Millions of Americans are sick and tired of healthcare and are giving up on solutions to cure the nation’s ill-reputed system and are now looking for an alternative course. Even as Obamacare inches further toward implementation at the start of the year, patients still can’t afford to visit a doctor, physicians are burning out as they watch their revenues go up in flames, and insurance providers are far from eager to open their doors to enroll millions of Americans who have not been able to purchase coverage on their own, three years after the new healthcare reform legislation was passed.
As the Supreme Court pondered the fate of the Affordable Care Act a year ago, one-in-four Americans – or 26 percent — were without health insurance, a statistic that jumped from 16.3 percent in 2010.1 Without insurance, disconnected Americans are avoiding basic medical services, such as routine doctor trips and screenings for cancer, cholesterol and high blood pressure.
Of the 55 million “uninsured nonelderly people,” the Congressional Budget Office predicts only 11 million – or 20 percent — are expected to obtain insurance during 2014; meaning the number of uninsured will fall to a disturbing 44 million next year.2 In fact, CBO projects that under Obamacare across the next decade, the number of uninsured will never fall below 30 million. In the meantime, insurance brokers nationwide struggle to survive.
Second Wind for Travel Abroad
With the winds of change in their face, cash-strapped employers and patients are bracing for even higher healthcare and insurance costs despite the Affordable Care Act’s best intentions to make healthcare affordable. Amidst these insecurities and uncertainties swirling around the healthcare landscape today, medical tourism is gaining a second wind even after some – on both sides of the reform debate – consider Obamacare to be yet another in a series of last-gasp exercises aimed at solving the nation’s healthcare afflictions.
The unsettling view of the nation’s $2.6 trillion healthcare system, 10 times the $256 billion spent in 1980, has come on the backs of families, which have seen premiums grow by 97 percent in their employer-sponsored coverage programs, and at the expense of Medicare, which has watched enrollment from an aging population swell, thereby, draining federal and state budgets.3
Addressing this escalating burden has become a priority for all stakeholders, especially insurance companies looking to attract customers to their dwindling bases. Many coverage entities that once put medical tourism on the back burner with an eye instead toward gaining political favor, have chosen to take a cue from employers and give both domestic and international travel for treatments and procedures a long, hard, second look in an attempt to lure business and keep their companies solvent.
The bottom line is always well-defined. And the business community knows better than anyone else that there are few free rides, no matter what might have been previously expected under the new healthcare legislation. Only employers living under a rock would not have heard that Obamacare will require them to offer employee benefits or suffer a $2,000 penalty per worker.
When key provisions of the Affordable Care Act kick in 2015, employers will begin to question whether to grant health insurance to their employees or pay the penalty instead. At first, before the employer-mandate had been pushed back to 2015, one survey suggested some 30 percent of business owners would “definitely” or “probably” stop offering employee health insurance. However, half of the employers with the strongest understanding of healthcare reform’s changes said they will drop coverage and 60 percent said they will look for alternatives to traditional employer-provided health insurance.4
Tickets to Fly
Given the choices, more companies may look to punch their tickets by sending employees to undergo treatment beyond state or national borders at a fraction of the costs they would pay once healthcare reform hits full throttle.
Insurance companies and the employers they service would be foolish to ignore the potential of the newly insured in the emerging immigrant markets, many of whom would need little more than a nudge to travel abroad for quality medical care they could afford.
But, before employers get their feet wet across the pond, where travel to a foreign country for medical treatment might be out of the comfort zone for some patients, they might find a little secret in their own backyard. Some companies already say they can reduce their costs by 20 percent to 40 percent – more than enough to cover travel expenses – by persuading their employees to consider high-quality care and lower prices in locations that may be no more than a five-hour drive away.5
Lowe’s Companies, with locations in the United States, Canada and Mexico, was one of the first to take advantage of domestic medical tourism. The mainstream home improvement retailer, with 114,000 employees enrolled in a health insurance plan, partnered with the Cleveland Clinic to provide a coverage option that would shift complicated cardiac surgeries from a community facility to a hospital renowned for its quality care.6
The rational paid off in fewer complications and increased successful outcomes, employees returning to work sooner instead of back to the doctor and overall lower costs for patient and employer alike.
Other large self-funding companies including Wal-Mart, The Boeing Co., PepsiCo and HCR ManorCare have followed suit. Although these and other outfits are just getting the gist of domestic medical tourism, they believe the programs save, in part, by negotiating a single rate up front, which includes a fee for surgeons, anesthesiologist and all medical care up until hospital discharge.
Domestic medical tourism is also moving beyond complex procedures and organ transplants to offer relatively minor treatments, such as repair to knee and hip resurfacing all in the name of finding value in healthcare.
Savvy Shoppers
That same idea of scrutinizing the role of hospital prices and bringing the art of savvy shopper to play in selecting premium care could help shake up the hospital industry and foster competition not only across regions, but foreign borders as well. Even though hospitals probably won’t be flashing their prices on roadside billboards anytime soon, the recent public release of Medicare charges is a step toward exposing the secretive nature of costs and one that might provoke employers to see beyond borders to reduce their healthcare costs.
Employers then entertaining the thought of sending their employees overseas to cut into the cost of their medical offerings should look no further than their lunchrooms for confirmation. In case they did not know, they already have an employee base from which to work from.
In fact, minority and ethnic populations are growing at such a rate that they will soon become a majority designation. From Asians and Latin Americans to Pacific Islanders and natives of the Middle East, diverse groups of people and their descendants not only live in the United States, but work here as well.
Immigrants account for more than 35 percent of workers in the farming and custodial/building maintenance industries. Nearly 30 percent are construction workers. The manufacturing and food service industries combine to fill more than 20 percent of their workforce with foreign-born employees.7
But, don’t get the wrong idea. Not all foreign-born workers are employed in low-paying, low-skilled occupations, either. The Migration Policy Institute study found that 19 percent of immigrant workers are employed in professional industries including professional services, education and healthcare.8
More than half of the growth in the total population of the United States between 2000 and 2010 was due to an increase in the Hispanic population. In 2010, there were 50.5 million Hispanics in the United States – or 16 percent of the population – rising from 30.5 million at the turn of the millennium when this group made up 13 percent of the total population. The growth of some 15.2 million during this period accounted for more than half of the 27.3 increase in the total population in the United States.9
America’s Changing Face
Nowhere is the changing face of America clearer than in California, where, by last count, 37.3 million Hispanics call the left coast home. That same community also rubs elbows at work and at home with almost 4.5 million Asian-Americans or 13.6 percent of the Golden State population.10
For that reason, President Barack Obama made personal pleas to Californians — primarily Hispanics — to sign up for coverage through the healthcare exchanges that are being created to help millions of uninsured consumers afford coverage under the Affordable Care Act. His worry is that after insurers submit premium rates to state regulators, effective 2014, the law could drive up the cost of coverage so much that many consumers may opt to pay a penalty for failing to get insurance.
From 2002 to 2012, the proportion of employers offering any coverage declined from 71 percent to 60 percent. Meanwhile, the costs of healthcare insurance rose by just under 170 percent since 2002, more than five times the overall inflation rate.11
In the face of evaporating commissions, attracting new clients through innovative channels like medical tourism should make dollars and sense to any insurance broker who feels the winds from the unsettling disorder that is healthcare today.
California has the country’s biggest insurance market, and with 6 million uninsured residents, it’s another major part of the effort to get consumers to sign up for coverage. Getting young people to enroll also is critical; they cost insurers less money because they generally have better health and don’t require much costly medical care.
Insurance companies and the employers they service would be foolish to ignore the potential of the newly insured in the emerging immigrant markets, many of whom would need little more than a nudge to travel abroad for quality medical care they could afford. After all, immigrant Americans have a history of traveling back to their country of origin for less expensive healthcare and of which they are accustomed and familiar with.
Those new Americans who haven’t tasted overseas medical care have also testified they would be more than willing to when asked. Hispanics, by a 54.1 percent margin, and 56.8 percent of Asian-Americans have already said they would consider medical care abroad where there are no cultural differences to untwine, and be afforded a chance to spend some time with extended family members is an added bonus.12
Longer life spans and greater prevalence of chronic illness has no doubt placed a tremendous demand on the healthcare system and immigrant communities as well as Americans – even those in California – who do not have living ties to family relatives overseas. Even these adults who have work-based coverage find themselves shelling out more for deductibles and co-payments. The share of Americans with deductibles greater than $1,000 more than tripled between 2003 and 2012, reaching 25 percent.13
Wellness: Emerging Trend
Cost of healthcare has gone up faster than wages, giving impetus to insurance companies and employers alike to shine the spotlight of medical tourism on a market that has sparked renewed interest in the possible role of prevention to curb spiraling costs.
Healthcare costs for chronic disease treatments are estimated to account for 75 percent of the nation’s medical bills.14 The expenditures have put a tremendous focus on – for example — the rise of overweight and obese employees and their contributions not only to healthcare spending, but workforce productivity as well.
Medical tourism and its extended offerings should not be perceived as tough a sell for brokers and the insurance companies they represent, but rather an avenue for taking the confusion out of healthcare and putting affordability and quality back in.
Out from throes of a changing nature of illness and the resulting burdens placed on both the nation and business owners, another medical tourism trend has emerged that can hardly be considered a passing fad or niche. Wellness travel is one of the fastest growing trends in medical tourism today, and worth more than US $106 billion, according to a recent estimate by the SRI Group.15
Fed by an aging world population; the failure of conventional medical systems to address cost-effective, prevention-focused alternatives to existing Western models; and the increased globalization of healthcare, wellness consumers across the United States are filling their plates from an assortment of spa treatments around the world.
Insurance companies and brokers would be wise to take these demands seriously as an attractive alternative to reduce the costs of healthcare and the productivity of the employees over the long-term when packaging coverage plans for employers.
Dollars and Sense
For the short-term, insurance companies are guessing what to charge when the exchanges open without the luxury of knowing what their costs will be under Obamacare in 2014. If they charge too much, they’ll lose customers. If they charge too little, they’ll lose money. Once they settle in on a price, it can’t be changed until the following year.
Instead of waiting around for 2015, insurance companies are challenged to take some risk now. The good news is they do not have to take this road alone. There are nonprofit trade resources like the Medical Tourism Association®, which works with employers, insurers and agents, along with other supportive governing bodies, to walk any novice through the process.
In the face of evaporating commissions, attracting new clients through innovative channels like medical tourism should make dollars and sense to any insurance broker who feels the winds from the unsettling disorder that is healthcare today.
Medical tourism and its extended offerings should not be perceived as tough a sell for brokers and the insurance companies they represent, but rather an avenue for taking the confusion out of healthcare and putting affordability and quality back in.
References
*(1 “The Commonwealth Fund Health Insurance Tracking Survey of U.S. Adults, 2011”; The Commonwealth Fund; June-July 2011; http://www. commonwealthfund.org/Surveys/2012/Feb/The-Commonwealth-Fund-Health- Insurance-Tracking-Survey.aspx; Accessed Sept. 1, 2013. 2 “CBO and JCT’s Estimates of the Effects of the Affordable Care Act on the Number of People Obtaining Employment-Based Health Insurance”; Congressional Budget Office; March 2012; http://www.cbo.gov/sites/default/files/ cbofiles/attachments/03-15-ACA_and_Insurance_2.pdf; Accessed Sept. 1, 2013.3 “U.S. Healthcare Costs”; KaiserEDU.org; http://www.kaiseredu.org/Issue- Modules/US-Health-Care-Costs/Background-Brief.aspx; Accessed Sept. 1, 2013.4 “Employer Survey on US Healthcare Reform”; McKinsey & Company; June 20, 2011; http://www.mckinsey.com/features/us_employer_healthcare_survey; Accessed Sept. 1, 2013. 5 Appleby, J.; “Latest Destination for Medical Tourism: The U.S.”; Kaiser Health News; http://www.kaiserhealthnews.org/stories/2010/july/07/domesticmedical- tourism.aspx?referrer=search; Accessed Sept. 1, 2013. 6 “Domestic Medical Tourism at Lowe’s Corporation, Inc.”; Medical Tourism Magazine; Medical Tourism Association; Jan. 11, 2013; http:// www.medicaltourismmag.com/article/domestic-medical-tourism-at-lowe-scompanies- inc-.html; Accessed Sept. 1,, 2013.7 “A Profile of America’s Foreign-Born Population”; Center for Immigration Studies; January 2007; http://www.cis.org/immigrants_profile_2007; Accessed Sept. 1, 2013.8 Camarota, S.; “Facts on Immigration and Health Insurance”; Center for Immigration Studies; August 2009; http://www.cis.org/HealthCare-Immigration; Accessed Sept. 1, 2013. 9 “Overview of Race and Hispanic origin: 2010”; 2010 Census Briefs; U.S. Census Bureau; U.S. Department of Commerce; March 2011; http://www. census.gov/prod/cen2010/briefs/c2010br-02.pdf ; Accessed Sept. 1, 2013. 10 “California Census Statistics: People Quick Facts”; U.S. Census Bureau; U.S. Department of Commerce; June 6, 2013; http://quickfacts.census.gov/qfd/ states/06000.html; Accessed Sept. 1, 2013.11 “California Employer Health Benefits Survey: Fewer Covered, More Cost”; California Healthcare Foundation; 2012: http://www.chcf.org/ publications/2013/04/employer-health-benefits; Accessed Sept. 1, 2013.12 “The Ethnic Employee”; Medical Tourism Magazine; Medical Tourism Association; Feb. 8, 2009; http://www.medicaltourismmag.com/issue-detail. php?item=183&issue=8; Accessed Sept. 1, 2013. 13 “2012 Commonwealth Fund Biennial Health Insurance Survey”; The Commonwealth Fund; August 2012; http://www.commonwealthfund.org/ Surveys/2013/Biennial-Health-Insurance-Survey.aspx; Accessed Sept. 1, 2013. 14 “U.S. Healthcare Costs”; KaiserEDU.org; http://www.kaiseredu.org/Issue- Modules/US-Health-Care-Costs/Background-Brief.aspx; Accessed Sept. 1, 2013. 15 “Spas and the Global Wellness Market: Synergies and Opportunities”; SRI International; Global Spa Summit; pp. 36; May 2010; http://www.wellpeople.com/ pdf/Spas_Global_Wellness_Market_SRI_May_2010.pdf; Accessed Sept. 1, 2013.)
