaporean hospital. Singapore is one of the most prosperous countries in the world, but medical care there is still significantly cheaper than in the U.S., so the arrangement looked like a model for how medical tourism might work. But none of Hannaford’s workers were interested in going to Singapore.

There are a host of forces that could change this. The quality of medical facilities in developing countries has risen dramatically, and the private hospitals that cater to tourists often feature technologies similar to those in American hospitals. (This has its problematic side: many of these high-end hospitals are in countries where citizens struggle to get basic care.) Furthermore, new companies are making treatment abroad easier and more attractive. Blue Cross/Blue Shield has started a company called Companion Global Healthcare, which connects patients with hospitals around the world. Political events could also quickly make medical tourism considerably more attractive. If Obamacare is overturned, forty million Americans without insurance will stay that way. If Medicaid and Medicare are cut sharply, the cost of American health care will eventually become prohibitive to many senior citizens. And if health-care costs keep soaring fewer employers will offer health insurance. That doesn’t mean that Americans are soon going to jet halfway around the world for an ingrown toenail, but it’s easy to envisage regional systems becoming common, with Americans heading to places like Costa Rica and Mexico, and Western Europeans going to places like Hungary and Turkey.

If more Americans sought care abroad, it wouldn’t just save them money; it could also help control medical costs at home. Medical tourism can be considered a kind of import: instead of the product coming to the consumer, as it does with cars or sneakers, the consumer is going to the product. More medical tourism would increase free trade in medical services, something there has not been much of in the past. The U.S. has been religious about breaking down barriers to free trade, especially in manufacturing and service industries, exposing ordinary workers to foreign competition. But health care has been insulated from the forces of globalization. This has been great for hospitals and doctors, but less good for consumers. It’s one reason that the cost of health care has risen so much faster than that of almost everything else.

It has been generally assumed that medicine is inherently a local business. But that would change if we allowed Medicare and Medicaid funds to be spent in foreign hospitals, or if insurers cut consumers in on the savings from treatment abroad. And if domestic hospitals actually had to compete with places like Bumrungrad or CIMA, the way American car companies have to compete with Toyota and Honda, they might be forced to become more efficient. Even an increase in domestic medical tourism—people journeying to lower-cost U.S. hospitals, like the Cleveland Clinic—would help. There are other ways to bring free trade to medicine, too. As the economist Dean Baker has argued, making it easier for foreign doctors who met standardized requirements to practice in the U.S. would hold down costs and improve service. In addition to exporting patients, we could import doctors. Politically speaking, of course, this all seems improbable, because the medical industry is a powerful lobby and uninterested in competition. But the reality is that, unless we find some other way to rein in health-care costs, the logic of free trade in medicine is going to become harder to resist.

ILLUSTRATION: Christoph Niemann