The impact of healthcare reform on the USA's medical tourism industry


Political changes in Europe and the USA have led many in medical tourism to make statements of how these will affect the future of medical tourism. Many of these unchallenged statements have been accepted by national and international media as “fact”. But much comment is based on poor understanding of healthcare politics and will mislead countries, companies and hospitals hoping to benefit from these changes.

Healthcare reform in the USA

Many ‘experts’ have claimed that US healthcare reform will greatly increase outbound medical tourism. The main reasons they give are:

  •     There is a huge target market of 50 million uninsured Americans
  •     Employers and insurers now have the green light to proceed with including medical tourism in insured or self-funded plans
  •     The reforms bring EU style universal healthcare to the USA.

Sadly all three are way off the mark.

What needs to be understood about current US politics is that it is a duopoly of Republican and Democrat where much policy is determined by massive lobbying, huge campaign contributions and revolving door hiring. Healthcare reform is affected by two massive lobbies, insurance and health providers that hedge their bets by supporting both parties. Both expect to make money from healthcare reform; this also explains why reform is more of a sticking plaster than a root and branch reform of a problematic healthcare system where the main beneficiaries are doctors and hospitals. If the Republicans win the election, to undo the reforms will cost at least $10 billion; while change is like turning round a supertanker….. it takes years not months.

The insurance myth

Much of the current planned healthcare reform is due by 2014, but it will be at least 2018 before everything is settled. And even that assumes no significant changes after the elections.

No insurer or company is going to add outbound medical tourism if there is the possibility that they are committing themselves to something that they are not sure of and could not quickly retract in the future.

There is a more pressing problem. The legislation is prescriptive on how big a proportion of the premium can contribute to non-medical items such as administration. Insurers and companies cannot get away with costing a medical tourism package (of treatment plus travel plus accommodation) and rolling all within the medical treatment. If it costs $1,000 for treatment in the USA, but only $400 in country X plus $100 travel plus $100 accommodation plus $100 agency fee, you cannot say that the total of $ 700 can all be within the medical payment section. Only $400 can be attributed to that part; the other $300 has to be within expenses. Then there is a problem that there are minimum standards of insurance product and even tighter restrictions of products offered by healthcare exchanges. Neither model has any allowance for outbound medical tourism.

My view that all medical and other costs of medical tourism will be within the medical part of the premium is backed by major US insurers. They write expatriate insurance for millions of Americans when abroad, but write it within the USA. Insurers have taken legal and other advice and have come to the view that they may be forced to take the underwriting away from the USA. Expatriate insurance has extra costs such as repatriation, air ambulance, higher admin fees etc. The three leading US expatriate insurers have concluded that the new law means that ALL these extra costs have to be put in the non-insurance part of the premium, and effectively take that percentage over the legally allowed limit.

The uninsured American myth

Even with healthcare reform, there will still be some 50 million uninsured Americans. Some ‘experts’ are still saying that this will offer a huge market for overseas countries.

For a few people having no insurance will be a deliberate choice; but many of those able to pay the tax fine for non-insurance are on the ultra-right for whom the idea of going overseas for treatment is against their core beliefs.

Another sector that may ignore the law are within the 1% of Americans who are ultra-rich and can afford the very best private US treatment. Trying to sell these people medical tourism on the basis of saving money will be as ineffective as offering them a Kia instead of a BMW.

According to income statistics from the US Census Bureau for 2010, the national poverty rate exceeded 15% of the population, the highest in 20 years. Ranked by income inequality, the USA is now 95th in the world behind Nigeria, Cameroon and the Ivory Coast.

The vast majority of the 50 million uninsured are, and for the foreseeable future, will be a permanent underclass of lifetime urban ghetto residents, migrant workers, illegal immigrants, chronic drug and alcohol abusers, crippled war veterans, the homeless, the long-term unemployed and two million in jail plus another ten million with active non-traffic criminal convictions.

Simply put, there is no market here for medical tourism; this underclass struggles to pay for food and other basics.

Why the US reform is not EU style universal healthcare

Republican lawmakers have denigrated President Barack Obama’s health care overhaul by labeling it a European-style takeover of the health system.

French minister of health Marisol Touraine recently explained why the 2010 law creates a distinctly different system than the one that universally covers the French.

  • Among other differences, the U.S. system provides government-sponsored insurance coverage only to certain segments of the population. Historically, that’s been seniors, the disabled and the poor. Starting in 2014, the federal government will begin subsidizing private insurance for some low and middle-income Americans.
  • France’s health coverage extends across age groups and income levels
  • The French government picks up about 75% of the cost of citizens’ health care, and about 90% of the French have supplemental private health insurance to cover the rest.

In the UK healthcare for all is free at the point of treatment and insurance is collected from general taxation. In Germany, Switzerland and The Netherlands, everybody has to buy private insurance but the products are from a few authorized sellers and tightly controlled on price and benefits.

The US system will still be about wide varieties of cover with very limited state price controls backed by national laws on certain types of health insurance.

Economic and political change in Europe

The effect of economic and political change in Europe has resulted in cuts in public expenditure…. the effect on state healthcare in some countries is dramatic .We have already seen dramatic health budget cuts in Portugal, Spain, Greece, Ireland, and Italy and less severe ones in the UK.

These cuts will mean that those that can afford it will have a greater incentive to look across borders for healthcare. But it also means that the cuts will lead to a reduction in the number who can afford private healthcare for non-essential treatment.

The chances of the EU Cross–Border Healthcare Directive being implemented by 2013 are very low in some countries, let alone the problem of getting governments to pay for overseas treatment.

We are also seeing politicians in the UK and Spain trying to cut back on what is often legitimate treatment of foreigners. In times of crisis, ‘ healthcare immigrants’ are a soft target for politicians with no real economic solutions. Non-resident foreigners will be affected in countries such as Greece and Portugal simply because there will be less free healthcare for anyone.

France is looking at ways to reduce health expenses by encouraging people to make less-expensive doctor office visits first before making costlier trips to the hospital. The new socialist government has firmly rejected passing on a greater portion of health costs to residents. The new administration has already peeled back some health cuts from by the previous regime. Sarkozy’s administration had imposed a 30 euro surcharge on any foreigner who got treatment under France’s government funded system, and this has been eliminated because it was actually costing more as many delayed getting treatment.

France is also leading the charge against ‘cut cut cut “ economic policy and bailing out banks at the expense of the population. Iceland, the first country that collapsed, is actually the first to recover and is also using a ‘bounty hunter squad” to locate bankers, officials and politicians who caused the crisis, and remove them from wherever they are to be personally prosecuted in Iceland; thus destroying the misleading statements from US and UK officials that it would be almost impossible to personally prosecute the top bankers who caused the economic mess.

The waiting lists of the UK

Long NHS waiting lists are regularly claimed by country after country as to why British people will flock to them for surgery. While waiting lists are getting longer, for anything urgent and serious, they are very short. NHS hospitals are legally obliged to provide surgery within 18 weeks from diagnosis.

The public-private partnerships of many years ago are now haunting the NHS. These badly thought out deals built new hospitals with private money but run by public money. The badly structured deals were great for the financiers. So much so that one London hospital has gone into administration, and others may follow, as such a huge percentage of their budget goes to paying the financiers. 

The British tend to go overseas for items where the NHS and private insurance offers little or no help: cosmetic surgery, cosmetic dentistry and fertility treatment, or areas where many people have to pay out whether it is NHS or private care - dental treatment.

Where there may be a keener appetite to go overseas is not driven by waiting lists, but by a sense of wanting more control over when and where to get treated. Both the NHS and private insurers are increasingly nannying people to get healthy, and exercising more control of who they can see where. So-called freedom of choice may work in big cities, but is impractical in rural areas due to the practicalities.

For some types of treatment in some areas, waiting lists are getting longer for what the local NHS regards as non-urgent items; hip and knee replacements, cataract surgery and IVF.

So, yes the British are a target market, but using waiting lists in general as a reason is dangerous as it is not the reason most go abroad, and is likely to antagonize many people who generally support the NHS but would consider overseas treatment for certain conditions.


Trying to use political and healthcare problems/reform in the USA or Europe as a reason why medical tourism will grow for country X is often based on poor understanding. Using the wrong marketing message will not only fail to deliver new customers, it could actively turn off people and organizations that may have considered you.

Saying anything bad about a country’s healthcare, politics or economic problems is a dangerous game, as while they may feel free to criticise, many dislike other countries or organizations doing so, particularly if it is to sell services to them.

Selling medical tourism to an American or European by attacking the politics or economics of their country is more likely to find potential customers walking away than buying your product!


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