Why Medical Tourism Could Be Good Policy

The researchers built a model of the American medical market based on a random sample of 20 percent of traditional Medicare claims from 2017. Medicare is the largest benefits provider in the US, accounting for a fifth of healthcare spending. The sample consisted of 229 million services representing $19 billion of spending.

Trade and market size play a greater role in less common procedures, the researchers suggest. Rural locations tend to have worse health outcomes and fewer doctors per capita. Large urban areas tend to have more specialists who can offer better outcomes based on lots of practice. An area producing 10 percent more of a given service because of greater demand delivers 6 percent higher quality, according to the researchers’ estimates.

“Doctors performing rare procedures export their services more often and across a broader geographic scope,” they write. Consider, for example, a relatively rare cardiac procedure, the insertion of a left ventricular assist device to restore heart function. Half of those patients traveled from outside a single surgeon’s region, the data indicate. Meanwhile, people traveled for only 15 percent of screening colonoscopies, which are routinely practiced and widely available.

Arguing that expanded interregional trade in medical services would give more patients access to the benefits of scale, the researchers contrast the effects of increasing healthcare payments to providers with subsidizing travel for treatment. They find that higher medical payouts in more sparsely populated areas could help expand the local availability of services. But reimbursing patients for travel could expand access to healthcare even more and help improve the quality of services available to people outside major population areas, according to the analysis.

This would be an imperfect solution, though, because people in lower socioeconomic groups are significantly less likely or willing to travel for healthcare, the researchers find. Consequently, larger travel subsidies would be required to even out access across groups of patients. In Paducah, for example, those with the lowest incomes would need a 10 percent larger travel subsidy than those with the highest incomes to achieve the same improvement in access to services, according to the study.