The pros and cons of medical tourism for the international private medical insurance market


Medical tourism is on the rise and expected to grow at a rate of 21.4 per cent between 2017 to 2023. That’s one of many factors contributing to the growth of the international private medical insurance (iPMI) market. But how does this trend impact individuals, healthcare providers, employers and governments? And how does it affect medical inflation and care quality?

The pros and cons of medical tourism for the international private medical insurance market

Leading the health tourism charge is the US, closely followed by Europe. Thousands of Americans and Europeans fly abroad to receive treatment, avoiding domestic waiting lists and often enjoying reduced treatment costs. The Asia Pacific region, South America and Central America currently dominate the market, where Americans can save up to 60 per cent on treatment.

From ageing populations and medical inflation to inadequate domestic care and healthcare cuts, several factors are driving this global trend. And now a variety of health and wellness systems, from national health services to health insurance companies, are responding.

A conundrum for governments

Thousands of patients benefit from access to cheaper treatment, as do the governments of many developing nations who can earn millions by offering cheaper procedures. But even this latter benefit brings a difficult conundrum to the governments of many developing nations. Should they provide the best healthcare for nationals by sending them abroad for treatments unavailable at home? Or should they retain that money to invest in their national health systems at home?

Those that choose the former option are placing increased pressure on their national health services as much-needed investment goes abroad. This is also a driver of medical inflation: flying a patient to another country can mean higher costs than if it were carried out at home. This means there is less to invest in the national system, and costs are driven up.

And for those nations making a virtue of selling cheaper treatment, the cost is often reduced levels of care for nationals, as tourists use up national resources and the private sector attracts the best clinicians.

Complex root causes

The main drivers for medical tourism are cost and access. But the root causes of this increase in travelling for treatment are cuts in national health funding, ageing and affluent populations, staff shortages, and a range of lifestyle factors.

Many people travel to countries that offer lower-cost medical treatment because they can’t afford them at home or don’t have access to the treatment at all. A full 1.7 million Americans live in households that will declare bankruptcy due to their inability to pay their medical bills. Yet in a 2017 analysis it was estimated, for example, that Americans flying to Malaysia for treatment could realise savings of 65–80 per cent on medical bills. Many around the world are in the same situation. Others are flying for cheap elective surgery and treatment for things such as cosmetic surgery and dentistry.

On the other hand, company executives and those on assignment often travel to access better treatment in the country of their choice — and not just when they’re unwell or managing a condition, but in pursuit of preventative wellness care.

Another contributing factor is certain nations’ reliance on foreign countries for specialist treatments. Nigeria’s national health service sends many patients abroad for treatment, paying other countries for access. In an effort to ‘reduce our dependence on foreign medical tourism’, Nigeria announced in February 2018 the construction of a N7.5 billion (£14.9m) ultra-modern specialist hospital in Kano Statein.

National healthcare system waiting times are also driving medical tourism increases. In Wales, for instance, waiting times for treatment under the UK’s National Health Service (NHS) have gone up by 400 per cent since 2013. The UK’s The Telegraph reported in 2017 that many UK citizens were travelling abroad to receive immediate treatment and avoid these long waiting times.

Developed nations’ ageing populations are also having a growing impact. As people’s lifespans are increasing but their ‘healthspans’ (years lived free of significant disease) are not, the higher costs of ageing are putting pressure on healthcare systems. As national health services buckle under this pressure, the longer waiting lists and medical inflation cause many older people to seek alternative, cheaper treatments abroad.

A blessing and a curse for countries

Although some countries are benefitting from an influx of patients keen to exploit cheaper care, some national health services are feeling the pressure. For example, Costa Rica earned $338 million from the trade in 2012. But spending on ‘deliberate health tourism’ by those taking advantage of the UK NHS’s free services was estimated to be between 0.3 per cent and 2 per cent — or £2bn of the entire NHS budget. An immigration health surcharge has been proposed as one way to tackle this problem.

The issue is proving a challenge for many government leaders who want to provide the best healthcare for their country’s nationals. Sometimes this does mean using specialist care in other countries. But flying a patient to another country can mean higher costs than necessary, thereby contributing to medical inflation. This in turn means that governments have less to invest in their own national system, necessitating cost increases yet again.

A quick sweep of recent news headlines shows many countries are getting in on the action, building pay-to-play services and promoting them:

One nation making the most of the opportunity is Cuba. In his November 2017 speech at the International Travel and Health Insurance Conference in Barcelona, Asistur SA Director General, Humberto Barreto Nardo, explained how Cuba wants to build a strong infrastructure offering basic medical care and the best medical standards for its population and for medical tourists. He described how a corporate entity called ‘Cuban Medical Services Market Developer’ was being created to guarantee quality medical care for both locals and international tourists.

A blessing and a curse for individuals and employers

The primary benefit to individuals is the opportunity to seek quality care for a lower cost without regard to geography — and by doing so, they preserve their productivity, a benefit to employers. But they and their employers don’t necessarily benefit by nations and private enterprise tapping this market. The trend contributes to global healthcare inflation and doesn’t address disease/condition prevention and intervention. Instead, it often results in health insurance premium increases, higher passed-on costs through budget/target shortfalls and/or potential tax increases, and most importantly, fewer healthier people.

And that’s if all goes well for the person travelling for treatment. Many patients fly for lower-cost treatment only to experience subsequent complications that may hike costs they haven’t budgeted for and can’t deal with since they’re so far from home.

In a 2013 report, “researchers examining outbound medical tourism from Oman found that 15 per cent of 45 surveyed medical tourists experienced complications following treatment abroad, while a survey of the British Association of Plastic, Reconstructive and Aesthetic Surgery found that 37 per cent of members had seen patients with complications resulting from medical tourism”.

The role of the expat

Demands on local healthcare systems from expats travelling back to their countries of origin is also causing waiting lists to lengthen and costs to rise. For many expats, iPMI ensures they have access to quality care and treatments wherever they are — but that also puts increased pressure on private resources, draining national health services of staff and hospitals. 

Best practices

In a ‘pay-to-play’ system, everyone loses out. Nations have less money to spend on keeping their populations healthy, while medical inflation causes insurers to raise premiums, which in turn hurts individuals and employers.

That’s why the 21st century is seeing a blossoming turn toward a preventative rather than curative focus on care. Called ‘value-based care’, this approach puts the whole patient (not just his or her condition or disease) at the centre of the health journey. This makes it easier for people to get quality care while keeping medical inflation in check. Many governments, for instance, are investing in keeping people healthy through credible nutrition information, smoking cessation campaigns and other initiatives.

Since the medical tourism trend appears to be here to stay, value-based care may be one of the industry’s best ways to balance the quality of care with increasing costs.  

This article was provided by Aetna International.


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