Creating Incentives to Reduce Healthcare Costs; Medical Tourism Can Save Us All Money

An Opinion article in the Washington Post by John R. Graham explains How Domestic Medical Tourism Could Save Us All Money.

One of the most under-reported medical success stories in recent years has been the increase in medical tourism: traveling abroad to get high-quality care at a fraction of what it would cost in the United States.

The same Lasik eye surgery that might cost $4,400 here (for both eyes) is available in India, for example, for $500, according to the Medical Tourism Association. A heart-valve replacement that might cost $170,000 in the United States could cost less than $30,000 in Israel.

While going overseas for care isn’t for most people, it certainly should make us wonder why we don’t encourage Americans, especially Medicare recipients whose bills are largely paid by taxpayers, to at least shop around in their own states or communities.

The best way to slow this growth is not by putting the squeeze on Medicare beneficiaries, as well as drug companies, hospitals and other providers — as President Obama’s $4 trillion budget plan would do — or by creating new bureaucratic barriers to care, but by providing Medicare recipients with incentives to seek the best care for the best price. And you do that by allowing them to share in the gains from reducing costs.

Creating Incentives

Graham proposes that instead of Medicare doing competitive bidding, let medicare recipients shop for services then reward them by adding a portion of the savings to their monthly Social Security deposits.

I suggest that if people are healthy enough to travel, they should be required to get a heart valve operation done in Israel for $30,000 rather than $170,000 here.

And there is no reason to stop at Medicare. Insurers could easily offer reduced-rate plans at less cost for those willing to travel abroad.

Right now, there are virtually no incentives anywhere in the system for people to lower costs. Put incentives in to lower costs, and costs will come down.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com