Policy: Health Care

Need an MRI? Get it in Mexico

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Opinion,Op-Eds,Health Care,Mexico,Manhattan Moment

Health tourists are nothing new. Sickly Greeks of antiquity traversed the Mediterranean in droves to visit Epidaurus, a Peloponnesian town reputed for its medical care.

Within the U.S. today, numerous employers have started using “direct contracting” to save money on health care: Lowe's, for example, allows employees and dependents to be transported to Cleveland Clinic for cardiac procedures; Walmart contracts with six “centers of excellence” around the country to provide coverage for heart, spine, and transplant surgeries.

This is largely a good thing. With health care one of the few markets to remain predominately local, there is no reason why providers across state lines should not compete for patients.

But what about competing across countries?

With medical costs an ever-growing concern (few companies expect medical inflation to remain low), along with cost pressures from Obamacare, some companies are sending patients abroad. One such insurer, California-based MediExcel, requires beneficiaries to obtain certain services in Mexico.

For firms in states on the country's southern border, such developments hold obvious appeal. Large companies, say in California or Texas, might construct networks of low-cost foreign providers -- for not only basic services like MRIs or X-rays, but also more complex procedures such as spinal or cardiac surgery.

Medical tourism, moreover, can be a powerful cost-saving measure for firms across America. Spinal fusion, for instance, costs around $100,000 in the U.S.; in Costa Rica, the tab runs to just $11,500. Similar savings can be found for other procedures, including coronary and gastric bypass surgeries.

Companies, meanwhile, that previously did not offer insurance—but which will now be required to under Obamacare — may find medical tourism a useful safety valve to avoid racking up excessively high costs. Still, it is far from guaranteed that the latter will remain open indefinitely.

Indeed domestic barriers to medical tourism already exist. “Telemedicine” — whereby patients interact with doctors and other medical professionals via video, email, and other electronic methods — is hampered by antiquated state-level licensing regulations preventing the practice of medicine by physicians not licensed in-state.

And while no federal regulations currently prohibit travel for overseas medical services (Texas is the only state to explicitly ban insurance plans which require travel outside the U.S.), if more companies take advantage of the considerable cost savings available, calls for limits on their use will invariably arise.

Outright bans would nonetheless be highly misguided.

Persuading employees, it is true, to travel abroad may at times be a difficult sell. Quality concerns over foreign providers might emerge. Yet simple requirements at the state level (such as minimum safety standards) and other basic protections (like requiring notice that foreign providers are not covered by U.S. medical malpractice laws) should suffice. Enticing employees with other incentives would help, too: Coupling together exotic, all-expenses-paid vacations with surgery would still deliver significant savings to employers.

In short, medical tourism, if allowed to flourish, represents a promising tool to help businesses tackle the growing cost of medical care in the age of Obamacare.

Yevgeniy Feyman is a fellow at the Manhattan Institute's Center for Medical Progress.
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