NCPA - National Center for Policy Analysis

SOURCING BETTER HEALTH CARE

June 26, 2008

While the role of free trade in driving down prices and driving up quality has long been accepted by economists, health care has been one area in which there has been almost no international trade.  It is time for this to change, say Fredrik Erixon, Director, and Lucy Davis, Trade Policy Analyst of the Europe Center for International Political Economy (ECIPE). 

International trade in health care would provide many patients with affordable care, say Erixon and Davis.  For example: 

  • Open-heart surgery in India costs only one sixth of the price in the United States, including travel, accommodation and medicines.
  • A hip can be replaced in Thailand for only one eighth of the cost in the United Kingdom.
  • If only 10 percent of U.S. patients went abroad for 15 types of treatment, U.S. patients and insurance companies could save $1.5 billion a year, including travel costs.

While the benefits of free trade in health are clear for rich countries, developing countries also stand to gain, say Erixon and Davis:  

  • Medical tourism would provide opportunities for much-needed investment of foreign capital.
  • Medical tourism could bring India as much as $2.2 billion per year by 2012, according to a study by management consultants McKinsey and the Confederation of Indian Industry.
  • These financial opportunities would also give developing countries' medical staff a far greater incentive to remain at home, reducing the debilitating "brain drain."

Rich and poor countries should ignore the siren calls of protectionism and liberalize their health care for the good of patients everywhere, say Erixon and Davis.

Source: Fredrik Erixon and Lucy Davis, "Sourcing Better Health Care," New York Times, June 22, 2008.

 

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