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Policy Innovations Digital Magazine (2006-2016): Briefings: Medical Tourism Causes Complications

Oct 27, 2008

Forty-five million Americans are currently uninsured and health expenditures in the United States are rising faster than wages and inflation. Despite spending more on health care than any other industrialized nation, in 2000 the United States ranked 37th in the World Health Organization's evaluation of health care systems around the globe.

Reforming domestic health care has been a big issue in the 2008 U.S. presidential campaign, yet a growing number of Americans and insurance providers are turning to international solutions.

Approximately 750,000 Americans traveled overseas for medical treatment in 2007, and the number of so-called medical tourists could increase to more than 15 million in 2017. In previous decades, the medical tourism industry was dominated by cosmetic and dental procedures. Today everything from knee replacements to major heart surgery can be obtained in developing countries where internationally accredited health centers provide high-quality treatment with lower costs and shorter waiting periods than in the United States.

A heart-valve replacement priced at $200,000 or more in an American hospital can cost $10,000 in India, according to the University of Delaware, including airfare and a post-operative vacation package. Average savings in Thailand are about 70 percent compared with the United States, and between 50 and 75 percent in Latin America.

Thailand's Bumrungrad Hospital treated 400,000 international patients in 2007, including 65,000 Americans. Thanks to an increase in foreign patients, the hospital's total revenue for 2008 is predicted to rise to $618 million.

Overall the effects of medical tourism are mixed. On the one hand, the industry can boost a developing country's gross domestic product and investment in health facilities. Upgrades in a country's hospitals also tend to decrease external brain drain, as top physicians find local jobs instead of leaving for employment in developed nations.

A study by the Confederation of Indian Industry predicts that by 2012 the medical tourism industry could add up to $2.3 billion to the country's annual GDP. The head of India's Wockhardt hospitals, which cater to foreigners, reported two dozen Indian doctors returning from the United States and Britain to work in his facilities.

In many cases, however, medical tourism threatens to exacerbate unequal access to quality health care in developing countries. Although relatively cheap by most Western standards, the private hospitals that treat foreigners are out of reach for the majority of people, and the revenue they bring in rarely makes its way to the public sector. According to a 2006 report by the World Health Organization, less than 4 percent of India's total government spending in recent years has gone toward health.

External brain drain is often replaced by internal brain drain, as doctors leave public health care centers to work in private hospitals. Last year NPR reported on a shortage of Thai doctors in the capital's public hospital because of the higher pay offered at Bumrungrad.

Some doctors, however, split their time between public and private facilities to balance serving the public sector with earning enough income to support their families. An editorial in The Nation, a Bangkok business newspaper, cites the promotion of medical tourism as a factor in the country's failure to meet its goal of providing one doctor per 1,800 citizens.

The situation in Cuba has been described as "medical apartheid." Top quality treatment that is available to foreigners and to the Cuban elite is off limits to most of the country's population who can't afford to pay for health care in dollars. Based on interviews with Cuban citizens, Canada's National Post reported that access to basic pharmaceuticals was severely limited, either priced in dollars or restricted to the black market.

Some countries are responding to this public health dilemma. Private hospitals in the Philippines have been asked to accommodate more local charity patients. India's Health Secretary Naresh Dayal has suggested that private hospitals should provide medical treatment to poor patients free of charge as revenues increase. Others have proposed that India tax the currently subsidized private hospitals to support public health initiatives.

So far a set of best practices on balancing medical tourism with improvements in public health has yet to make its way into international agreements or hospital accreditation processes.

Nonetheless, the major cost savings associated with medical tourism are attracting more patients and health insurance companies than ever before. Blue Cross & Blue Shield of South Carolina now facilitates travel from the United States to Thailand and other international hospitals through its Companion Global Healthcare subsidiary.

Legislation was introduced in West Virginia that would provide incentives to state employees who go abroad for medical treatment. According to Business Week, more and more insurers will be offering overseas options to their policyholders in the next five to ten years.

Medical tourism is not an alternative to significant reform of the U.S. health care industry. Aside from the negative effects on public health overseas—plus the environmental impact of long-distance air travel linked to the industry—medical tourism is not predicted to reduce the country's health spending by more than 1 to 2 percent. The overseas options will cost health care providers in the United States roughly $16 billion in 2008, according to the Deloitte Center for Health Solutions—a figure that may jump to $373 billion or more within a decade.

By introducing global competition to an industry that's long been considered immune to outsourcing, medical tourism may up the ante on reforming coverage, cost, and quality at home.

Correction: October 29, 2008
The original version of this article incorrectly stated that Blue Cross & Blue Shield of South Carolina covers travel expenses to Thailand's Bumrungrad hospital. Travel to international hospitals is facilitated by the Blue Cross subsidiary Companion Global Healthcare, which performs concierge services related to treatment.

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