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Medical Tourism: Why Americans Take Medical Vacations Abroad
Diana M. Ernst, Pacific Research Institute, 9-15-06

Ernst examines the phenomenon of Americans seeking medical treatment abroad and concludes that much of the impetus for medical tourism can be laid at the doorstep of high domestic prices—and bad health care policies.
A growing population of Americans has discovered a cheaper way to get the critical health care they need. This new phenomenon is a role reversal for those accustomed to foreigners voyaging to the U.S. for topnotch health care—if they can afford it. As health-care prices skyrocket, even Americans can't afford it. Some go to India and Thailand for herniated disk repairs, heart surgeries, and even new procedures like hip resurfacing. And they return with a lot more money left in their pockets—sometimes 70-80 percent more than if they’d been treated in the U.S.

Ms. Jeanne Bennett of Raleigh, North Carolina, recently made headlines for traveling to India to receive hip resurfacing. This procedure reshapes the head of the femur with a prosthetic, which fits into the hip socket. It is a technique usually recommended for younger patients who do not need a full hip replacement. Bennett had suffered with an arthritic hip for years, despite being barely middle aged. When American surgeons told her to bear the pain until she could get a new hip, she sought alternatives. She flew to India where she had successful surgery, for $5,600.

This trend is not all due to U.S. health policy. For example, the American dollar is more valuable in many underdeveloped, foreign countries, where the pay scale is low and the number of patients high. Too much of this loss of medical activity, however, is due to bad health policy at home. Medical malpractice is not nearly so ruthless in foreign countries, where doctors can pay as little as $4,000 a year for malpractice insurance. American doctors can pay 25 times that amount every year. Intense liability pressures in the U.S. forces doctors to change the way they practice medicine, avoid higher-risk procedures, and in extreme cases, close down their practices entirely.

Medical tourists can save more than just money by going abroad for health treatment. In the United States, lengthy and strict FDA regulations delay cutting-edge procedures like hip resurfacing. FDA approval is also essential for insurers to cover medical treatments. Hip resurfacing is only available at some American medical centers, including Duke, where a few operations take place every month. In Europe and Asia, the technique is already established, and Indian doctors like Ms. Bennett's surgeon welcome the extra business. He performs hip resurfacing for as many as 15 Americans every month.

We should mention other costly additions to the supply side of the U.S. health-care industry, such as Medicare and Medicaid expenses, which consume ever-higher percentages of the national GDP. Likewise, certificate of need laws inhibit new, specialized hospitals from developing unless they can defeat lobbyists who oppose competition.

Project FDA.
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