North Americans and Medical Tourism: High Health Costs Driving Consumer Interest in Travelling for Treatment
Medical tourism, where consumers travel to a foreign country for the purpose of obtaining medical treatment in that country, is growing in popularity among consumers in the US and Canada as populations age, healthcare costs spiral in the former and waiting lists grow longer in the latter. They are also tempted by the holiday setting and all-inclusive packages. The related fields of wellness and fitness tourism are also part of the picture.
Total Health Expenditure as a Share of GDP in Selected Countries: 2014
Source: Euromonitor International from OECD/WHO/World Bank/national statistics
- More than a million Americans travelled abroad for healthcare in 2014;
- Significant savings on offer;
- “The work was amazing… I also got a vacation”
- Lack of regulation and infection risk among the disadvantages.
- Health-focused packaged travel;
- Apart from medical tourism itself, the related fields of wellness tourism (to spas, for example) and fitness tourism (travelling to participate in a sporting activity or event) are also growing in popularity.
The cost of healthcare is a major issue for many American consumers. Despite spending a higher proportion of GDP on healthcare than any other developed economy, it is unaffordable, or even inaccessible, to many in the US. Health expenditure accounted for 16.4% of GDP in the US during 2014, a level that was more than twice as high as in the UK (8.1%).
The proportion of adults in the US without health insurance stood at 11.9% during the fourth quarter of 2015, according to the Gallup-Healthways Well-Being Index. However, this figure has declined significantly since the Affordable Care Act (dubbed ‘Obamacare’ by some) came into force in 2010.
A survey conducted jointly by the New York Times newspaper and the Kaiser Family Foundation during late 2015 found that around 20% of adults aged less than 65 years with health insurance reported having problems paying their medical bills over the previous 12 months. Among the uninsured population, this figure rose to 53%. Among the latter group, 77% said they had ‘put off vacations or other major household purchases’ in order to pay for healthcare, while 75% had ‘cut back spending on food, clothing or basic household items’.
The newspaper claimed: “The US [is] the most expensive place in the world to get sick… Medical bills… can prompt deep financial and personal sacrifices, affecting housing, employment, credit and people’s daily lives”. It noted that since the late 1990s, insurance plans have increasingly required their customers to pay an increasingly greater share of their medical bills by means of deductibles. A deductible is the amount a patient must pay for covered health care services before their health insurance plan begins to pay. For example, if your deductible is US$1,000, your insurance plan will not pay anything until you have paid US$1,000 for covered services.
In neighbouring Canada, consumers pay for most healthcare indirectly via general taxation. Public health expenditure accounted for 69.5% of total health expenditure in Canada during 2014, compared with a figure of 47% in the US. However, waiting lists in Canada can be long. During late 2015, public policy think tank The Fraser Institute surveyed 2,382 medical specialists throughout Canada to determine the length of time between when a patient is referred to them and when they receive treatment. The median wait time was found to be 18.3 weeks, having doubled over the previous two decades.
More than a million Americans travelled abroad for healthcare in 2014
In such an environment, it is unsurprising that consumer interest in medical tourism is on the rise in North America. A report published by website Patients Beyond Borders in March 2015 estimated that 1.2 million Americans travelled to a foreign country for medical care in 2014, up from 900,000 during 2013. It found that the most popular destination was Mexico, particularly among those living in the southwest of the country.
According to a study conducted by think tank The Fraser Institute, 52,513 Canadians left the country to receive non-emergency medical treatment during 2014, up 26% on the previous year. Many older Canadians fly south to escape the long northern winter, with the Caribbean a particularly popular destination. A growing number are receiving medical treatment while they are on these breaks. According to Wendy Sánchez, head of the Dominican Republic’s Health Tourism Department, many of these are seeking to save money, avoid long waiting lists at home or “do not qualify for insurance coverage due to their old age”.
Significant savings on offer
According to data compiled by AARP (the American Association of Retired Persons), a heart bypass in the US costs an average of US$88,000. In Costa Rica, it is just US$31,500. The average cost of a hip replacement is US$33,000 in the US and US$12,400 in Thailand, while rhinoplasty (a nose job) costs an average of US$6,200 in the US and US$2,800 in Mexico. Taking travel and accommodation costs into consideration, it concluded that if the difference in the cost of treatment to a patient is more than US$6,000, seeking care abroad is likely to save them money.
“The work was amazing… I also got a vacation”
Writing on the online forum Reddit in 2013, one poster recounted their experience of have major dental work performed in Costa Rica: “The work was amazing. I’ve since had it looked at by professionals here, and they all grudgingly admit it’s beautiful. Four years later and it’s just as strong… The total estimate for the work if it were done here – US$20,000. Cost in Costa Rica (including airfare) – US$6,000. I also got a vacation”.
A second added: “My mother has flown to Mexico twice to get dental work done now (she is self-employed, so all dental expenses are out of pocket). She certainly has nothing but positive things to say about the whole experience – she saved about US$15,000 and the work is top notch”. According to a third: “Everything else is globalised, so I do the same with medicine whenever possible. If I can get the same medication from a cheap overseas pharmacy, I will. If I can get the same surgery for a fraction of the cost just a plane ride away, I will”.
Lack of regulation and infection risk among the disadvantages
There are potential disadvantages to medical tourism that may limit its growth. These largely centre around regulation – medication may be counterfeit or of poor quality in some countries, while the blood supply in some countries comes primarily from paid donors and may not be screened and doctors may not follow safe injection practices. Moreover, patients may have little recourse if they fall victim to medical malpractice. Meanwhile, antibiotic resistance is a growing problem, and resistant bacteria are proliferating in some emerging markets, such as India, posing a threat to medical tourists.
As the large baby boom cohort (those born between 1946 and 1964) ages and life expectancy lengthens, the increased strain that this will place on public healthcare systems is likely to result in more of the burden of healthcare costs being shifted from governments directly onto consumers: The number of Americans aged 65 years or older is forecast to rise from 46.2 million to 74.6 million between 2014 and 2030, while the number of Canadians in this cohort is forecast to increase from 5.6 million to 9.4 million over the same period.
This is likely to drive strong long-term growth in medical tourism as consumers seek to minimise their health expenses. Meanwhile, governments and private health insurers may attempt to facilitate it in an effort to manage healthcare costs.
On the other hand, the proliferation of ‘superbugs’ that are resistant to most or even all antibiotics could make medical tourism a riskier affair, dampening demand. Speaking to the Guardian newspaper in December 2015, Dr David Brown, director of Antibiotics Research UK, commented: “I think, for the time being, northern Europe will be OK. Southern Europe, places such as Italy and Greece and the Middle East are more under threat because of weaker health systems and monitoring systems. India [a popular destination for medical tourism], especially, could be in real trouble”.