U.S. health care reform and medical tourism opportunities

Health related expenditure in travel, also known as medical tourism, is a fast growing sector in many regions of the developing world. High costs of medical services, long waiting lists, and the ageing of an affluent baby-boom population in developed countries, together with the relative affordability of international travel and high quality health care services at affordable prices in destination countries, have prompted a growing number of patients to seek and receive medical, dental and/or cosmetic care in the developing world.

Like other offshore services, medical tourism can help create good quality jobs in destination countries, develop linkages between local firms and global services markets, attract foreign direct investment, and improve access to medical technology and practices and to medical centers outside the country. On the other hand, expansion of medical tourism poses significant challenges on various fronts including proper infrastructure and technology, availability of skilled health professionals, adequacy of regulatory frameworks, and of institutional capacities.

As medical outsourcing gains the attention of employers, insurers, entrepreneurs, and even state legislatures in the United States, several developing countries are analyzing the potential of medical tourism in diversifying exports, attracting investment and enhancing employment opportunities at all steps of the skills ladder.

The comprehensive health care reform passed by the United States Congress in March 20101, the Affordable Care Act (ACA), could have a significant effect on the potential of medical tourism in Latin America and the Caribbean. In fact, 64% of the respondents to a survey of medical tourism service providers believe that U.S. health care reform is likely to have a significant positive impact on the number of patients seeking medical travel abroad (Peters and Sauer, 2011).

This document looks at medical tourism trends in the United States and the potential of medical tourism opportunities as the ACA is implemented. There are two main channels through which health care reform can influence the size of the U.S. medical tourism market for the region. The first has to do with sustained efforts by different actors of the U.S. health care system to keep costs under control. The second relates to access to medical services; as a growing number of U.S. residents gain access to health insurance and the aging of the general population puts pressure on a relatively inelastic supply of services, as is the number of hospital beds and professionals trained in the medical profession.

The first part of this paper looks at the trends of U.S. trade in health services. The second analyses the potential effects of the U.S. health care reform on medical tourism and the last one provides the conclusions.