Medical Tourism: Have Insurance Card, Will Travel

July 31, 2012

Free Market Foundation

Most Americans are shielded from the full cost of health care and have little or no incentive to compare prices or choose lower cost providers, says Devon Herrick, a senior fellow with the National Center for Policy Analysis.

However, as patients take on a growing portion of their health care costs, medical tourists are going abroad for treatments that can cost up to 80 per cent less than at home.

Consider:

In the United States, an insurer might pay $40,000 for a hip replacement.

In Singapore, hip replacements range from $10,000 to $15,000.

A hip replacement in India would cost $8,000 or less.

Some health insurers in the United States are experimenting with small, exclusive networks, which may require patients to travel some distance for certain procedures. Other provider networks are competing on price for the business of individuals, insurers and employer health plans:

Illinois-based Healthplace America, Inc., offers U.S. employers a specialty network of hospitals and clinics that will perform surgeries for 30 per cent to 50 per cent less than a typical provider network.

North American Surgery, Inc., has negotiated deep discounts with 22 surgery centers, hospitals and clinics across the United States as an alternative to foreign travel for low-cost surgeries.

North American Surgery’s “cash” price for a hip replacement in the United States is $16,000 to $19,000.

Selective contracting with hospitals and clinics abroad, as well as at home, could foster greater competition among health care providers and lower health care spending, says Herrick.

Source: Devon Herrick, Medical Tourism: Have Insurance Card, Will Travel, National Center for Policy Analysis, September 22, 2010.

For text: http://www.ncpa.org/pub/ba724

For more on Health Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=16

First published by the National Center for Policy Analysis, United States

FMF Policy Bulletin/ 28 September 2010