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Outsourcing Medical Care

I've read some articles lately about medical tourism and came across one today from BusinessWeek called "Outsourcing the Patients". It talks about a really interesting trend of health insurers sending their policyholders overseas to get health care because the costs are so much cheaper. And we're not talking about some obscure insurers, the article refers to Blue Cross Blue Shield of South Carolina for its example. These insurers are really concerned about rising health care costs in the U.S. It's what sent WellPoint's stock tumbling almost 30% this past week - an amazing loss in market value - because they had to make "revisions to our prior earnings guidance due to higher than expected medical costs". One of the biggest Blue affiliates with over 250 actuaries underestimating costs definitely spooks the market and speaks to how high costs really are.

To put how high costs are in perspective, here's a summary from the BusinessWeek article comparing health care costs across countries:
ProcedureU.S.SingaporeThailandIndia
Heart Bypass$130,000$18,500$11,000$10,000
Heart Valve Replacement160,00012,50010,0009,000
Angioplasty57,00013,00013,00011,000
Hip Replacement43,00012,00012,0009,000
Hysterectomy20,0006,0004,5003,000
Knee Replacement40,00013,00010,0008,500
Spinal Fusion62,0009,0007,0005,500


And just to be sure that we're comparing apples to apples, all of the above costs are from hospitals that have been accredited by the same agency that is well regarded in the medical community. The major difference is that in Asia it's difficult to pursue malpractice lawsuits. Either way, the above data set raises a few questions for me. 1) How can these foreign countries offer the same procedure at presumably the same quality for so much lower a price? (Can it really be related to providers not getting paid for all services and jacking up prices as a result? Or to cover themselves from malpractice lawsuits?). And then 2) What are you going to say to your health insurer when they ask you to fly to Thailand for that next operation?
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