The world should embrace medical tourism

Americans are increasingly turning to medical tourism as a means to find affordable healthcare. In simple terms, medical tourism refers to patients traveling from their home country to another country to obtain medical care.

Traditionally, medical tourism consisted of people traveling from developing nations to prestigious medical centers in developed nations for sensitive medical treatments unavailable in their home country. But the game has changed in recent years. Elaine McArdle at Harvard Law Today highlights some newer trends in the medical tourism front: “Once the province of the uber-wealthy seeking radical cosmetic surgeries or treatments unavailable in the U.S., medical tourism has become an attractive option for many, especially the uninsured, since the cost savings are so dramatic. According to some estimates, about 2 million Americans a year are traveling overseas for major health procedures, from knee replacements to neurosurgery, with the number growing rapidly.”1

At first glance, medical tourism seems like a niche industry exclusively confined to the wealthy. However, Patients Beyond Borders, a leading source for medical tourism, details the growing scope of this industry: “Patients Beyond Borders’ editors define a medical traveler as anyone who travels across international borders for the purpose of receiving medical care. We do not count in-country expatriates, tourists in need of emergency medical care, companions accompanying medical travelers, or multiple patient episodes that occur over the course of one medical visit. With these variables in mind, we believe the market size is US$45.5-72 billion, based on approximately 14 million cross-border patients worldwide spending an average of $3,800 to $6,000 per visit, including medically-related costs, cross-border and local transport, inpatient stay and accommodations. We estimate some 1,400,000 Americans will travel outside the U.S. for medical care this year (2017).”2 Some of the most popular destinations of medical tourism include: Costa Rica, India, Israel, Malaysia, Mexico, Singapore, Taiwan, Thailand, Turkey and the United States.

Why do tourists opt for these countries when it comes to their medical care?

Patients Beyond Borders notes that the aforementioned countries are chosen for the following reasons:

  • Government and private sector investment in healthcare infrastructure
  • Demonstrable commitment to international accreditation, quality assurance, and transparency of outcomes
  • International patient flow
  • Potential for cost savings on medical procedures
  • Political transparency and social stability
  • Excellent tourism infrastructure
  • Sustained reputation for clinical excellence
  • History of healthcare innovation and achievement
  • Successful adoption of best practices and state-of-the-art medical technology
  • Availability of internationally-trained, experienced medical staff

It is very clear that medical tourism is now a widespread occurrence as both citizens from developed and developing countries use it as a means to receive healthcare. As the healthcare affordability dilemma in the U.S. continues, we can expect more Americans to continue to go abroad to receive medical procedures.

Understanding the U.S. healthcare dilemma

With one of the most technological advanced healthcare systems in the world, why are growing numbers of U.S. citizens still opting for medical tourism?

The answer lies in the U.S. healthcare affordability crisis. It is no secret that healthcare costs have risen substantially in the U.S. over the past few decades, with statistics indicating an increase of approximately 118 percent from 1992 to 2012.

Naturally, this has evoked emotional debate on both sides of the political aisle.

Despite the popular appeal of interventionist proposals by politicians, these prescriptions completely miss the mark. In fact, they ignore the real elephant in the living room in the current healthcare affordability crisis: government intervention in the healthcare sector.

Mike Holly at the Mises Institute provides a sobering analysis on the origins of the U.S. healthcare crisis in his article “How Government Regulations Made Healthcare So Expensive”3:
“The U.S. ‘health care cost crisis’ didn’t start until 1965. The government increased demand with the passage of Medicare and Medicaid while restricting the supply of doctors and hospitals. Health care prices responded at twice the rate of inflation. Now, the U.S. is repeating the same mistakes with the unveiling of Obamacare (a.k.a. ‘Medicare and Medicaid for the middle class).”

The degree of intervention in the healthcare sector cannot be pinned on just one piece of legislation, but rather multiple decades of anti-market legislation pushed by bipartisan actors.

Holly further illustrates this unholy consensus: “The majority of policymakers support either monopolization (typically Republicans) or nationalization (typically Democrats). Both have claimed “physician supply can create its own demand,” which means increasing the supply of doctors and hospitals will just motivate them to convince “ignorant” consumers to order more unnecessary and expensive health care. During the 1970s, Frank Sloan, a Vanderbilt University health care economist, explained the success of the most influential pro-regulation health care economist, Uwe Reinhardt: “His theories are highly regarded because he is so clearly understood. Unfortunately the evidence for them is not good; it is not bad either, it is just not there. And it would be a shame to see federal policy set on such a poor, unscientific basis.””

Excessive bureaucratic red tape, anti-market price controls, and subsidies would become fixtures in the American healthcare sectors after decades of consistent government intervention.

The results have been nothing short of dismal – rising administrative costs that which are ultimately passed on to customers, rationing, and declining quality of healthcare services.

While politicians are busy bickering over which top-down policy prescriptions will bring about affordable healthcare for all, Americans continue to go to foreign destinations like the Cayman Islands for medical treatment. This has become the new reality in the era of Obamacare which has only made healthcare in the U.S. more expensive and cumbersome.

In 2014, Medical Tourism Magazine reported on the attractiveness of the Cayman Islands as a destination for American medical tourists: “Since opening earlier this year, Health City Cayman has put the tiny island of just 55,000 residents on the international map for more than Stingray City or Seven Mile Beach. Once complete, Health City will house 2,000 beds, a medical research team and an assisted-living center to form one of the largest healthcare complexes in the Caribbean for cardiac surgery, cardiology, orthopedics, pediatrics, endocrinology and pulmonology. … Analysts say deductibles for Americans who purchased Obamacare plans can top $5,000 for individuals and $10,000 for families. Faced with the prospect of substantial price increases next year or the inconvenience of changing plans, many of these 7.3 million Americans might not hesitate to forgo the high out-of-pocket costs and make the one-hour flight to the Cayman Islands for affordable care instead.”
If the U.S. cannot reverse the growing tide of interventionism in the healthcare sector, jurisdictions like the Cayman Islands will serve as a convenient alternative for medical tourists in need of quality medical treatment at an affordable price.

Medical tourism beyond the U.S.

Citizens going abroad for healthcare is not just confined to the U.S.

Like the United States, the United Kingdom has traditionally been a recipient of medical tourism due to its state of the art medical facilities and world class physicians. But since the establishment of the National Health Service in 1948, the U.K.’s healthcare sector has been riddled with all sorts of inefficiencies and misallocation of resources. Such inconveniences brought about by government-run healthcare have reversed the U.K.’s status as a net recipient of medical tourists.

In 2013 a team led by researchers at the London School of Hygiene and Tropical Medicine calculated that the number of U.K. residents seeking treatment elsewhere had risen sharply to 63,000 in 2010, compared with just 52,000 coming into the country – a figure that has grown far more slowly in recent years.

Government intervention does not discriminate against countries, it is an equal opportunity distorter wherever it takes root. And the U.K. is no exception to this rule.

The recent Charlie Gard case4 illustrated the degree of overreach the NHS has over personal health matters.

This case involved a terminally-ill infant that suffered from a rare genetic disorder that would have required experimental treatment. Gard’s parents were able to successfully raise £1.4 million in private donations so they could take their son to America to receive this treatment.

Sadly, a series of courts ruled in favor of the government doctors who believed that this experimental treatment would be futile, effectively killing Charlie Gard.

Such a grisly case not only demonstrates the cold-hearted, inefficient nature of the NHS, but also the willingness of U.K. citizens to leave their country in order to find the best medical care possible.

This tragic case should serve as a firm reminder of why unimpeded medical tourism must be embraced around the globe.

Healthcare needs market forces

At the end of the day, the provision of healthcare is a service. Like any good or service, healthcare is best allocated in a market setting where supply and demand are allowed to function freely. Globalization has allowed for unprecedented increases in the volume of trade of goods and services, healthcare included.

In the same way that they respond to onerous levels of taxation, American citizens as free consumers can take their services elsewhere when it comes to healthcare. On a micro-level, most would just go from one healthcare provider to another if the prices and quality of service are not up to par. However, in today’s globalized market economy, countless Americans have the opportunity to travel abroad and receive quality care.

Given the degree of government intervention that has accumulated over the years in the healthcare sector, citizens naturally respond by taking bolder steps such as medical tourism to obtain healthcare. This is only natural in market economies where the consumer is king and not necessarily shackled to a specific company or service.

Medical tourism is here to stay

Although it may be shocking that greater numbers of Americans are turning to medical tourism, there is nothing inherently wrong about this activity. In fact, market enthusiasts should embrace the development of medical tourism as a major industry. Americans, and citizens around the world, for that matter, now have the unique opportunity to obtain the medical care they desire in foreign lands at a reasonable price. For their citizen’s sake, governments across the globe should allow medical tourism to develop as freely as possible.

Intervening in the medical tourist sector will simply yield the same dismal results that similar interventions have generated at the domestic level. Consumers simply deserve better.

Medical tourism not only offers consumers more options for healthcare services, but it also puts pressure on governments to craft friendlier medical policies. The jurisdictions with the most competitive medical care environments will provide the best healthcare services for their own citizens, while attracting foreign consumers.

Medical tourism demonstrates how markets will find a way to serve customers even when the heavy-handed state gets in the way. Nevertheless, if the U.S. does not get its healthcare house in order, more U.S. citizens will continue turning to medical tourism as a means to get cost-effective treatments.

In the land of goods and services, the market is still king.