Are High Health Costs Really Forcing Americans to Go Overseas?

COMMENTARY Health Care Reform

Are High Health Costs Really Forcing Americans to Go Overseas?

Oct 21st, 2019 4 min read
COMMENTARY BY
Kevin Pham, MD

Visiting Policy Analyst

Dr. Pham is a Visiting Policy Analyst at The Heritage Foundation.

Key Takeaways

When Americans choose to leave our borders to seek out health care, we should ask why.

We should be careful to see that it’s the underlying costs in the health care industry that are driving prices so high.

Price controls won’t fix the root problem; they’ll only create new problems.

A recent piece in Medical Xpress drew attention to the high costs of U.S. health care—and just how far some Americans are going to escape them.

The piece shares the story of one patient, Veronica Merrill, who sought bariatric surgery that would have cost $12,000 in the United States but less than $4,000 in Mexico. She ultimately decided to seek treatment in Mexico and partake in what some have called “medical tourism.”

Merrill is one of an estimated 1.9 million Americans who will travel abroad for medical care this year, according to Patients Beyond Borders.

Based on the piece, you might be convinced steep health care costs are forcing Americans to seek life-saving treatments abroad. But that’s not quite the full reality.

According to Patients Beyond Borders, a group that promotes medical tourism, and the Centers for Disease Control and Prevention, the most common procedures that Americans seek overseas are cosmetic, dental, cardiac, and bariatric.

Cosmetic procedures are rarely a health matter, and most health care plans don’t cover dental anyway. But cardiac and bariatric surgeries are serious procedures.

The fact that Americans are leaving the country to receive this care should tell us something, but what?

High Prices, but No Easy Fix

The Medical Xpress piece quotes Gerald Kominski of the UCLA Fielding School of Public Health saying the United States does “little to regulate prices, in contrast to all other high-income nations,” and that this is “indicative of a problem with affordability, as opposed to quality.”

This implies that the solution to rising American health care prices is price control.

But the basic rules of economics tell us that price flows naturally from value, and that trying to control prices artificially will cause the value to decrease.

We know this happens in real life. Strict government control on prices and payments have resulted in Canadians fleeing to America to receive prompt care and Britons having their procedures canceled outright.

If American medical tourism indicates a problem with affordability rather than the quality of care, what does that say about the price-controlled British and Canadian systems that single-payer advocates wish to emulate?

In Merrill’s case, her insurance does cover bariatric surgery except for those who are morbidly obese with diabetes and hypertension.

Without knowing her medical history, it’s impossible to say whether this surgery was appropriate for her, but we can say bariatric surgery is not a benign procedure and usually is reserved for urgent cases, or cases in which the patient’s obesity has been unresponsive to diet and exercise or weight loss medication.

These considerations are in large part clinical, but under a single-payer system such as the United Kingdom’s, the government decides when surgeries are appropriate and can deny them for cost reasons.

Last year, for instance, NHS England decided to stop funding 17 different procedures it deemed unnecessary. Among these are carpal tunnel release, tonsillectomies, and other fairly minor surgeries.

With regard to obesity, the National Health Service already restricts certain procedures on the basis of weight.

Thus, there are both good and bad reasons why a third-party payer might deny a bariatric surgery, and it is likely that some American medical tourists are looking overseas to get around these guidelines and save money.

Also, part of the reason surgery in Mexico is much more affordable is the simple fact that the dollar is much stronger than the peso. This makes it much easier for an average American to pay upfront for a medical procedure, similar to how the world’s rich and famous are able to pay upfront for American health care.

Costs From Existing Regulation

American health care is also expensive because of drug prices, hospital costs, and the high cost of practicing medicine in the U.S. Insurance costs also play a role in this calculation.  

The intent of the Affordable Care Act was to lower health care prices. Former President Barack Obama famously promised that his signature bill would lower premiums for the typical family by $2,500.

In reality, health care prices have consistently gone up as a result of the legislation.

To comply with the Affordable Care Act, all insurance plans must provide 10 essential health benefits, which include maternity care, pediatric care, and screenings for aortic aneurysms and colorectal cancer.

The rigid structure of the law forces insurance companies to either charge more to pay for all this coverage, or to place more restrictions on when they will pay for it. In practice, insurance companies end up blending the two strategies, which means Americans with more expensive plans face more restricted benefits.

Medical tourism is a large and growing market, and foreign hospitals are increasingly seeking international health accreditation, including through the same accrediting body used by American hospitals.

Still, both the Centers for Disease Control and Prevention and the American Medical Association offer warnings about medical tourism, particularly about difficulty with quality control and accountability.

It’s a Free Market

The decision to seek medical care elsewhere is ultimately a personal decision about how and where to spend one’s health care dollars. When Americans choose to leave our borders to seek out health care, we should ask why.

There will be many reasons—some better and some worse. But we should be careful to see that it’s the underlying costs in the health care industry that are driving prices so high. Price controls won’t fix the root problem; they’ll only create new problems.

This piece originally appeared in The Daily Signal

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