A growing number of Americans are interested in going abroad for surgery. Hospitals in India, Thailand, and other countries are able to offer high-quality treatment for a fraction of the cost of American hospitals. This enterprise is called “medical tourism”.
Indianapolis-based WellPoint, which covers 35 million Americans, has decided to offer the option. It’s starting out very small: one 700-employee firm in Wisconsin will use the opportunity.
But it’s got to spread like wildfire as WellPoint gets more comfortable with it. Surely, premiums will drop significantly, and the carrier will market it to other groups as a way to increase market share. Other carriers will be sure to follow.
This poses a challenge for American hospitals. Hopefully, losing business to medical tourism will lead them to conclude that they will simply “hollow out” if they do not change their approach to public policy.
Currently, general hospitals lobby against specialty hospitals, and otherwise support an unsustainably high cost-structure. Many states have Certificate-of-Need (CON) laws, which inhibit competition (and is a measurement in the U.S. Index of Health Ownership). This is necessary, they argue, to pay for the uncompensated care of uninsured patients who present at the ER, as well as underpayment by Medicare and Medicaid plans. The result is a cost-shift to private payers – such as WellPoint and other carriers (which I discussed at some length in my analysis of Governor Schwarzenegger’s health reform).
Imagine if the state thought that the solution to the homeless problem was that hotels must offer rooms for free to anyone who walks in the lobby! We’d have a hotel crisis pretty fast. America will be fortunate if its hospitals realize the folly of current “safety-net” policy and embrace change.