We question what effect the US healthcare reform will have on medical tourism


Views have been obtained from the US Medical Tourism Association, Deloitte Center for Health Solutions, Patients Beyond Borders, Medtreks, Companion Global Healthcare and Planet Hospital.

Concerns have been voiced already about the potential repercussions of the reform on both the US healthcare system and the medical tourism industry. Opinions are varied and to some extent confused as many potential future scenarios are being suggested. Some, none, or all of these scenarios may come into being and no one is really sure how it’s going to play out.  The actual bill is 2,700 pages long and while no one has yet had time to thoroughly study the legislation, there is general agreement that the introduction of compulsory health insurance for US citizens will have enormous ramifications throughout the US healthcare system and society as a whole.

Is this a time of opportunity for medical tourism? Read on….

US Medical Tourism Association

Within the US Medical Tourism Association, there’s been a rapid about face following the passing of the legislation. MTA CEO, Jonathan Edelheit, had previously written off Obama’s chances of healthcare reform in a magazine article entitled “Medical Tourism in the Ashes of Healthcare Reform” stating:

“Healthcare Reform is dead in the United States”, posing the question: “What does healthcare reform dying in the US mean for medical tourism?”, and answering it thus: “It is extremely positive”. The article went on to predict “massive growth of medical tourism in the future”

The article was a little premature, and was rewritten following Obama’s success. It now states:

 “Healthcare Reform was dead in the United States and now it’s back.” The question has changed to: “What does healthcare reform passing in the US mean for medical tourism?”  But the answer remains unchanged as “It is extremely positive”. And the article continues to predict “massive growth of medical tourism in the future”, as before.

Based on the article, and its subsequent rewrite, the MTA viewpoint appears to be that US healthcare reform will make no difference either way to the direction that medical tourism takes. We can expect massive growth whatever happens.

Subsequent comment provided by Jessica Johnson at the MTA reiterates the revised thinking:

“The MTA has the same position as Deloitte that Healthcare Reform in the US will grow medical tourism and should be very positive for medical tourism as it will significantly increase the cost of health insurance in the US for both employers and individuals.  Healthcare Reform in the US will not lower health insurance costs, and it will also potentially create long waiting times for medical procedures which will create situations like in Canada and the UK, where patients travel outside their country because of long queues for important surgeries.”

Deloitte Center for Health Solutions

 Deloitte sees nothing explicit in the reforms that either encourages or discourages medical tourism, and has recently provided an assessment of the overall impact of healthcare reform in the USA. See this week’s IMTJ news article: Deloitte’s take on US healthcare reform.

Paul Keckley from Deloitte Center for Health Solutions adds:

“According to the 2009 Medical Tourism: Update and Implications report by the Deloitte Center for Health Solutions, there are currently 750,000 approximate outbound medical tourism cases per year, around $5.1 billion in offshore spending. In the current health care reform legislation, there is nothing explicit that precludes or promotes medical tourism. However, if health care costs increase at current rates (premiums this year are increasing 8-13 percent), we could expect people to seek cheaper options that are safe.  This is especially true for people who participate in plans that encourage cost restraint.  It is likely that medical tourism will grow in the future.”

Patients Beyond Borders

The short answer from Josef Woodman at Patients Beyond Borders  is...who knows?  According to Josef:

“Most components of the bill will take effect gradually, and implementation is likely to be even more glacial.  At this point it’s not even clear the Act will stand, as more than 14 states have now filed lawsuits challenging its constitutionality.

Should the Act remain in place, we will undoubtedly see increased burdens on our already groaning healthcare infrastructure.  In accommodating 30+ million new healthcare consumers, we’ll likely experience an increased and acute shortage of primary care physicians, nurses, and administrative staff, resulting in longer waits for treatment.  Thus, while the number of uninsured American patients will decrease, the ranks of the underinsured will rise dramatically, as limited resources are triaged by insurers and providers across the healthcare reform landscape.

In short, the US healthcare system under healthcare reform will likely morph into more of a public-private system as found in the UK, and emerging in Canada.  Not unlike the US education system, we’ll see lower cost—albeit less accessible— public care for those who cannot otherwise afford more expensive private care financed by luxury insurance plans, concierge services or out-of-pocket payments.

To avoid the scenarios experienced by overburdened government-regulated healthcare systems in the UK, Canada and Germany, US insurers and providers would be prudent to take proactive measures.  Thinking globally wouldn’t hurt.  For example, to help mitigate the pressures of our over-burdened healthcare system, US insurers might aggressively accelerate efforts to include cross-border treatment plans for American-accredited facilities overseas. Cost savings can be substantial, even at the wholesale rates.  In like manner, leading US providers should be aggressively planning the construction of more cost-efficient international facilities and/or creating sustainable affiliations with JCI-accredited hospitals abroad.”


Jack Lundberg from Medtreks believes it is difficult to predict what changes big or small, may take place in the medical tourism marketplace:

 “I do think there will be any number of opportunities that present themselves over both the near and mid-term horizons.  Seizing those opportunities, however, will require remaining highly informed about pending marketplace developments across a broad spectrum of information sources, recognizing and/or predicting opportunities, and having the ability to quickly and successfully incorporate those opportunities into their business models as they appear.

I believe in the short term, those medical tourism companies which have catered to and relied upon the uninsured demographic will likely see a significant drop-off in customer flow, the reason being that prospective clients will now more readily utilize domestic providers at a comparatively competitive cost.  Those firms that have diversified their portfolios, i.e. cater to both insured and uninsured alike, will realize far less of an impact.  For both business models, however, I also believe there will be a protracted, say 2-6 years, period of relative confusion as insurers, patients, hospitals and doctors begin to comprehend the changes and then, take steps to effectively manage the same.

That said insurance companies under this proposed regime, present an interesting dichotomy.  On the one hand, they should see the number of covered lives increase since coverage is now or soon will be required.  Consequently, their pool of premiums will grow.  However, given the fact that (1) costs themselves are not addressed by this measure, and (2) pre-existing conditions are to be covered, it will be interesting to see how many of those firms hold onto the historical insurance model and/or who can remain competitive, i.e. profitable, given these constraints.   

In order to remain in business, I think insurers will be forced to adopt new business strategies, say, advocating for and implementing preventative health measures like exercise, diet, screenings, etc., thereby potentially avoiding “big ticket” expenses absent such an approach.  Doing so will act to preserve profit margins such that (ideally) they more than offset out-of-pocket expenses associated with the costs incurred by treating the chronically ill and/or those with pre-existing conditions.

I also think insurers will increasingly look towards overseas providers to minimize the out-of-pocket expenses incurred for various and sundry surgeries, thus, actually promoting and supporting medical tourism to a much larger, far more-public degree than has been the case to-date.  This development, however, ignores the potential political developments that might be realized down the road which may be considerable.

Conversely and this is where it could have a negative impact on medical tourism some commentators have stated emphatically that we will have a de facto public option—the insurance companies.  Why?  Since the federal government will now dictate who they have to insure, what they have to cover and at what cost they will do so, for all intents and purposes, it IS a government operation, the insurance companies merely the already-existing structure and manpower.  They collect the premiums on behalf of the government and administer the programme; there’s no need to re-create the wheel, hire new people, implement new systems, etc.  Objectively speaking, it’s really quite a beautiful system they’ve envisioned, seized control of and now made their own.   

I say this because I think this dramatically alters the medical tourism playing field, at least in the mid-term.  I think it highly unlikely the government will allow coverage for out-of-country surgical procedures, particularly given the Democrat’s affinity for and association with organized labor.  If that does not occur, it will likely become a matter of them (government), compelling hospitals to perform a specific procedure for a particular, i.e. “competitive” or “equivalent” price. I believe there would or could be increased political pressure brought to bear for the Government to enact one or more of protectionist policies.  Were this to happen, of course, it would spell disaster for medical tourism firms domiciled in the U.S.  Given the exemptions afforded the unions thus far in the current healthcare bill, such a scenario is a very real possibility.”

Companion Global Healthcare

David Boucher at Companion Global Healthcare a wholly owned subsidiary  of BlueCross BlueShield of South Carolina, sees the reforms overall as a positive for medical tourism:

“However, we are still analyzing the entire 2,000 page plus bill and  amendments are still being made.  So we will develop a more thoughtful position over the next couple of weeks.  That we are aware of, the bill is absent of language which either limits or encourages international medical tourism, so at least this much is positive.   However, it has been asserted by some that the increase of the insured population versus a relatively static physician population may increase the number of outbound medical
tourists, considering this increased insured population with the increase
in Americans with chronic diseases AND the ever-increasing boomer population.

We already have a shortage of physicians and nurses in the US and adding 30m plus onto an already stressed system is going to cause massive problems. We are expecting the Silver Tsunami in 2011 when the baby boomers turn 65 and will be applying for Medicare (publically funded healthcare insurance of the over-65s).  There’s a perfect storm brewing, chronic disease amongst this age group is increasing and by 2013-15 I believe a two tier system will potentially emerge like in many European countries. We’re already seeing this happen, the Mayo clinic in Phoenix, Arizona announced they were opting out of the Medicare programme. This is significant because a high percentage of the population in this area is over 65 and a significant number of the get Medicare.  Firstly other local hospitals will have to take on greater number of Medicare patients and the newly numbers of insured and additionally Medicare is treatment below costs which means that , the system won’t be able to sustain this increase patient numbers and the financial and actual impact of that. So even before the bill has been passed we’re seeing an erosion of the system.

As a result I think queues will occur, like in the UK and Canada and impatient Americans will not want to wait 2-4 years for an operation.

I’m optimistic about the impact of this bill on medical tourism, once Americans understand what high quality of healthcare is available overseas and how much cheaper it is than here.  There are now 260 JCI accredited hospitals overseas and at the very least they are 30 to 40% cheaper than in the US.”

Planet Hospital

Rudy Rupak from Planet Hospital, approaches the reforms from a short term and long term perspective:

“In the short term it will have no effect on medical tourism because healthcare reform does not go into effect till 2014.  During that period however, insurance companies and employers who self insure will have to look at ways to save money now that everyone must be covered and the most effective way to do this is through medical tourism.

I feel that insurers and especially employers will have a stronger look at medical tourism, however not all destinations will benefit from this long term view.  Countries like Singapore and Thailand's Bumrungrad hospital will probably benefit but India with its draconian visa policy and its poor infrastructure could end up losing.  If a foreign option was included in the current bill it would have given the opposition party something else to attack and therefore medical tourism would have come under greater scrutiny.

In the post bill landscape, insurers will want to shield their liabilities as much as possible so that they are not sued for sending someone to a country where the patient is hurt, injured or grossly inconvenienced.  I think that the countries that will have a hard time winning over employees (not necessarily employers or insurers) are India, the Philippines, and parts of Mexico.

Finally since insurance companies have to accept everyone regardless of age or pre-existing conditions, the insurance companies open themselves up to adverse selection and will have to price their services higher.  However, I for one would love to see them offer a medical tourism option as a way to save money.  Populations that are ethnic in nature might be the first adopters of this in anticipation of the healthcare reform, our company is launching its own insurance product on May 1 called Diaspora which is aimed at this population.”


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