Can Medical Tourism Enable
Affordable Health Insurance?

Twenty percent of Americans between the ages of 19 and 64 — 36.5 million adults — have no health insurance according to the Economic Research Initiative on the Uninsured, based at the University of Michigan. Nine percent of children under 19 are uninsured, bringing the total to 45.5 million uninsured Americans, or 17.8% of the non-elderly population.

These statistics don’t include the underinsured, such as people who pay a lower premium for policies with larger deductibles and co-pays. As employers struggle with the cost of health benefits, high-deductible plans are becoming more common.

Individual Health Plans

While medical tourism — traveling overseas to obtain lower cost medical care — is a compelling option for these people when they need surgery, it could also be a means of making health insurance more affordable to them. Though not widespread, there are some indications that this trend may be emerging.

Blue Cross Blue Shield of South Carolina may be among the first to offer such a policy. David Boucher, assistant vice president of health care services, prefers the term “global health care” rather than medical tourism, because his focus is on health care, not vacations. After reading The World is Flat by Tom Friedman, and seeing a 60 Minutes report on medical tourism, he decided to get a first-hand look. “The purpose of the trip was first to look at quality. Cost is second.”

He visited Bumrungrad hospital in Bangkok, Thailand with his wife. “We were struck. The first two floors are a five-star hotel. It is a top-notch hospital. The technology is identical to what you’d find in the U.S.” Boucher, a former hospital CEO, toured the entire facility and spent time with hospital staff. “The percentage of staff who are trained in the U.S. and are board certified is impressive.” Boucher’s wife told him, “If I needed surgical care and we had the luxury of waiting for the 20 hour flight, we’re going here.”

Regarding his company's plans for implementing a policy with overseas options, Boucher said, “We’re taking this seriously. I am optimistic that something will come out of it. I think we’ll have something in place by the end of 2007, initially for individuals, in order to make health insurance more accessible to the 400,000 uninsured in South Carolina. Within a couple of years, I think we’ll see group demand — in terms of opportunities, not mandates.”

Boucher emphasized, “This is not about trashing health care in the U.S. We need quality hospitals here. This is about providing affordable options."

Cinergy Health, a nationwide provider of health care savings programs, is collaborating with MedRetreat, a medical tourism agency based in Chicago. Steve Trattner, chief marketing officer of Cinergy Health, said, "In combination with our discounted health care opportunities here in the U.S., MedRetreat can provide excellent health care facilitation services within their competent network of hospitals and physicians abroad. This combined service allows our members to stay in the U.S. for lower cost health care issues, and travel abroad for higher priced surgeries." The Cinergy Health savings program is not insurance, but rather a service offering access to a network of discounted health care providers.

Group Health Plans

Medical Tourism Insight surveyed 20 Fortune 500 benefits managers, asking if their companies were considering medical tourism as a means of reducing health benefit costs. Surprisingly, none of the benefits managers we spoke with were familiar with the term “medical tourism.” Once it was defined, concerns about liability and quality of care were often cited. One employer speculated that labor unions would never allow it.

However, there are early adopters.

Two of his largest clients have not implemented medical tourism programs yet, but are following the practice closely. Employers with a high percentage of foreign-born employees are the most enthusiastic. United Group Programs’ clients include a hotel with 30% foreign-born employees, and a janitorial company with nearly all of its employees from eastern Europe. Their employees have no problem traveling overseas for health care. Edelheit is sometimes able to send them to their home country, so they save money on their deductible and get a free trip home.

“We just sent someone to Colombia. The procedure would have been $10,000 to $20,000 here, but was only $2,500 in Colombia. The employee had nobody to take care of her three kids while she was away, so we paid for them to go with her.” Edelheit pointed out that Colombia is not a destination they normally work with, but this employee requested to go to her native country.

As health insurance rates have been increasing dramatically for several years, many American employers have been reducing coverage, or shifting more of the cost burden to their employees. “Employers are showing interest in medical tourism because this is the only thing in the industry that is lowering costs," added Edelheit. "It's good for the employers because they save money. It's good for the employees because it reverses the trend of declining benefits."

The Associated Press recently reported that Mercer Health and Benefits was researching overseas health care options for several of its Fortune 500 clients. The use of medical tourism to reduce health insurance costs — and make health insurance accessible to a greater number of Americans — is an emerging trend to watch.