Health Tourism, a New Market for
Latin America and the Caribbean

Foto: thinkpanama, Flickr

Trade in health services is a fast growing sector in many regions of the world. High costs of medical procedures, long waiting lists, and the ageing of an affluent baby-boom population in developed countries, together with the relative affordability of international travel and high quality healthcare services at affordable prices in destination countries, have prompted a growing number of patients to seek and receive medical, dental and/or cosmetic care in the developing world.

Several countries in the Latin America and Caribbean region are looking at medical tourism to diversify exports, attract investment and enhance employment opportunities at all steps of the skills ladder.

In this context, the ECLAC Washington Office has been analyzing the potential medical outsourcing effects of the comprehensive healthcare reform passed by the United States Congress in March 2010. The results of this study will be published soon under the title U.S. Health Care Reform and Medical Tourism Opportunities.

There are two main channels through which healthcare reform can influence the size of the U.S. medical tourism market for the region.

The first one has to do with sustained efforts by different actors of the U.S. health care system (i.e. employers, insurers, state legislatures, patients) to keep costs under control. The second is related to access to medical services as growing number of U.S. residents gain access to health insurance and the aging of the general population puts pressure on a relatively inelastic supply of services as is the number of hospital beds and professionals trained in the medical profession.

Healthcare costs in the United States are among the highest within OECD countries. In 2009, the U.S. spent 17.4% of GDP on health as compared to 9.6% in OECD countries. This is also true on a per capita basis where the U.S. spent US$ 7,960 in 2009 as compared to US$ 3,233 for OECD countries, on average.

For the majority of the insured population, premiums are shared between the employers and the employees and workers face additional costs when they use healthcare services. Between 2000 and 2010, the average premium for family coverage in an employer-provided health insurance plan increased by 114% and the employee's portion increased by 147%. In addition, the share of the total premium contributed by covered workers has been increasing over the last few years as have been deductibles and other forms of cost-sharing, making health insurance increasingly less affordable even for covered workers.

Several studies have shown that the growing number of patients who travel abroad to seek medical treatment are mainly either uninsured, insured with a limited benefit medical plan, or seeking treatment not covered under group health plans (i.e. cosmetic surgery or other elective surgery, mental health care, etc.). Offshore healthcare makes it financially possible for these patients to receive services that would be unaffordable in the United States.

If the healthcare reform is fully implemented and the number of uninsured people is reduced by about 30 million, economists have estimated that between 8 million and 13 million people will remain uninsured or under-insured and therefore still willing and able to seek health care abroad.