Even noted academics can be confused about the relationship between insurance and medical tourism. Ian Youngman corrects some of the common misunderstandings and myths.
You may have read some of the nonsense that suggests that if you need treatment abroad then you should buy an international health insurance product to cover the costs.
Just as you cannot buy fire insurance if you are in a burning building, then you cannot buy international health insurance to cover the costs of an existing medical problem.
Policies that appear to give the option of treatment in any country may effectively not cover medical travel by excluding cosmetic, dental and many elective treatments. Another way policies, which give the illusion of international cover, exclude it, is by limiting treatment only to approved overseas hospitals and not paying for treatment in the country or clinic the customer chooses. Few pay for the travel or accommodation costs of planned overseas treatment, and fewer still pay for a partner or companion.
There are a few reputable international insurances around that will cover people worldwide. These are mostly aimed at the international jet set with homes in many countries that travel around a lot on business and pleasure. They offer very wide cover but are very expensive.
Private health insurance and medical tourism
Private health insurance can either be full health insurance as an alternative to state cover, or top up cover on top of compulsory state or insurer cover. 99% of private health insurance policies do not cover treatment abroad and tend not to cover cosmetic surgery, routine dental care, cosmetic dentistry, fertility treatment or other non-essential treatment.
Travel insurance and medical tourism
A myth has developed that normal travel insurance is all that medical tourists and their companions need. While this may be true for baggage or people going to a spa or for a health check, it is certainly not so for anyone traveling for dental or fertility treatment, cosmetic surgery or surgery.
Most travel policies have exclusions on going abroad for any kind of treatment. The policy exclusion applies to all sections of the policy, not just the medical section. A few travel policies have exclusions only on the medical expenses and cancellation sections; which exclude any pre-booked trip with planned or pre-planned medical treatment.
Travel policies are designed to cover emergency medical treatment, not planned treatment. The exclusion, which normally applies even if not specifically mentioned by the policy, is pre-existing conditions. This can be interpreted in many ways to include anything you knew or suspected or have had treatment for, even if you have recovered.
Policies can also have specific exclusions such as;
- Cosmetic procedures
- Non-emergency dental treatment
- Pre-existing medical conditions
- Attendance at any hospital in last 12 months
- Anticipation of any treatment or investigations or treatment in the future
- Being on the waiting list for in-patient or day-patient treatment
- Traveling against medical advice.
Any form of medical treatment carries an inherent risk but also a risk of complication or adverse effects on pre-existing conditions. Therefore it is hard to medically underwrite such a policy and most travel insurers have taken the simplest and clearest option available to them, which is to exclude any medical costs related to such planned treatment or non-emergency treatment.
Many people are tempted to avoid the problem by failing to disclose that the whole or partial purpose of a trip is for treatment. Failure to reveal relevant information can invalidate the policy, rendering it worthless. Failure to reveal the true purpose of a trip when making a claim is fraud, a criminal offence. Most insurers in those circumstances simply refuse to pay the claim, but if it is for a large amount or the insurer is having a periodic crackdown on fraud, they could instigate a criminal or civil charge.
A direct result of this medical travel myth is that millions of people travel either with no travel insurance at all, or with inappropriate cover; and those insurers and agents that have tried to sell proper medical travel have often failed to make money or even survive.
Medical evacuation and repatriation
International medical emergency evacuation and/ or repatriation is part of standard international health insurance and travel insurance policies, but some companies now offer stand alone cover to people who may be settled long term in another country and choose to or have to buy cover locally. Cover provides transport to the nearest centre of medical excellence if they cannot get the treatment they need locally. It will even pay for some compassionate visits so that family can be there too. Such emergency cover is not medical tourism for planned treatment.
Medical tourism insurance
These policies do not cover the medical, travel or accommodation costs of medical tourism, only certain unexpected extra costs.
Globally only a handful of agencies and insurers have introduced specialist medical travel insurance covers. In the last decade, of those that launched, only two survive after two vanished in 2016. One reported that it sold under a hundred policies in 3 years so pulled the product to protect the account. There has not been a rush by the insurance industry to offer cover, as insurers are concerned about what they see as high risk and adverse selection.
A more pressing problem is that agents, travel agents, hospitals and consumers are reluctant to pay a price that is or is expected to be substantially more than a normal travel policy. Even in developed countries where travel insurance has been around for decades, as many as one in three people still travel abroad without any travel insurance. In many less developed countries, travel insurance may not even be available, or only bought by a small minority of travellers.
Insurers and medical tourism
Even recent articles quote insurers as offering medical tourism cover when those schemes or pilots closed several years ago.
The medical tourism industry often talks of numerous schemes and deals with insurers, but tends to forget to mention that in the last decade most of these schemes fell by the wayside, as customers did not want to travel, real costs were too high, there was fraud, or the quality of care was less than promised.
When comparing prices, the medical tourism hype of “save up to 90% on treatment at home” is often not true as it compares the lowest price overseas with the highest one at home, and fails to add in extras like food, travel and nursing costs. The key problem is that the comparison of individual book prices forgets that an insurer will usually pay only 50% of the list price. And the big health insurers can hammer cheaper deals with private hospitals, some only paying a third of list price. Also insurers have their own global healthcare networks with deals on direct billing and set prices.
A few insurers have tried to go into the medical tourism business by offering deals to customers and non-customers – and not linking this to health insurance. Most attempts close quickly as it is almost impossible to make money.
Many big insurers have piloted or fully investigated medical tourism. Those few that offered schemes and pilots found that take up was low, and even on employer schemes few employees were prepared to go to another country, or even another state.
The simple answer is that for most insurers there are no savings to be made for either them or their individual or corporate customers, due to their huge buying power and local/global networks.
US insurers have not bought in to medical tourism
In the last decade most US health and travel insurers have thoroughly investigated medical tourism with research and attendance at exhibitions and conferences.
They have done their sums and research and concluded that nobody saves money, employers do not want it, and employees/customers do not want it.
For US insurers. there are very strict rules on what costs can be put where on health insurance sold to employers or via the state insurance exchanges. None of the approved models have any cover for medical tourism and to add it in insurers would have to prove that it saved them money.
Insurers are allowed to offer incentives, but neither they nor employers are allowed to compel an employee, customer or their family to go out of state for treatment, let alone out of the country.
Insurer paid domestic medical tourism is said to be taking off, but there are no figures and going out of state for specialist care has been around for decades so is not new.
Why insurers do not want to be involved in medical tourism
A tiny handful of insurers offer and will offer insured medical tourism in a very limited way, and/or act as agents for medical tourism. But to the insurance industry, on a list of the top thousand relevant items, medical tourism would be placed at 999th position.
The great excuse that any group uses as to why certain organisations or individuals do not buy their product or services is “They and the media need educating about the benefits.” This is rarely true as the reality is that customers have found the product wanting or not needed.
The reality… the vast majority of insurers feel that medical tourism is not relevant to them or their customers.
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