NCPA - National Center for Policy Analysis

Medical Tourism on the Rise

April 16, 2012

The phenomenon of medical tourism, whereby citizens travel abroad for major medical operations, is on the rise in the United States as Americans attempt to circumvent skyrocketing health care costs.  Traveling to countries throughout the Far East and Latin America, they are able to receive comparable treatments at a fraction of the cost, even after travel expenses are taken into account, says the New Yorker.

  • The Bumrungrad hospital in Thailand treats 400,000 foreign patients annually.
  • Similarly, Malaysia had almost 600,000 medical tourists last year.
  • South Korea had more than 100,000, nearly a third of them American.
  • Mexico and Costa Rica have also become popular destinations.

This growing trend defies conventional wisdom regarding medical care -- that it was not a sector that could cross borders.  Yet large differentials in operation costs between countries, even those across the world from each other, are too tempting for those willing to bear the inherent risks.

Several factors have conspired to limit the incidence of medical tourism in the world, and will likely continue to do so in the near future:

  • Having to deal with the logistics of travel and stay in a foreign country can be prohibitively stressful, with many opting to pay the domestic premium to forgo such complications.
  • Insurance companies are wary about overseas operations despite their lower costs to the consumer because they usually already receive hefty discounts from domestic providers.
  • Above all, consumers appear to remain uncertain about the quality of medical care abroad with fears of malpractice and a lack of legal recourse preventing them from taking advantage of lower prices.

However, many of these factors will likely be overcome in time as price differentials grow and Americans increasingly look for alternatives to pricy domestic care.

To this end, medical tourism is not something that should be shunned or prohibited.  Instead, it should be recognized for what it essentially is: international trade.  Allowing consumers to seek lower prices abroad is equivalent to importing the service, and free trade is widely known to lead to more efficient markets.

Source: James Surowiecki, "Club Med," New Yorker, April 16, 2012.

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