From the July2011 issue of Benefits Selling:

Over the past year there has been a lot of buzz about the term“medicaltourism.” With health care costs continually rising, theattractiveness of providing medical care at up to a ninety percentsaving is pretty hard to resist.

For those who have been resisting this growing trend, theresistance is usually because they don’t want to be the“trendsetter” in U.S. healthcare. More than a year ago, medicaltourism was one of the top projects for all the major U.S. healthinsurance carriers. They all were moving forward with it, issuingRFPs for companies to propose implementing it for them, andperforming site tours of top international hospitals to add totheir network.

Then a huge roadblock happened: health care reform. When healthcare reform came around, all the health insurers in the UnitedStates stopped all innovative projects, including medical tourism,and started fighting for survival with the threat of health carereform putting them out of business. Times have changed.

Most insurance companies and employers are finally “comfortable”with health care reform. Comfortable meaning, they understand it,know how it will affect them, and they are in compliance with it.For the first time in more than a year, insurers and employers aregoing back to the innovation table. They know health care reformisn’t going to reduce health care costs, but actually raise costsand they need to implement programs to reduce costs before they aretotally out of control.

Many insurance companies and some of the biggest employers inthe United States now are turning to medical tourism as thesolution. In the voluntary benefits arena over a year ago twolimited medical/mini-medical carriers implement medical tourism,and now another limited medical carrier is about to implementit.

Soon more limited medical carriers will implement medicaltourism simply to stay competitive in the marketplace and to offersimilar benefits that other carriers offer. Voluntary benefitscarriers are also starting to move forward with medical tourism.There are dental insurance carriers moving forward withimplementing medical tourism, so that their insured can use theirdental benefit overseas.

The annual max of $1,000 to $1,500 per year won’t even cover onedental implant. Add medical tourism and allow the dental patient totravel to Central America or somewhere else in the world, that$1,000 max could be a $10,000 benefit. Once the first dentalcarrier announces this benefit, which should happen first, the restof the dental carriers will race to implement this, because if theydon’t, they will no longer be competitive in the marketplace.

Other carriers examining medical tourism are critical illness and cancer insurers. If you have a $10,000cash benefit when someone is diagnosed with cancer or one of thequalifying critical illnesses, then $10,000 won’t go very far inthe United States. But take that benefit overseas and it could beworth $100,000. A major market for medical tourism is ethnicemployees or patients.

Studies show that many ethnic patients who need a major or minorsurgery prefer to travel back to the country they or their familyis from and recover around family and comfortable surroundings.There is no cultural or language barrier or perception about thequality of the health care system.

Another large growth area is domestic medical tourism, whereAmericans travel within the United States for their majorsurgeries. There are many centers of excellence around the countrythat have streamlined their process and lowered their costs fororthopedic and heart procedures. Smart employers are learning thatthey can pay 60 percent of the cost of a knee replacement simply byincentivizing employees to travel to specific hospitals for theirknee surgery.

A perfect example of this is the partnership between theCleveland Clinic and Lowe’s. Lowe’s—a huge U.S. company with some228,000 employees—recently implemented a domestic medical tourismbenefit allowing full-time Lowe’s employees and their covereddependents enrolled in the company’s self-funded medical plan theopportunity to schedule heart procedures at Cleveland Clinic, oneof the country’s most renowned hospitals.

Lowe’s approached the Cleveland Clinic as they were developing abenefit that would allow employees to seek out the best medicalcare in the country. Bob Ihrie, Lowe’s senior vice president ofemployee rewards and services says of the partnership: “In workingtogether with Cleveland Clinic, our employees will be able toexperience the best of the best in health care with lowerout-of-pocket expense than having the surgery at anotherfacility.”

The idea is that the patient will be at the best location forheart surgery, which will decrease the likelihood of additionaloperations or complications so there will be a lower cost in thelong run. In today’s economic climate people are smarter shoppersof health care than ever before. They are willing to travel for thebest care and are starting to become more consumer driven,comparing quality and pricing.

In the voluntary benefits industry, these employees are paying100 percent of the cost for their voluntary benefits. They don’thave a huge bank account, and they want their dental plans,critical illness, cancer and long-term care plans to go furtherthan ever before. There are no magic ways to make a set dollarbenefit in a policy to go further or last longer, but medicaltourism offers that possibility.

2012 will be the biggest year yet for medical tourism as theinsurance industry and the voluntary benefits industry adopts itwith open arms, by choice or just to remain competitive.