Many many years ago the Nobel Prize-winning economist Kenneth Arrow wrote an article about asymmetry of information in medical care (your doctor knows more than you do). Since then countless textbook authors op-ed writers and policywonk briefers have seized on Arrow's observation to argue that a free market will not work in health care. Ergo we need a regulated institutionalized bureaucratized market - like what we have in the US and almost everywhere else.
The problem with this line of reasoning is that it commits what logicians call the fallacy of the excluded middle. The unstated and therefore unexamined minor premise is: regulated markets can solve the problem or at least do better than free markets. As it turns out this minor premise is difficult if not impossible to defend.
What brings all this to mind is medical tourism. In the international marketplace a booming bustling vibrant completely free market for medical care is emerging. Indeed the words "free market" do not do it justice. It's as close to laissez faire capitalism as anything Adam Smith might have hoped for.
And guess what? In this market patients are getting information about price quality you name it - the very information no one can get back home. The reason: since almost all "medical tourists" pay with their own money providers compete based on price and quality. By contrast providers back home do not compete based on anything.
[Note to Secretary Leavitt: If you want transparency in health care no need to beg and plead. Just outlaw third-party health insurance.]
Here's what's happening. Estimates vary but as many as half a million Americans travel outside the United States for health care every year and the number is growing by leaps and bounds. Amazingly. 70,000 British patients (who are supposed to be getting health care for free!) will leave the UK this year for health care abroad. These patients are going to such places as India. Thailand and Singapore as well as countries south of our border. Americans are finding package prices (that may include airfare and hotel rooms) that are one-third one-fourth or even one-fifth of what they would pay in the US.
In general quality is not a medical problem it is a political problem. Host countries must be willing to allow facilities to operate that cater to foreigners and provide a level of care to which most local citizens do not have access.
Here is my favorite Uwe Reinhardt quote: Medical tourism "has the potential of doing to the U. S health care system what the Japanese auto industry did to American carmakers."
Here is my prediction: Long before the last American hospital closes its doors the industry will undergo radical change. Already there are centers of excellence around the country gearing up to (you guessed it!) compete on price and quality.
Well thought out and said. People make their own decisions on food clothing shelter transportation employment—all more essential than health care. Government would make a mess on those if they intervened.
Are they saying that the consumer doesn’t know enough about medicine and so the decisions should be left to the high-school dropouts and marginal graduates who answer the phone?
I always enjoy reading your comments but had to react to this. I don’t think any conservative would support using the power of government to “outlaw” third party insurance. Certainly government needs to change to level the playing field between current insurance arrangements and alternatives but let’s not actively encourage government to take on any additional powers in restricting mutually beneficial contracts even if they take the form of third party insurance.
So. John. Why did I travel to Mexico to get my Lap Band for $6500 total ( all costs included except airfare) instead of paying $20,000 US?
By the way the Mexican Surgeon was so good he only needed four tiny incisions instead of the normal 5 incisions. By the way most American lap band surgeons have been trained by the elite surgeons from Mexico.
The major concern about medical tourism is that once the patient returns home if a complication occurs where do they turn? Kind of like the Cooper Clinic. They are the most expensive show in town but all they do is examine and perform tests. Once you are out of there if you have a problem they WILL NOT take care of you. With medical tourism if a cardic patient has an expensive procedure overseas and gets into trouble once home a local physician might very easily say “sorry call the doctor who took care of you”. And in many instances. I am not sure that I wouldn’t agree with that response.
That is why we need to fix the system. Merely having the surgery overseas saves the patient money but it doesn’t solve the bigger problem.
What an excellent articla and great link to the NCPA. I am co director of America’s Medical Solutions Pvt. Ltd. an Indian medical tourism company located in Bombay (Mumbai). India. We three directors are all Americans serving our fellow Americans and other westerners. Your article hit the nail on the head even as our existence and services should prove. We also appreciate anything you or your readers are doing to correct the federal Stark laws but feel that Laissez Faire Medicine can even take care of this problem all by itself too.
A good friend of mine needed about $12,000 worth of dental work done. He decided to go to Costa Rica to sae some money. The bill for the dental work was approximately $750.00. Since he had to stay around for a week to get the crowns made he rented a motorcycle and toured the island. He checked out the rain forest the volcano and both the Atlantic and Pacific coasts. His round trip plane fair from the DC area was around $500. His medically supervised lodging with a couple of meals a day ran about $60 or 70 dollars a day. I’m planning on going down soon. I need to have a couple of implants done. Down there they do same day implants which means you don’t have to wait for them to heal and adhere for 6 months and then go back down. They can be chewed on with care the next day. I was just in to see my dentist on another matter and he took a look at the rest of my teeth. He insists that most of them need root canals pins build up and crowns. On top of the implants that would be done by another dentist his estimate was $18,347. The implants build up and crowns would be around another $8400.00 here. I’m in the process of getting estimates currently but my friend says with the implants it will probably cost somewhere in the $3000.00 range.
You can pay a lot of money to a cosmetic surgeon in the States or you could go to medical tourism destinations like India. Argentina or Thailand and received the same treatment for a fraction of the cost. Medical tourism provides you with affordable options for face lifts. Botox liposuction and breast implants.
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Related article:
http://www.john-goodman-blog.com/laissez-faire-medicine/
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