What does the Affordable Care Act mean for medical tourism?

 

There is much speculation about the impact of US healthcare reform on the medical tourism sector. Pro-medical tourism pundits paint a rosy picture. Naysayers predict that the sector will wither and die. Few facts are cited, possibly because the Affordable Care Act (ACA) or "Obamacare" is a complex document of almost 1,000 pages. It is doubtful that many people have read it and fewer still who understand its vast implications.

I have read the Affordable Care Act..... all 900 plus pages of it. If you’re involved in US medical tourism, I will aim to provide you with a deeper understanding of the changes to the US healthcare system as well as guidance for business planning purposes for organizations involved in international health travel.

What is the Affordable Act?

 The Patient Protection and Affordable Care Act (PPACA) is a United States Federal statute signed into law on March 23, 2010. The law (along with the Health Care and Education Reconciliation Act of 2010) is referred to as the "Affordable Care Act" and is the most sweeping social legislation in the US in the past forty years. The Affordable Care Act (ACA) creates changes that will have significant impact on the way healthcare is insured, practiced, and paid for, with the Federal government playing a central role. Clearly ACA has important implications for medical tourism.

The major provisions of the ACA as they relate to the medical tourism sector

As background, some of the provisions of ACA went into effect immediately while others will be rolled out gradually until full implementation in 2019. Going forward, it is unlikely that Congress will repeal the provisions that are already in effect but Congress may amend or repeal other provisions that are to go into effect in the future. In addition, there are court challenges to portions of the law. We will have to wait and see if there are other changes to ACA that are unknown at this point in time.

  • First, unless revised by a ruling of the Supreme Court or if further implementation of the legislation is blocked by the US Congress or a newly-elected President, by 2014 all individuals will be required to obtain health insurance or pay a fine. This provision means that ACA will substantially reduce the number of 49 million individuals in the United States who are currently uninsured. Assuming that these uninsured individuals have been a good market for medical tourism, they may postpone non-urgent healthcare services until covered by ACA in 2014 anticipating that the services they want may be covered by health insurance.
  • Second, ACA defines, expands and standardizes the services that must be offered by health insurance companies. Services such as preventive health services (weight loss clinics, routine check-ups) and mental health services must be included in health insurance. These essential benefits delivered to even more people covered by insurance will be more costly to provide thereby driving up health insurance premiums. Individuals who were uninsured and who might have sought medical tourism services for uncovered procedures will now be able to obtain these services in the US as part of their insurance coverage. It is important to note that dental care and cosmetic surgery are not services that are mandated to be covered under ACA.
  • Third, adding over 30 million people* to the US healthcare system will increase demand on hospitals and doctors. There is already a shortage of doctors in the United States with many hospitals operating at or near capacity. More people with health insurance will increase the demands on the overburdened healthcare system resulting in delays, waiting lists for services, and postponement of non-urgent care.

With the cost of health insurance rising, individuals will look for ways to reduce the cost of purchasing insurance. Common ways to reduce the cost of health insurance is to increase the amount of deductibles and co-payments but overall, the cost of health insurance will continue to rise. Premiums, co-pays and deductibles - so called "out of pocket" costs - will all increase so that accessing medical services will become more costly to individuals, encouraging them to look for other creative ways to save money.

Here is an example of how insurance companies have already started shifting more costs to consumers while limiting access. The article, "Tiered health plans cutting costs, restricting options", appeared in the November 28, 2011 edition of the Boston Globe.

 It is projected that by 2015, the economic impact of the ACA will be felt across the country by consumers who will be paying more out of pocket and experiencing delays in obtaining services. Medical tourism will be an attractive alternative to paying high out of pocket costs or waiting for services.

  • Fourth, medical tourism marketers should also note that large group, self-insured plans like General Electric are exempt from many requirements of ACA, as are private health insurance plans that were in effect when the law was passed, unless they change their benefits plans. It is not clear if adding a medical travel benefit will be considered a "change" as defined by ACA. Until this definition is clear, these insurance companies may not want to risk adding this benefit if it puts them at risk of having to comply with all of the provisions of ACA.

The short and long term opportunities for the medical tourism sector

 The traditional services that have been the most popular medical tourism services will continue to be in demand. These services include:

  •     Dental and cosmetic procedures
  •     Fertility treatments
  •     Bariatric surgery
  •     Stem cell treatments
  •     Procedures that are not available in the US

In the mid to long term, healthcare providers should look for additional opportunities to deliver services for which there are delays or waiting lists or for which consumers must pay high out of pocket costs.

The short term and long term challenges for medical tourism

Right now, health insurance plans are trying to sort out the impacts of the ACA, and so they are not good marketing targets for destinations or providers trying to access the US market. Until the impact of the ACA legislation is clear to them, they will hesitate to view medical tourism as a viable option.

Also, ACA repeats and reinforces the long-standing prohibition of foreign healthcare providers being reimbursed by the US Centers for Medicare and Medicaid Services. Those individuals who are covered by Medicare or Medicaid (instead of private health insurance) can choose to pay out of pocket for services from a non-US provider but it is unlikely that many people will select this course of action if the Government pays for those same services in the US.

 Remember that individuals who receive benefits from the Department of Veterans Affairs are paid for by the US government and are not subject to the same prohibition as Medicare and Medicaid recipients. In other words, foreign providers may continue to deliver services to US veterans and receive payment.

 Until the US Supreme Court rules on the ACA related cases before it early in 2012, and the results of the 2012 election are known, a considerable amount of uncertainly will persist as the provisions of ACA are enacted, tested and refined. This uncertainly has a major impact on health insurance companies and their willingness to engage with the medical tourism sector. While the demand for traditional medical tourism services should remain strong and perhaps even grow, it may be another 2-5 years before demand for other types of services will return.

*Of the 49 million people in the United States currently without health insurance, it is estimated that 16 – 19 million will remain uninsured after ACA. These individuals include people who choose to defy the law and opt to pay the fine as well as those who are in the US without proper documentation.

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