From the January 2011 issue of Benefits Selling Magazine •Subscribe!

The Amazing (Medical Tourism) Race

A concept that was rare even a decade ago has slowly been gaining steam, often as a result of word-of-mouth. That concept is medical tourism -- people in need of medical procedures traveling to have those procedures done.

There are three categories of medical tourism:

  • Global outbound: U.S. patients travel to other countries for medical procedures.
  • Global inbound: Patients from other countries come to the United States for medical procedures.
  • Domestic: U.S. patients travel to other states, or long distances within their own states, for medical procedures.

International Medical Tourism
According to Scott Edelstein, Esq., a partner with Squire, Sanders & Dempsey, LLP, and a member of the Legal Council of the Medical Tourism Association, there's been a lot of growth for global outbound medical tourism. "At first, a lot of medical tourism was going to Asia," he reports. "These days, though, the destination with the greatest growth is Latin America, especially because more facilities are meeting JCI requirements."

JCI is the Joint Commission International, a body that accredits medical tourism sites worldwide. Another trend Edelstein has seen in recent years is the growth of inbound global medical tourism -- patients come from outside the U.S.

One thing that may be holding the trend back, though, is the reticence of some insurance carriers to become involved in medical tourism. According to Mary Ann Keogh Hoss, Ph.D., an associate professor with the Health Services Administration of Eastern Washington University, insurance companies are not averse to paying for medical travel in certain cases. However, they're reluctant to pay for much in the way of medical tourism.

What's the difference? The latter often involves vacation time for the patient's traveling companion while the patient is in treatment. In fact, according to Hoss, more people are beginning to refer to legitimate medical tourism as "medical travel," believing it's more palatable to everyone concerned.

Still, the lure for patients is becoming stronger. "Countries that are involved in medical travel tend to do so as a country," states Dr. Hoss. "Their departments of tourism, economic development and health work together to see how they can bring foreign travelers into their countries for medical treatment. We don't have anything similar to that in the United States."

Domestic Medical Tourism
In the past, Hoss says, many insurance companies were comfortable looking at medical travel that involved foreign countries, because of cost savings.

"These days, though, the focus seems to be more on travel across states," she states. "Insurance companies are asking, 'Where can we get the best price within the United States?'" Edelstein has seen growth, as well.

"There are more patients from one state traveling to another state for medical procedures," he reports. "A lot of hospitals are specifically trying to attract patients from other states. They do this by offering incentives to large employers."

The Issues: Cost and Quality
Two primary determinants of whether people will travel for medical procedures are cost and quality. In terms of cost, according to Tom Hamilton, president of Affordable Health Care Alliance, some insurance companies are starting to provide incentives to employees for engaging in medical tourism.

"Since medical procedures tend to be more expensive in certain parts of the United States than in other parts and overseas, more insurance companies are offering employees an option," he states. That option: "We will pay the full cost of the procedure to have it done at a low-cost facility in the U.S. or overseas, or you will pay a deductible if you want to have the procedure done locally."

Americans are slowly becoming more sophisticated in looking for quality, according to Hugh Greeley, director of HG Health care Consulting. "The Joint Commission International is becoming the gold standard for accrediting medical tourism sites."

Greg Carlson, Ph.D., an assistant professor in the Department of Health Services at the University of Alabama, says the early driver for medical tourism was the lower cost.

"These days, though, it is a combination of cost and quality, which is defined as the 'value proposition,'" he explains. "This is happening as a result of more transparency in the industry, which allows people to see what the outcomes are at different institutions in terms of clinical quality."

Ross Pendergraft, vice president of Arroyo Insurance Services, and immediate past president of the Los Angeles Association of Health Underwriters, is also seeing more quality consciousness. "More people are becoming aware of what medical tourism is," he states. "In the past, people in the United States assumed that U.S. medical facilities were the only really good ones.

Now, they're learning that there are a lot of really good medical facilities in other countries. In fact, some of these are able to provide better outcomes that those available in the United States." Pendergraft sees this trend as being similar to one that has evolved in recent decades related to automobiles, "In the 1960s and 1970s, Americans believed that the only good cars were domestic ones."

Reform Another Driver?
With the advent of nationalized health care in Canada, there has been a growing trend for people in that country to travel to other countries for their medical procedures, often because of the significant waits for treatment. Will health care reform in the U.S. lead to a similar trend?

According to Jonathan Edelheit, CEO of the Medical Tourism Association, health care reform will have a positive impact on medical tourism, simply because reform will ultimately increase health care costs.
"Obviously, medical tourism is growing in popularity because the cost of care overseas is less than it is in the United States," he points out. "So, as the costs increase even more here, it will drive even more people overseas."

Edelstein also believes reform will have a significant impact on medical tourism. "We are already starting to see some of that. Traditionally, medical tourism was something that was undertaken by patients who were underinsured or not insured. They were seeking lower cost care in other countries. What we will see with health care reform in the United States are serious access issues to health care. As a result, patients who aren't willing to wait three months or longer for procedures will elect to go to other countries."

Pendergraft also anticipates a growth in medical tourism as health care reform takes hold. "Since health care reform has not addressed the issue of curbing the cost of health care, people will become even more interested in finding health care that is less expensive," he states. "Typically, you can receive health care outside of the U.S. for 20 to 25 cents on the dollar."

Implications for Brokers
What impact does, and will, medical tourism have on brokers who sell health care coverage? "We have been seeing more mini-medical plans and limited medical plans implementing medical tourism," replies Edelheit. "They are doing this because it makes their benefits more rich and comprehensive."

For example, a heart procedure that would cost $100,000 in the United States might be covered at $10,000 by the medical plan. However, this $10,000 benefit might actually pay the full cost of the surgery in another country.

"Some brokers are also starting to play around a little with critical illness policies that cover medical tourism," he continues. "If they have a plan that pays out a $10,000 or $20,000 benefit for a critical illness, such as heart or cancer, that payment might cover the full cost of the procedure overseas."

And, he adds, some brokers are also creating a niche market by marketing plans that cover medical tourism to ethnic employees in the U.S. who tend to be willing to travel back to their home countries for medical procedures.

The one overlooked benefit Edelheit believes will become huge in the next few years is dental.
"Dental insurance in the United States usually only covers $1,000 to $1,500 per year," he states. "In the States, dental implants can cost $20,000 to $50,000 for a full set. When dental carriers start implementing medical tourism into their insurance, it might be able to create up to a 90 percent increase in the dental benefits that employees have."

While patients are embracing medical tourism, and self-insured employers seem to be doing the same thing, not all of the carriers in the fully-insured market are yet willing to fully embrace the concept, according to Pendergraft. "In either case, brokers need to learn more about medical tourism. In the future, medical tourism is really going to take off, and I would hate to be the broker who is asking, 'What happened?'"

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