Does Health Insurance Impede Trade In Health Care Services?

Abstract

There is limited trade in health services despite big differences in the price of health care across countries. Whether patients travel abroad for health care depends on the coverage of treatments by their health insurance plan. Under existing health insurance contracts, the gains from trade are not fully internalized by the consumer. The result is a strong "local-market bias" in the consumption of health care. A simple modification of existing insurance products can create sufficient incentives for consumers to travel. For just 15 highly tradable, low-risk treatments, the annual savings to the US would be $1.4 billion even if only one in ten patients who need these treatments went abroad. Half of these annual savings would accrue to the Medicare program alone. We examine how measures by destination countries to improve and credibly signal the quality of health care can enhance the scope for trade.

Trade in Healthcare and Health Insurance Services: The GATS as a Supporting Actor (?)

“…32 The question certainly arises who is protected from whom: The patients from treatment in substandard foreign facilities, less mobile population segments (and patients) from a gradual deterioration of domestically available supplies -or, rather, national healthcare providers from inconvenient competitors? According to Mattoo and Rathindran (2005), if only 10 per cent of the US patients that need treatment for 15 tradable low-risk ailments went abroad, the annual savings would amount to US$1.4 billion. International cost comparisons for surgical procedures are contained in Hermann (2009).…”

Trade In Health Services In The ASEAN Region

“…One recent study, for example, estimated that the United States would save $1.4 billion annually if only one in ten patients were to go abroad for a limited set of low-risk treatments (Mattoo and Rathindran, 2005). Countries that export health services realize gains from specialization, allowing them to employ their capital and labor where they are most efficient and generating export revenues for the import of other goods and services.…”

CGE Modeling of Market Access in Services

“…The potential impact of permitting portability could be substantial. Mattoo and Rathindran (2006) find that extending health insurance coverage to overseas care for just fifteen types of tradable treatments could produce savings for the United States of over $1 billion a year even if only one in ten American patients travel abroad. The lower costs of health services abroad offer the opportunity to extend medical benefits to people who currently are not insured.…”