It’s a sad state of affairs that we’re now outsourcing even our health care. Why is the AMA not doing what needs to be done to bring the costs of US health care into line with what other countries spend? I suppose it’s good that they are acknowledging that people are seeking lower-cost alternatives in other countries. And I’m sure they would rather get the business for themselves instead of sending it overseas. But medical tourism isn’t going to be a viable solution for most of America. Most Americans don’t even have a passport, much less the desire or means to travel abroad for serious medical care. While it’s nice to have the option to get a hip replacement while on vacation in Thailand, I’d hate to see it come to a point where that’s the only way that Americans can afford a hip replacement. With the number of uninsured Americans growing at a rapid rate, and the cost of health care in this country rising far faster than inflation, what other option will people without quality health insurance have ten years from now? We cannot continue on the path we’re on now – with rising costs and decreasing numbers of people with health insurance. Our pharmaceutical industry makes record-breaking profits, and we’re sending our citizens abroad with a hearty ‘bon voyage’ to get open heart surgery. Something’s not right with that picture.

Price is the obvious reason for the increase in medical procedures moving offshore, where a colonoscopy can be done for under $700, and heart surgery for $20,000. If health insurance companies offer incentives like deductible waivers and travel expense reimbursement, it’s likely that they will have more and more people willing to take a trip overseas to get medical care.

The Blue Cross Blue Shield network formed the first medical offshoring partnership last month, in an agreement with Bumrungrad Hospital, in Bangkok, Thailand, and more health insurance carriers are likely to follow suit. Here in Colorado, Anthem Blue Cross Blue Shield is one of our largest and most popular carriers, so it will be interesting to see if we start hearing anything from our clients about medical tourism.

Medical care in the US is dramatically more expensive than it is at high-quality hospitals in the rest of the world. But since our health care system – based on a system of private health insurance that typically limits patients to providers within the US – has been relatively insulated from global market pressures, health care prices in other countries haven’t really had an effect here in the past. It will be interesting to see if an increase in travel abroad for medical care results in more competitive prices here at home. Or perhaps providers in other countries will start to bring their prices more in line with American health care rates. Either way, it will be interesting to see what percentage of American medical procedures are performed overseas ten years from now.

(More information on medical tourism at the Health Business Blog)

Ezra’s point was that we need to do something to address the actual spending waste (unnecessary tests, unnecessary treatments, etc).

Instead, you’re going to need to attack these costs at the top. You may need to ration. You’ll definitely need to cut down on wasteful care. You’ll definitely need to erase the payment structure that encourages doctors to prescribe the most intensive treatments. You’ll probably need to give the government bargaining power so we begin paying less per unit of care, as all other countries do.

To give credit to the blogosphere that helped me find Ezra’s article: InsureBlog linked to a “quick and effective takedown” of Ezra’s article written by EconLog. If you read the rebuttal written by Bryan Caplan of EconLog, he equates unnecessary trips to China with healthcare spending. Here is what I wrote in the comments on his rebuttal titled “Ezra and Elasticity”…

You’ve written a good post here, but I think it misses the point of Ezra’s article. First of all, the $10K deductible is a bad example. We sell a lot of HSAs and a $5-$6K family deductible or $2-$4K individual deductible is more typical (and the best way to beat the actuaries). These deductibles leave about the same exposure as people normally have on non-HSA plans. The reason they got them though, was because they don’t need copays on doctors visits or Rx before the deductible, not because it has a higher deductible or overall exposure.
Ezra’s point was that once people reached their out of pocket maximum with a claim, which is typically the same as a non-HSA plan, there is nothing to reduce wasteful spending like unnecessary tests and treatments. So, he is correct in saying that healthcare spending will not slow because of HSAs.

… also, while the $2-$6K of healthcare spending that got the patient to their deductible may have been necessary, the expensive part comes after that. Part of the next $150 – $400K is where the waste comes in.
So in your Chinese travel example, it would be better to say that you pick people at random and require them to spend $4-$10K worth of travel to China, or they might die. But once they did that, they could travel to anywhere they wanted in the entire world and somebody else would pay, whether they needed to go there or not.

Kind-of a long comment, I know, but it was hard to equate healthcare expense with travel expense.

I think that the American healthcare system cannot continue much longer on its current trend of rapidly rising costs, lowered health insurance benefits, and increasing numbers of uninsureds. Something’s got to give. When CEOs are posting record bonuses and salaries, and health insurance companies are reveling in huge mergers, the American public is bound to become more and more disenchanted with the current system. Because of this, I can see people giving more consideration to the idea of going overseas for medical treatment that can be scheduled in advance. Thousands of Americans have already traveled to places like Thailand and Singapore for elective plastic surgery that isn’t covered by health insurance. But with the number of uninsureds rising every year, more people are in a situation to consider traveling abroad for necessary medical treatment aswell.

If employers get in on the overseas healthcare action, it could result in a much-needed decrease in health insurance premiums for all workers. But there are also some potential pitfalls. If companies find that sending workers overseas for treatment does significantly reduce costs, they may consider making overseas treatment mandatory in order for an employee to receive coverage (businesses are generally reluctant to choose the more expensive option in any situation). Many employees would not feel comfortable with the idea of having to travel thousands of miles to receive healthcare in an unfamiliar environment, without their friends, family, and regular doctors.

I do think that there are some aspects of the American healthcare system that are ridiculous. Multimillion dollar medical malpractice awards come to mind. As do millionaire hospital and insurance company CEOs. Even the exceedingly high cost of medical school puts a burden on our healthcare system, since it contributes to the high salaries many doctors demand. But with the high cost of healthcare here, and especially with the threat of lawsuits always in the background, we do have a measure of reassurance that our treatment will be handled properly. Overseas, this may not be the case. If the US were to start shipping patients to India and Thailand in large numbers, their health care system may become overburdened and the quality of care may decline.

I also have to question the ethics of outsourcing in general. Is it right to pay far less for medical care in another country than it would cost here? Or are the prices here so overinflated that they are no longer a good indicator for the actual value of a service?