Targeting the American medical traveller

The open enrolment season for health insurance renewal for 2023 is gearing up, and is likely to show more people in the USA have health insurance than ever before.  With less than 1% of US health insurers offering any cover for medical travel overseas, should medical travel destinations target Americans with insurance but who will pay for medical travel out of their own pocket? Beware of the limitations says analyst Ian Youngman.

Whether it’s health insurance through an employer, the individual market, or even through Medicare, high healthcare costs and cover exclusions are making insurance in the USA less useful each year.

The Affordable Care Act built on 60 years of progress in expanding insurance cover. With the Democrats expanding Medicare and Medicaid, now only 8.3% of Americans are uninsured.  The results of the mid-term elections mean that both these and the ACA are safe for another two years. And being insured is still much better than being uninsured in this country.

Medical tourism may be concerned that the low rate of uninsured people means fewer outbound American medical travellers.  The reality is that sadly those with no cover are at the bottom of society who have no money for medical travel. The target for medical travel destinations has to be the insured.

Limits to targeting the insured American

Those newer to medical travel may assume that persuading health insurers how wonderful medical tourism is would be the logical way to go.

In reality, USA insurers have spent two decades investigating overseas medical travel, launching pilots, endless conference visits and special products, and have ultimately decided they want little to do with it as they move to owning or partnering with local healthcare providers.

In addition, the millions who are insured have limited cover.

While the ACA created a limit on how much some people have to pay when they get ill, health plans frequently fail to keep people out of medical debt, to provide timely access to health care they need, or to ensure that people can afford the medications they need to stay healthy.

In a recent survey conducted by the Commonwealth Fund, 40% of working age adults who were insured for the full year had to skip or delay health care they needed because they could not pay for it; 37% struggled to pay medical bills over the past year or were paying off medical debt over time; 23% were underinsured, meaning their healthcare costs and deductibles were very high compared to their incomes, and they suffered nearly as much as those who were uninsured.  The survey also found 60% reported delays in care due to cost, and 60% of those who did get care reported problems paying their medical bills.

Many Americans who are covered by health insurance face such huge cost barriers and exclusions that it is cover in name only. This is not just a problem for people with private insurance: 20% of Medicare enrolees aged 65 and older are also underinsured.

Blame the cost of care

The major culprit in all of this is the cost of care. The U.S. is projected to have spent US$4.3 trillion on healthcare in 2021, more than any other country.

Medical costs are higher than anywhere in the world. The prices that commercial insurers and employers pay to providers are directly linked to how much people are asked to pay out of their own pockets in the form of deductibles, co-pays, and coinsurance because commercial insurers and employers pass part of the costs onto consumers.

Insurers do get significantly discounted deals from hospitals and clinics, particularly when they own them, but the cost of care always rises despite insurers’ innovations and the move to preventative healthcare.

Assuming prices continue to rise unabated, most insurers will continue to ask patients to pay more.

The federal government has a law that is not enforced or perhaps not even workable that requires hospitals to publish the prices they actually collect from health insurers.

Policymakers have several options. Congress could expand access to care and reduce medical debt by shrinking the deductibles in marketplace plans and lowering their out-of-pocket limits. Adding an out-of-pocket maximum to Medicare would also provide relief for seniors.

Know your target market

The Commonwealth Fund has other ideas but in the real world the cost of healthcare in the USA will continue to grow.

Medical travel destinations aiming to attract American patients need to work out how they can fill the gaps, and move away from out of date ideas of offering major surgery at low prices when it is already fully covered by health insurance.

Destinations must fully understand what the US health insurance system, which is so unlike any other country, does and does not cover and what all the variations are.

Access the updated 2022 IMT Country Profile for America here https://www.imtj.com/country/usa/.