Will U.S. Health Plans Encourage Medical Tourism?

An article in today’s The Kansas City Star reports that growing legions of American patients – by one estimate, 150,000 last year – are traveling to countries such as India, Thailand, Brazil and Mexico for medical care.

To illustrate this growing trend, the paper tells the story of a local couple who ventured to Brazil where they underwent obesity surgeries that were not covered by their health insurance policies. Their total tab, including medical costs, drugs, airfare and hotel bills: $24,000. If they would have had the surgeries in this country, the combined medical costs alone would have totaled at least $140,000. Apparently these price differences are not just for the types of surgeries not covered by insurance plans. The article noted that the typical cost of a coronary bypass in the United States ranged from $55,000 to $86,000, compared with $7,000 to $7,500 in India and $15,612 to $16,913 in Thailand.

But what about quality you ask. American patients are said to be drawn to medical tourism by the high-quality reputations of many overseas health providers. Rudy Rupak, president of PlanetHospital, a California company that sets up overseas medical care is quoted in the article as saying, “Ninety percent of the doctors I recommend are U.S.-trained or board-certified, and they’re working in hospitals that are palatial and state of the art.”

Experts attribute those whopping price differentials to lower earnings by most health-care personnel in developing countries. In addition, malpractice insurance premiums are non-existent in most foreign countries, and global health-care product suppliers sell to developing countries at cheaper prices.

What will this global competition mean to the U.S. health care industry? According to this article, some see medical tourism as a positive development. In fact, some U.S. employers are sending their workers overseas for treatment and some U.S. health plans are working with overseas providers.

We have seen it become somewhat commonplace for insurers to use so called Centers of Excellence (COE), regional medical centers that specialize in a particular procedure or disease state, to reduce treatment costs and improve outcomes. Usually, the plan will cover the expenses incurred for the patient and a family member to travel to the COE. If we cannot get onshore costs under control, it may soon become commonplace for health plans to add benefits for Americans to travel off shore for expensive medical procedures.