Are medical tourism and consumer directed health plans really a good fit?

It seems like a no-brainer: patients in consumer directed health plans –which combine a Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA) with a high-deductible PPO– should be early adopters of medical tourism. And sure enough, a lot of people are saying that’s the case. AIS’s Health Business Daily picks up on the theme today with a reprint from Inside Consumer-Directed Care, inanely headlined as follows:

Once an indulgence of Hollywood Jet-Setters, Medical Tourism is Now Going Places

Here’s how it begins:

Medical tourism, once an indulgence of Hollywood jet-setters who wanted a discreet facelift or the desperately ill seeking unconventional treatments, is poised to enter the mainstream as a component of consumer-directed health (CDH).

The article cites an internal Towers Perrin memo laying out the familiar facts on medical costs and goes on to tout the potential for consumer directed plans:

A hip replacement that costs as much as $80,000 in the U.S. can be obtained in Singapore or Thailand for $12,000, according to an internal Towers Perrin memo. A prostatectomy costing $60,000 in the U.S. can be done in India for $7,000…

It’s only a matter of time” before medical tourism takes hold in the CDH market, says Jay Savan, an employee benefits consultant in the St. Louis office of Towers Perrin.

I agree that medical tourism has a place in the insured market, but the link with consumer directed plans isn’t so clear. After all, in a traditional CDHP, the patient is indifferent to the cost once their HSA balance is exceeded. There’s often literally no difference in out-of-pocket costs for a $7,000 surgery and a $60,000 surgery. That’s why CDHPs have been such a failure in curbing surgical and major medical costs.

Savan offers some decent ideas in the article: employers could waive the deductible for surgery abroad, pay for a companion’s trip, or offer extra paid time off. But these suggestions really have nothing to do with consumer directed health plans as currently configured. It could just as easily be done with a traditional managed care –or even an old-fashioned indemnity– plan.

If I were an employee I’d want a better deal. How does a 50 percent share of the savings sound to you?

January 17, 2008

2 thoughts on “Are medical tourism and consumer directed health plans really a good fit?”

  1. David,

    I agree with you. The article has too many loose ends and doesn’t go too deep into the concept of HSAs. My question however is, can an uninsured individual open an HSA? Or is being insured a prerequisite?

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