For many reasons, health insurers in the U.S. have been reluctant to jump on the medical tourism bandwagon. They are concerned about taking business away from doctors and hospitals already resentful of payment rates virtually dictated by the plans. Insurers realize that promoting medical treatment abroad would be perceived as a cost control measure at a time when politics is making cost containment an ever “dirtier word” with the public. Finally, patients would likely hold insurance companies responsible for malpractice committed in the course of medical tourism. But overriding these serious concerns is the prospect of backbreaking costs brought on by the healthcare reforms now poised to become law.
We now understand that the proposed legislation would require health insurance companies to change the way they do business (by covering pre-existing conditions, accepting all applicants for coverage, e.g.), thereby eliminating avoidance of adverse risk and potentially increasing premiums dramatically. According to the Cato Institute, federal legislation that is working its way through Congress strongly resembles the reforms enacted in Massachusetts in 2006, which have accelerated costs significantly. As a result, despite the imposition of fines for non-compliance, many individuals and small employers may not be able to afford health insurance. This outcome could, in the long run, actually increase the number of uninsureds, who must pay medical bills themselves and thus may seek less expensive care outside the U.S.
Unfortunately, current healthcare reform proposals do little to address the underlying reasons why healthcare costs are so high: defensive medicine, overutilization of specialists, the shortage of primary care physicians, excessive drug costs and patients’ expectations of heroic measures at the end of life, for example. These relentless price pressures bode well for the medical tourism industry, which will continue to represent a lower cost alternative to double digit annual increases in medical costs in the U.S.
Tags: healthcare reform, medical tourism
I think that Dr. Gillingham’s analyses of the potential for increased medical tourism under a health reform environment where health care costs continue to spiral is sadly/unfortunately right on. Robert Samuelson recently noted that current health reform proposals are aimed at increasing access to insurance but don’t really solve the cost drivers and may inadvertantly have the opposite effect of driving costs even higher. My math indicates that increasing the insurance pool of covered lives will help lower the average cost of premiums for those who have it today but will not deal with the marginal costs to the system and again, Dr. Gillingham rightly reasons that this will lead insurers and individuals (maybe even states and self insured employers) to look for cheaper care elsewhere. Good for Medical tourism industry maybe. Uwe Reinhart a noted Princeton economist has always remind us that health care costs equal health care incomes and until hospitals, pharms and doctors are happy to take cuts in pay, health care costs will be our eternal burden.