U.S. insurance companies have yet to wholeheartedly embrace medical tourism, along with U.S. employers. This hesitancy, some argue, may inhibit America from becoming more involved in the industry. It was not surprising then to see a moderate number of sessions at this year’s World Medical Tourism and Global Health Congress which covered the topics of employer and insurance involvement in medical tourism.
Peter Hayes, formerly of Hannaford Brothers, sees healthcare as being about two main issues: how it can be made better and, more importantly, how it can be delivered with high availability.
“We’re in the U.S., competing for capital, and we spend two or three times more for healthcare than anywhere else,” Hayes said. “The reality is, we’re spending far more and getting far poorer health outcomes.”
Hayes said his company started to look at medical tourism three years ago, and finally incorporated it in January of 2008. “We’re one of the first employers that got into medical tourism. We put it in place and it was in the Wall Street Journal by March of 2008,” he said.
Hayes and his company created a benefit design for minimally invasive procedures, which covered employees completely if they chose to go abroad. “Our members saved about $150,000 so it really was a win-win,” Hayes said.
Chatham Steel out of Savannah, Georgia, is another company working to include medical tourism in the benefits offered to employees. Director of Human Resources Missy Jarrott believes that offering medical tourism to employees is the “right thing to do.”
“Chatham Steel believes in offering a choice to our employees, whether it’s our voluntary benefit plan or cost savings to employees as long as quality and safety is a priority,” Jarrott said. “Our focus at Chatham Steel is proactive and to include medical tourism as an asset to our wellness program would benefit everyone.”
Jarrott said she hopes to offer benefits not included under the current plan, including cosmetic, dental and bariatric procedures. The cost-effectiveness of traveling overseas for joint replacements, cardiovascular operations and other complex surgeries is also being assessed. “What is so unique about medical tourism is that we’re seeing that other countries can offer the same type of services and quality of care that we have here in the U.S.,” Jarrott said.
One of the common concerns among employers is that employees will lack interest in medical tourism opportunities. Jarrott does not share this outlook and said that she believes her employees will “accept medical tourism as an enhancement of the benefits” already offered and that they will be excited about the concept of receiving “healthcare overseas in addition to vacationing with their family.”
“From the employer’s perspective, at first the feedback may be ‘why would I want to send my employees to third world countries?’ The answer would be ‘why would you not if the same quality of services is equal to what we have in the U.S.,” Jarrott said.
As for implementation, Chatham Steel is still in “phase one” of educating executives and employees and designing a benefit plan which fits with current vacation policies.
“The next step would be determining the cost savings in measuring outcomes,” Jarrott said, adding that testimonies and feedback from employees would be instrumental.
Jim Carnicella, Human Resources Director for the City of Ocoee, Florida was, at the time of the congress, several weeks away from sending its first employee abroad for medical treatment. “We started to consider medical tourism about two years ago,” he said. “Our strategies included moving from a fully insured plan to a self-funded consumer-driven plan with a $2,500 and $4,000 out-of-pocket for individuals and family.”
Similar to Hannaford Brothers, Peter Hayes’ company decided to offer incentives for medical tourism by assuring employees that deductibles and coinsurance would be waived if an employee chose to travel overseas for care and that the company would pay for the employee while they were away.
“We talked and educated them about the alternatives available to them,” Hayes said.
Towards the end of his presentation, Hayes encouraged other employers to take an interest in medical tourism, both as a solution and an option.
“We are under increasing pressure to find quality healthcare for our employees and at the same time manage costs. We really need to re-frame the dialogue,” Hayes said.
Self-Funded and Limited Medical Plans
The fiscal benefits of incorporating medical tourism into limited medical plans were made clear by Surgical Trip president Tom O’Hara. A total knee replacement on a high deductible plan would cost $40,000, and if “that total plan in this scenario covers $6,750, the employee costs would be about $33,250. Under a medical tourism network, it would drop to $7,750,” O’Hara said.
Gary McGeddy, Executive Vice President of Fairmont Specialty, demonstrated a scenario of similar theme: “In a typical limited medical plan, you’ll have a $5,000 surgery benefit with one surgery per year, a hospital benefit of $1,000 a day up to 30 days and visit benefits,” McGeddy said. “If you could go to India for hip resurfacing it could cost $15,000, instead of $50,000 in the U.S. – it’s a significant savings.”
Vice President of Swiss Reinsurance Company Matt Leming also pointed out the positive effect medical tourism could have on insurance rates: “Specific coverage is where medical tourism can have the greatest impact on lowering costs,” Leming said. “If medical travel is incorporated and utilized by employees, and those expenses do not exceed retention levels, than those savings will help to offset ratings increases.”
The question arises, then, if the results of incorporating medical tourism are so financially positive, then why is there such an atmosphere of hesitancy in the insurance industry?
“There’s always the concern that the quality is going to be less. There are concerns about facilities being overcrowded, not as clean or having inexperienced staff,” McGeddy said. “There’s a laundry list of fears and it’s really important to folks in the insurance industry to get people to overcome these fears.”
Alexander Domaszewicz, a senior consultant with Mercer Health & Benefits Services, explained that those who control benefits in the U.S. just aren’t risk takers. He recommended, as a first step, getting “20 or 30 under our belt so we can look around and say there are folks here who’ve done this and it went well” and then options can begin to broaden.
Once a comfort level has been reached, there are several approaches that can be taken to integrate medical tourism. There are limited medical plans, as O’Hara and McGeddy described, and self-funded plans.
Leming spent a large part of his presentation discussing self-funding plans and their potential relationship with medical tourism. “Self-funding is about choice. It’s about how employers choose to fund their group health plan,” he said.
He went on to explain the difference between traditional fully insured plans, where the employer pays a fee to the insurance company and the company takes on the risk, and self-funded plans, where the employer directly takes the risk. In the case of the latter, employers can purchase loss risk coverage from a reinsurance company.
“Equally important to understand is that employers have a lot of flexibility in how they tailor and design their plans. They can design their plan based on need and what’s most beneficial, while fully insured plans are bound by state mandates and restrictions,” Leming said.
A self-funded plan, like any other, has advantages and disadvantages. On one side, “it requires a long term investment.” On the other, “it will reduce the tax liability and helps the employer manage their own reserves.” Leming was quick to point out that though a self-funded plan does grant more control, it is not for every employer.
Since limited medical plans and self-funded plans may not, between the two of them, work for everyone, some are seeking an alternative.
“Traditionally you really had two ends of the spectrum – you have major medical and limited benefits plans. We’ve been working to come up with something that is really the next generation’s plan,” said Jerry Turney, of USNOW. “What we’ve done with the new plan designs is to take the basic limited plan and overlay a deductible and a known annual maximum.”
The idea is that with a larger amount in benefits, medical tourism will become a much more viable option. Turney said he would love to think they had created something new, but that all they’ve really done is revitalized the “most prevalent medical insurance plan in the 1950s, 60s and 70s”.
“We called it a base plan,” he said, “it’s amazing how a good plan design stands the test of time.
The challenge then, is not as much devising a method but communicating the idea.
During his presentation, David Cheek of Pan-America Life Insurance encouraged a higher level of communication within the insurance world regarding medical tourism to help ideas move forward.
“There needs to be more of an awareness of what medical tourism is and we as an industry need to come together and make it more aware to the community, the employees, the consumers and also to those selling these products, by which I mean brokers and insurance,” he said.
Placing the Last Piece
Through their sessions at the congress, various speakers from the corporate and insurance industries have established that there are employers interested in medical tourism and that integrating it into health insurance is not impossible. So what’s next?
Steve Cyboran, Vice President of Sibson Consulting, developed a process for the integration of medical tourism which he feels will help guide those interested in pursuing the growing industry. Cyboran recommends one first clarifies their health philosophy and identify opportunity potentials. Then move onto designing a coverage plan, identifying a network and facilitator and communicating the ideas and plans with employees and, finally, monitoring your success.
“The most critical piece of this is going to be the communication of it,” Cyboran said. “Looking at your demographics, where would they be most willing to go? Ask your employees what they’re most comfortable with.”
Getting employees comfortable with the idea of medical tourism, however, means nothing if their employers lack interest – the employers must embrace it first. President and CEO of Midwest Business Group on Health, Larry Boress believes that a few trailblazers must pave the way beforehand.
“They don’t have any role models, they don’t have anyone to go to,” he explained. “There’s a lot of talk and media, but nothing from their peers. Employers will make changes if they believe their respected peers in the industry are going into it.”
Boress recommended using a CEO or the spouse of a CEO who has utilized medical tourism as an example – “direct experience is the best motivator.”
Sandra Berkowitz, Vice President of Willis/HRH, discussed risk mitigation as a motivator in her presentation. She explained that employers are worried about cost, ultimately, and that risk creates uncertainty and volatility of costs, so “to the extent that you can demonstrate that you are aware of and have taken steps to control the volatility of risk, then employers become more interested.”
Berkowitz suggested that facilitators assess their current coverage situation to make sure that they are properly covered, making them a more secure choice for employers.
“My understanding is that many facilitators have emerged out of the travel agency segment and they have travel agency coverage, but those policies tend to not have a bodily injury cover,” she said, “and now that they’re moving into this whole medical industry, it may not be adequate.”
A simple solution to this kind of situation is complications insurance, Berkowitz said. She explained that complications insurance covers what one would expect, but also has a specific medical misadventure cover included in the limit. It is “fairly inexpensive” but covers important things like “evacuation and the cost of the companion.” In addition, there is no burden on the employee to prove liability with complication coverage, said Berkowitz.
“Medical tourism, I believe, is going to become an everyday thing,” said Ross Pendergraft, President-Elect of the Los Angeles Association of Health Underwriters. Pendergraft’s presentation echoed many of the sentiments of his fellow industry participants, posing that clear communication would result in the integration and success of medical tourism.
“Americans want the best and they want it now,” he continued. “The best is not always here in the U.S. as much as we like to think it is, and if we want it now with healthcare going down the pipe, we’re going to have to go outside of the U.S.”