Cross-border care: When health insurers send Americans to other countries

July 8, 2014

By Matthew E. Milliken
July 8, 2014

Adam Teicholz and Glenn Cohen took an interesting look in The New Republic the other day at cross-border care, a relatively new phenomenon in which U.S. health insurance companies send patients out of the country — mainly to Mexico — for certain tests and other medical procedures.

Cross-border care is distinct from medical tourism. In the latter, which is better known, people travel to other nations for medicine or procedures that are easier to obtain away from home.

“Easier to obtain” often refers to a difference in costs, which the website says can be up to 90 percent cheaper than in the United States. For example, the site lists the cost for a heart bypass as being $144,000 domestically. Overseas, the same procedure can cost as little as $5,200 in India. (That accounts for airfare for two, but not food, lodging or other expenses.) In all of 10 other countries that the site lists, a heart bypass is estimated to cost less than $30,000. Even accounting for travel costs, a patient can come out ahead.

For this very reason — that charges for health care can be significantly lower outside of the U.S. — a handful of American insurers are requiring their clients to leave the country for some care. And therein lies the key difference: Medical tourism is generally undertaken on an individual’s initiative, while cross-border care is spurred by institutional imperatives.

Cross-border care is so new that there are far more questions than definitive answers about its effects. It’s not yet understood, for example, whether care that patients receive in other nations is superior, comparable or inferior to what they can get in the U.S. As the authors note, health-care outcomes are notoriously difficult to evaluate, even within the same nation; attempting to compare facilities in different countries is that much more complicated.

Here’s a key part of the article by Teicholz, a legal analyst and producer for ABC News, and Cohen, a Harvard professor who specializes in health law policy, biotechnology and bioethics:

With quality so hard to compare, there is little protecting the patient. Market pressures are of limited use. Insurers don’t have much incentive to attract customers by contracting with the best providers abroad. Americans tend to change insurance policies less often than would behoove them (only about one in six per year). And small companies with more than 50 employees, now required by the Affordable Care Act to provide health insurance for their staff, often want to pay as little as possible. Their employees, many of whom are poor or near-poor, often want the lowest possible premiums. The court system doesn’t compel quality either. It’s generally very hard to sue insurance companies when a provider does something wrong, and it’s additionally complicated when dealing with foreign entities.

Nor has the government provided much reassurance or guidance. In a part of the economy known for excessive regulation, cross-border plans have fallen through the cracks. Neither the federal governments nor the states have significant laws or rules in place governing such plans. And even where there are rules, they often aren’t enforced… Most insurance law is state law, and plans with foreign providers just aren’t on most state insurance commissioners’ radar. Other than California and Texas, no states have focused on mandatory-travel insurance plans.

The authors add that the Patient Privacy and Affordable Care Act “offers little clarity” on how cross-border care should be regulated going forward.

So where does this leave us? Teicholz and Cohen are cautiously optimistic that the situation will evolve organically to benefit consumers. That is, they hope that advances in measuring health outcomes and regulating treatment will combine to produce a regimen that produces good results for people and insurers.

The reason this topic caught my eye is not that I have any intrinsic interest in either medical tourism or cross-border care, but that this could be the next hot-button topic when it comes to health care.

I say this because a number of the rah-rah defenders of the pre-Obamacare state of American health care seemed to be under the misapprehension that the U.S. health care system is the envy of the world — this despite the fact that America’s health outcomes often rank poorly when compared to those of other industrialized nations.

For such people, I suspect that this item on cross-border care will be used as evidence either that (a) the quality of United States health care is declining, (b) the U.S. should follow the lead of other countries and deregulate health care in order to increase competition, which would (in keeping with free-market theory) enable higher quality and lower prices to flourish, or (c) both of these propositions.

But for many contemporary liberals, I think that cross-border care will be used as evidence that, in fact, American health care is not the unparalleled jewel that advocates of the status quo ante Obamacare would hold.

In other words, what people get out of Teicholz and Cohen’s article is likely to rely heavily on what they bring to it.

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