 |
|
Can Medical Tourism Cure What Ails You?
By Mary Samsa and Jake Downing November 2007 As this country's health care costs continue to spiral out of control, politicians, insurance companies, employers who offer group health insurance, and individuals in need of health insurance or care are all looking for ways to stem the tide. As a result, some are starting to examine medical tourism as a way to reduce medical costs and insurance premiums. The Travel Bug Medical tourism is the act of traveling outside the United States to obtain medical care, usually at a dramatic savings over what it would cost in this country. It has been estimated that at least 500,000 Americans seek medical or dental care outside the U.S. each year. The reason for that is the potential for dramatic cost savings — even taking into account the extra travel expenses. In general, the cost of obtaining medical care in other countries can range from 15 percent to 40 percent of what it would cost in the U.S. For example:
To date, most Americans who seek medical care overseas do so because they are uninsured or underinsured. But the potential savings are so dramatic, it's no surprise that insurance companies and employers are investigating medical tourism as one way to get a handle on out-of-control health care costs. For example:
In the big scheme of things, that's not even a drop in the bucket of the country's health care woes. But it is possible evidence of a trend that is getting ready to take off. At this point most insurers that are investigating medical tourism are proceeding with caution. Roadblocks Although medical tourism is gaining momentum, there are many potential roadblocks to it becoming a mainstream offering in the U.S. workplace. The first roadblock is, as mentioned above, the fact that very few insurers currently offer plans that cover medical tourism. But even assuming that roadblock will be overcome in time, employers may have a hard time selling employees on the idea of leaving their familiar environs to seek medical care in a foreign land. Regardless of whether it is justified, many Americans have an image of foreign hospitals as dirty places with sub-par physicians, technology, and care. Ironically, by all accounts the hospitals that cater to medical tourism can actually provide quicker, better, and more personalized care than what is often received in this country. Even assuming that those types of biases can be overcome, many employees may be understandably reluctant to travel overseas for medical care for reasons that have nothing to do with the quality or cost of care. For example, most people prefer to have their loved ones around them in times of need. They may be concerned about communicating with health care providers who don't speak English, or at least not fluently. There are also logistical matters such as who will provide follow-up care when the patient returns home, whether that provider will be able to read the medical records provided by the foreign provider, and so on. Not to mention that the cost of treating any complications that may occur could cancel out the initial savings from having the procedure done in another country in the first place. The Big Picture Clearly, the greatest direct advantage to the health care consumer (including both patients and group health plan sponsors) is the cost savings on individual medical procedures. More broadly, the globalization of health care increases competition and may, eventually, have the effect of: 1) driving down the costs of procedures performed in the United States; and 2) helping to moderate the continued escalation of health care costs in the U.S. Legal Issues The IRS is reportedly considering the tax issues raised by medical tourism. For example, while the fees charged for medical services performed outside the U.S. are not taxable to the recipient (amounts paid on an insured's behalf by a group health plan for medical procedures are not taxable to employees), it appears that, without changes to the tax code, the following items might be:
It seems unlikely, however, that the taxation of these benefits would negate the substantial savings on health care. Fiduciary concerns, however, may negate these savings for some health plans. Trustees, plan administrators, and other plan fiduciaries will be required to satisfy fiduciary standards in contracting with appropriately qualified foreign health care providers and establishing adequate means to monitor those providers. Even with these steps, the potential for fiduciary liability exists. For example, a group health plan pays an employee $10,000 to go to India for a procedure that would have been covered under the plan. The procedure goes wrong, as will happen with even the most qualified provider, and India's legal system does not adequately compensate the employee under U.S. standards of liability. The $10,000 payment has now turned into potentially hundreds of thousands of dollars in loss to the employee. It is not hard to imagine a plaintiff's lawyer finding a way to sue the plan to recover this loss. As such, fiduciaries will need to weigh this risk against the financial savings of medical tourism and act accordingly. Bottom Line In 2006, Senator Gordon Smith (R - OR) held hearings on medical tourism, at which time he called for the creation of an interagency government task force to study the issue. It is unclear whether any formal task force was created, but it is certain that attention will continue to be paid as the cost of health care in this country continues to skyrocket. Cautious employers and plan sponsors should wait and let the issue unfold. As more and more employers and plan sponsors offer medical tourism, the economic, practical, and legal issues will become clearer. Advisory Board member Mary Samsa (msamsa@seyfarth.com) is a partner and Jake Downing (jdowning@seyfarth.com) is an associate in the Chicago office of Seyfarth Shaw LLP. Copyright © 2007 M. Lee Smith Publishers LLC. This article is an excerpt from Benefits and Compensation Law Alert (ISSN 1526-7967). Benefits and Compensation Law Alert is designed to provide accurate and authoritative information in regard to the subject matter covered. It is published with the understanding that neither the author(s) nor its publisher is engaged in rendering legal, accounting, or other professional services through its pages. If legal advice or other expert assistance is required, the services of a competent professional should be sought. (From a Declaration of Principles jointly adopted by a committee of the American Bar Association and a committee of Publishers and Associations.) Additional Resources Newsletters for people who really need to know about benefits: |
 |
|
|
