Ian Youngman from IMTJ continues his review of the impact of US healthcare reform on medical tourism…..a sprinkling of fact, pure fiction and plenty of wishful thinking. Ian puts US healthcare reform in perspective and separates myth from reality. In this second article he deals with eleven more myths and realities. (See Part One for the first ten myths).
“Industry comment” and initial “sound bites” on any major issue can rapidly become unquestioned truths. Every industry commentator has an agenda and he or she will reflect an issue in the way that best suits their political and business interests. That’s the way it is. By pinning down the main myths early, with help from experts who really know what they are talking about, we can stimulate serious discussion and analysis of the real issues from a more accurate starting point.
So, let’s look at some of the fact and fiction in the debate so far.
(See Part One for the first ten myths).
Myth Eleven: Health care costs will still skyrocket.
Many measures in the healthcare reform are about controlling costs. There is no escaping that an older population and expensive health improvements are a problem worldwide, but this has nothing to do with healthcare reform.
Myth Twelve: The US government can cut costs by negotiating deals with countries such as India.
The US government will use the tax system to encourage individuals and companies to buy health insurance. It funds organizations offering health insurance to the poor and elderly. It is not a national health system as in the UK.The US government does not directly buy any health care, so has nothing to negotiate on.
Myth Thirteen: Insurance companies will be able to charge whatever they want.
Although a bill to restrict health insurance premiums failed, there are several ways that insurers will be limited. The state has several methods between now and 2016 to control insurers on both cover and price. New plans for specific state control of health insurance prices are probable in some states. In 2014, once the state-run insurance exchanges are up and running, there are caps on premiums. The legislation will create a process for review of increases in health care premiums and would require plans to justify those increases, according to the Kaiser Family Foundation. And once the state-run insurance exchanges are up and running, states will be required to report premium increases and recommend whether any plans should be excluded due to unjustified premium increases.
Paul Keckley of Deloitte’s Center for Health Solutions comments:
”For the health insurance industry, new federal regulations from 2013-2019 include premium controls, mandated coverage requirements for essential benefits and transparency in pricing. In 30 states, insurance commissioners currently regulate insurance premiums. The new federal law sets up a new federal premium oversight process above the states, while requiring states to set up health insurance exchanges. Will states exercise control of premiums or will federal oversight supersede state responsibility? “
Myth Fourteen: Insurance premiums for younger Americans could rise as much as 70%. So employers and insurers will have little choice but to implement medical tourism as a way of cutting and reducing healthcare costs.
“From 2014, premiums for young adults seeking coverage on the individual market would likely climb by 17%. Insurers typically charge six or seven times as much to older customers as to younger ones in states with no restrictions. The new law limits the ratio to 3-to-1, meaning a 50-year-old could be charged only three times as much as a 20-year-old. The 17% increase does not factor in tax credits to help offset the increase. Tax credits will be available for individuals making up to four times the federal poverty level, a high salary of $43,320 for a single person. The credits will vary based on income and premium costs.”
Says non-partisan Rand Health.
Myth Fifteen: It will be cheaper for young healthy families to pay the tax fine than buy insurance.
The comparisons made use current private insurance prices. The new state exchanges, pre-agreed covers and restrictions on price limits, will lower prices. The legislation gives the government many powers to regulate the insurance industry that it can use in the future. Also, the tax fine is per person. In 2014, the tax fine is $695 a person and $2,085 per family. In 2016 it increases to $750 a year, after which it rises with inflation.
Myth Sixteen: Health insurers pricing and limit on total payouts makes people with long-term serious medical conditions a medical tourism target.
Insurers will not be allowed to offer pricing that discriminates. A new law next January bans annual and lifetime caps on health insurance policies sold in Maine. Other states will follow. Federal health care reform legislation also eliminates such caps from 2014.
Myth Seventeen: High co-payments and excesses will mean people have to pay a large share of costs themselves.
There is a requirement that insurers devote 80 or 85 percent of premiums to medical claims and related expenses. If insurers raise co-payments and deductibles, turn away applicants with pre-existing conditions, or cut payments to doctors and hospitals, each of these would reduce medical spending and make it harder for insurers to meet the required ratios. There are other complex risk-balancing mechanisms that penalize selective insurers and benefit those offering more cover to a wider target market.
Myth Eighteen: The insurance industry will do as it pleases.
Insurers lost customers in 2008 and 2009. Instead of losing customers each year, healthcare reform gives them over 32 million new customers. If the insurance industry gets greedy or unhelpful, there are measures in health reform to more tightly control insurers.
Any company charging excessive premiums during the next few years could give authorities grounds to bar insurers from a lucrative market, the new exchanges when they open for business in 2014.There are lots of new rules that insurers will have to obey, and they have already been collectively warned of the serious consequences of exploiting legal loopholes.
Within separate banking and insurance reform, government has the ability to regulate them at national level - rather than the state level where big insurers have an edge, to control them on pricing, reserving, payment and product. The government has carrot and stick; a huge customer influx as an incentive to behave responsibly, and an arsenal of weapons to control them if they do not.
Myth Nineteen: There is nothing mentioned in healthcare reform that mentions medical tourism so nothing restricts insurance companies and employers from implementing medical tourism.
The American political parties at national and state level regard medical tourism as unimportant and insignificant. Not once has it featured in the political debate. This is not necessarily a good thing. The model policies on offer in health exchanges have no medical tourism element. Individual states are protective of their own healthcare and local jobs, even against other US states. With US jobs at risk, at federal and state level, both parties loathe the outsourcing of anything overseas. Individual insurers and employers will not be prevented from offering medical tourism options, but expect no official encouragement, and rapid discouragement if unions object or there is any hint of forcing customers or employees to go overseas.
Myth Twenty: There is nothing to stop insurers adding medical tourism
In the limited context of legality, that is true. But as Paul Keckley from Deloitte says:
“From 2011, health plans must spend at least 85 cents of every premium dollar on medical care for group coverage, and at least 80 cents for individual coverage. Costs associated with medical care such as call centers, patient education, disease management programs etc. may qualify as medical costs along with other services plans provide. Regulators in the Department of Health and Human Services are seeking to publish regulations by June.”
Which parts of the costs of medical tourism, e.g. travel and accommodation are included within the 85/80% and which are not could be vital to whether or not insurers can include it. None of the medical tourism bodies are approved lobbyists, so will have difficulty getting an audience with regulators, to persuade them to include all costs, as if they are within the excluded 15/20%, then persuading insurers to pay for medical tourism will be an uphill struggle.
Myth Twenty One: Employers and their insurers will rush to save money by sending people overseas.
Few employers or health insurers are currently prepared to offer it. The big health insurers have piloted it and found it wanting. Cost will be a minor concern with the bigger insurers who already have huge bargaining power and pay only a fraction of list prices in the US or elsewhere. Insurers and employers will want guarantees and indemnities against medical malpractice, accident or death, and terrorism risks. A few companies will offer it, but it will be a niche product, not mainstream.
Murders by drug gangs in Mexico, continuing political turmoil in Thailand and terrorism in India will make US businesses and insurers and many of their customers very nervous. The reality in such overseas countries may be different, but the general perception of these countries in US may be that these are dangerous places to travel, let alone visit for medical treatment.
Americans will still be medical tourists. Health insurance reform is likely to make health plans add dental cover, but this does not affect the majority of dental tourists who go overseas for cosmetic treatment, implants and other areas not covered by routine dentistry. Health insurance does not cover cosmetic or weight loss treatment. There are innovative treatments overseas that are not available in the USA.
Whatever the effect on numbers, healthcare reform does once and for all move the goal posts for any country or organization seeking American medical tourists. The old mantra of “50 million uninsured Americans” must be abandoned.
As healthcare reform is not instant, some suggest that they have a few years of marketing on the old basis. But healthcare marketing consultant, Irving Stackpole, disagrees:
“The insurance industry will be in flux for at least the next two years as it responds to the changes in the marketplace as a result of health care reform. Until issues are ironed out over time, traditional medical tourism markets such as uninsured individuals and self-insured providers may not be the best targets for medical tourism marketing.”