Global Medical Tourism: An Economist Approach to Combating Encroaching Privatization with Government Intervention

Jeremias Castillo & Alana Lewis

Abstract

International medical tourism is defined as patients traveling to another country in hopes of attaining health care. 1 Experts predict that the industry will grow from generating $102.6 billion USD globally, in 2019, to approximately $272.7 billion, by 2027. 2 Currently, there is a trend among countries to attract medical tourists in hopes of profiting and stimulating their economies to develop their healthcare systems. 3 However, local healthcare systems suffer in the deregulated markets associated with said medical tourism because it warps available resources at the expense of local populations. In reality, the developments of low-income countries chasing the economic benefits of medical tourism only cater to the elite. The introduction of safeguards such as taxes on medical tourism that reintroduce some of this profit into the local healthcare systems could be a solution. Local healthcare development should be prioritized over the fractional benefit that medical tourism offers, despite its promises to be more influential.

 

Manuscript

Figure 1: Global Medical Tourism Market (2019-2027).

It is first important to make a distinction between the elite and necessary medical tourism that occurs worldwide. Necessary tourism occurs due to lack of resources in the sending country’s healthcare system or because of a weak healthcare infrastructure for individuals who would have a higher quality assurance elsewhere. Such cases should be distinguished from the subject this paper approaches, as they involve international politics and are subject to negotiations between governments. Instead, this paper focuses on the effect of elite medical tourism on local populations and healthcare systems.

On the surface, medical tourism’s economic benefits seem like an apt effect to pursue. The host country’s economy benefits from visiting patients flooding into its healthcare centers, while the sending country benefits from having its patients taken care of without the long waits or high costs that exist for patients domestically.1 On paper, the relationship is symbiotic; in reality, said benefit is usually overestimated by 25%, unless the negative multiplier effect is taken into account and adjusted for.3 This technique has been pioneered by Beladi, whose work investigates whether there is economic benefit to host countries in the medical-tourism sector. This negative multiplier effect is the inaccurate GDP estimation of the medical-tourism sector’s revenue, in this case, as a result of local respending, causing an upscaling.4 While it is acknowledged that there is, the millions shown in very scarce revenue data that seemingly demonstrate the benefits of medical tourism are, therefore, brought into speculation.

Nonetheless, governments still promote medical tourism to their country in order to chase this likely narrow benefit which leads to the reallocation of resources towards medical tourists rather than citizens of the host country.5 In their paper “Prospects and Problems of Medical Tourism in Bangladesh”, Mamun and Andaleeb write about the possibility of Bangladesh developing its healthcare system so that it could eventually attract medical tourists of its own.6 However, this begs the question of what type of services would be developed in this pursuit of medical tourists. Within this sector there is a great deal of travel for cosmetic and other elective care.7 This would likely lead to more specialization of doctors to provide this type of care—such as plastic surgeons—which would leave substantial gaps in adequate care for those that need it most within Bangladesh.8 This shift causes a problem in the way care is given to local populations. In her paper on “Medical Tourism and Inequity in India…,” Smith uses the term “commodification of healthcare” to describe the trend of patients being seen as consumers rather than people in need with the right to adequate care.8 The wealthiest consumers–those who have the most to give to suppliers–are the ones that are taken into account most often. Thus, whatever care makes the most money is then to be prioritized rather than what would aid the masses.

Moreover, increasing tourism risks the progression of healthcare privatization as well.9 In Singapore, for example, medical tourists experience shorter wait times and a less hectic hospital experience in comparison to citizens. This is because they access private hospitals, as opposed to the public hospitals that the majority of Singapore citizens use.10 Privatization increases tourist hotspots and exacerbates resource distortion, though these issues would be less problematic if most patients, being of low-income, were not also barred from accessing healthcare at private facilities. According to a study at the Stanford Institute for Economic Policy Research, when healthcare facilities are privatized in the United States, the individuals most affected are those from low-income backgrounds as they are rejected from being served due to little reimbursement for costly attendance.11 Unfortunately, economic benefits sought after in the medical-tourism sphere do not translate to better care for the less fortunate. Rather, the pursuit of these benefits exacerbates the health disparities already present in these deregulated markets where healthcare thrives as a business—but the common people do not.

This inequality of benefit necessitates a different approach to medical tourism. Cuba’s communist state was able to successfully develop its healthcare sector via reallocation of surplus resources from its luxury services amassed from tourism.5 Pre-existing policies can deter successful reinvestment in more capitalistic and democratic nations as economic benefits are left in the hands of powerful entities, not the state. While abolishing medical tourism—as some might argue—would inhibit its negative impacts on local health systems from being felt, it would also dissolve an opportunity for better healthcare infrastructure globally. What these entities, currently operating in free-markets, need is an incentive to encourage reinvestment into the public sector, whether it be taxation or some other form of economic reform. If significantly taxed, some of the revenue generated from medical tourism could be reinvested into initiatives to develop higher quality care for those that live in these countries.12 Initiatives for improving the public healthcare sector could include the redistribution of wealth amassed by private healthcare facilities—regardless of income—to mitigate price increases caused by the service demands of medical tourists. Additionally, these providers could be obligated to expand access to those most impacted by the increasing privatization of healthcare, being low-income people, in their respective local municipality. 13 Both of these goals could be met by placing a graduated tax on facilities serving a significant amount of medical tourists and using this tax revenue to encourage these private providers to expand service to the low-income and uninsured locally. The government could propose giving back what it has made in tax revenue under the condition that a greater fraction is spent domestically on locals facing obstacles in accessing healthcare in the form of pro-bono work. Any resident who is above the set national poverty-line threshold should qualify for low-cost health coverage and therefore be provided care at affordable rates. Lastly, these providers may not claim any pro-bono work done under this contract for tax breaks as it would render these policies ineffective.

In principle, the medical tourism sector should not flourish if the regular healthcare sector does not equally benefit. Even with a well developed healthcare system in a given country, the medical tourism sector will still perpetuate inequalities.8 After all, without high quality and prioritized services for those traveling to obtain this care, medical tourism within a country will not thrive. However, it is important to promote the development of the healthcare system generally and not only cater to medical tourists because they are paying more money.

Conclusion

Healthcare, for all intents and purposes, is a business, and the growth of and focus on medical tourism by many countries is reflective of this. Medical tourism will continue to grow as countries latch more onto the opportunity to develop their economies with it.12 Addressing the dilemma presented by medical tourism is the responsibility of government leaders everywhere in respect of the natural rights of each governed individual they represent. Solving said dilemma saves the healthcare sector from heavy costs globally that result from poor health in countries’ respective populations;3 pursuit of the subject is, therefore, also in the interest of economically liberal states.

 

Acknowledgements

Thank you to Dr. Sanjay Saini for your guidance in our paper topic and research. We would also like to extend thanks to Shreyas Rajesh for his role as editor of this paper.

About the Authors

Jeremias Castillo is a first-year undergraduate, studying at Harvard University as Class of 2027. He plans to pursue a double concentration in Neuroscience and Computational Government with a language citation in Spanish. Castillo also has interests in Global Health and Social Activism and Advocacy.

Alana Lewis is a first-year undergrad student at Harvard University in the class of 2027. She plans to study Chemical & Physical Biology and also has interests in Global Health and Spanish Language studies.

 

References

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