The passage of the Patient Protection and Affordable Care Act (PPACA) addresses access, but most health care economists agree that medical expenses will continue to rise. As this happens, more employers will be forced to shift a larger portion of health care costs to their employees in order to remain profitable. Medical travel, which has received increased interest from U.S. residents and employers, is now a highly attractive and viable option to businesses and their employees that may help consumers deal with the increased load that they must bear.
Medical travel defined
The practice of travelling across international borders to obtain health care – medical travel, also known as medical tourism or global health care – has increased significantly in popularity over the past decade. Travelers seek both elective and specialized surgical procedures, such as joint replacement; cardiac, bariatric, and cosmetic procedures; and major dental work.
A number of factors are driving this trend, including:
- The high quality of international medical care and the ability to reduce a U.S. patient’s out-of-pocket expenses for typically high-cost surgical procedures
- The cultural diversity of the US workforce
- The ease of the adoption and integration of global health care benefits into a plan design
Large U.S. employers estimate that their health care benefit costs will increase an average of 8.9 percent in 2011, up from an average increase of 7 percent in 2010, according to an August 2010 survey report by the National Business Group on Health, a nonprofit association of large employers. The survey received responses from 72 of the nation’s largest corporations, representing more than 3.7 million employees.
The survey also showed that more than 60 percent of large employers will offer a consumer-directed health plan (CDHP) in 2011, typically a health savings account (HSA) or a health reimbursement account (HRA).
On average, an international surgical procedure saves 40 to 80 percent over U.S. costs, making medical travel a viable option for businesses and employees to explore.
A handful of medical travel facilitators work directly with employers, health care brokers, and health insurance plans to offer medical travel to the organization’s employees.
It is common to see employers provide a 100 percent benefit to employees who travel for lower-cost medical care by waiving all deductible and out-of-pocket expenses for the surgical procedures. If employers can lower costs by incorporating a medical travel option, many believe that the employee needs to win financially, as well.
One model utilizes an HRA, which allows the consumer to share in the savings for their surgical procedure. This shared savings model can work in concert with an HSA, high-deductible health plan (HDHP), or other plan designs. Under this model, the patient is eligible to have their plan sponsor or employer deposit between $2,000 and $8,000 into a HRA, which is made possible by the lower cost of the surgical procedure through medical travel. The funds deposited are tax-deductible for the employer and tax-free for the employee, and offer the employee access to dollars that can offset future health care expenses.