Health Care Provision, Financing and Marketing in a Global Environment

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Medical tourism and other ways of coping with rising health care costs around the world dominated the discussion on “Health Care Provision, Financing and Marketing in a Global Environment,” one of the panel sessions at the University of Miami Global Business Forum Jan. 15 – 16, 2009.

Martha Temple, president of global benefits for Aetna, told the audience that chronic disease is on the rise not only in the United States and Europe but also in emerging countries such as China and India, largely because their populations are living longer than ever before. The problem in those and other developing countries is compounded because they lack a comprehensive health care infrastructure. “The biggest worry of some of those governments is how they’re going to get people to health care,” Temple said. For example, with few hospitals in rural China, people from those areas often have to travel to cities to seek treatment for complex conditions and diseases like cancer. But because health care is more expensive in the cities, they can’t afford it, she said.
 
Population increases are also at the root of a crisis in publicly funded health care systems in European countries, especially the big ones. For example, 17 percent of Russia’s 150 million people are over 60, Temple noted. A lot Germans seek health care outside of Germany because of long waits to receive services. “In these public health care systems, there’s a huge problem because you have more people out of the workforce aging in the population than you have in the workforce that [are] spending the money to fund these populations — similar to what we’re seeing here in the U.S. with the Medicare system,” she explained. People who can afford to opt out of the public systems are doing so with private medical insurance and by traveling to other countries where health care is cheaper and more accessible.

The percentage of GDP spent on health care has risen in almost every country in recent years, Temple continued. In the United States, the average annual expenditure per capita in 2005 was $6,400, for example. The U.S. government pays for slightly less than half of total health care costs, while in Europe tax dollars fund more than half — and in some cases much more. Some European countries have started to impose more out-of-pocket payments on their citizens in an effort to get health care spending under better control.

Aetna is currently helping the British government identify ways to cut costs. One significant discovery was a rural area where the average hospital stay was over 30 days. “People would go to the hospital and they didn’t have anyone to say to them, ‘You don’t need to have this level of care. You can go to a more appropriate step-down facility, or have a visiting nurse come into your house,’” Temple said. “People would just go into the hospital and stay there for a long period of time. That’s obviously very expensive and a burden on the government.”

The increase in health care costs overseas has started cutting into the profit margins of multinational corporations with operations abroad as well, noted Chris Burns, global employee benefits practice leader at Willis Group, an insurance broker. One reason is that foreign governments are shifting more of the burden of paying for health care from the public sector to the private, he said. Moreover, in eight of 10 countries outside the U.S., health care inflation exceeds the rise in the cost-of-living index. One of the worst examples is Venezuela, whose health care costs have shot up 30 percent. Multinationals, however, still spend significantly less on health care for their employees outside the U.S., where their annual expense per person is about $9,000, Burns said.

A strategy that companies can use to reduce their health care expenditures abroad includes wellness centers, health risk assessments and employee assistance programs (for example, those that provide psychological and substance abuse counseling), Burns said. “If you break down health care costs, 80 percent come from 20 percent of the population, for the most part, and many of those come from people who are disabled. So, if you can employ a strategy to bring people back to work quicker, you lessen the impact of health care costs in the future,” he explained.
 
He also recommended that multinationals seek profit-sharing arrangements with any of the nine health insurance companies that operate globally. Belgium, Brazil, France, Ireland, Mexico and South Korea already require this kind of profit sharing as a way of reducing health care costs.

Allen Brenteson, a vice president at Baptist Health South Florida, reported a veritable boom in the number of Americans traveling abroad for health care. About 750,000 Americans received medical treatment abroad in 2007, compared to 150,000 in 2006, he said. By 2010, he predicted, 6 million Americans will travel abroad each year for some kind of medical care, mostly to save money. As a result, he believes more U.S. insurance companies will cover medical expenses incurred abroad.

Hoping to capitalize on this burgeoning market, hospitals and other companies from such countries as South Korea, New Zealand, Brazil, Costa Rica and India are trying to lure Americans for treatment. “The interest is just amazing,” Brenteson said. Still, he expressed qualms that “too many unqualified players” are getting involved. And if the Obama administration succeeds in covering the 45 million Americans who currently lack health insurance, foreign hospitals and clinics that are gearing up for a continued boom in American medical tourism are going to suffer “a big disappointment,” he ventured.

Penny Shaffer, market president of South Florida for Blue Cross Blue Shield of Florida, the Global Business Forum’s key sponsor, noted the importance of portable electronic medical records. Whether one is traveling abroad specifically for medical treatment or not, it is wise to carry copies of one’s medical records on a flash drive, because U.S. privacy laws make it difficult even for medical professionals abroad to obtain a patient’s medical information in the United States. “It lives in a multilayered vault, so that’s good for protection of the information. But when you’re traveling, that vault is pretty tough to access,” Shaffer warned.

She also encourages travelers to learn what overseas benefits their insurance policies provide, and to identify the preferred and trusted health care providers in their destinations. Besides one’s insurance company, U.S. embassies are a good source of the latter information, she suggested.

The pursuit of a larger international client base has prompted some American insurance companies to begin considering coverage of techniques that have long been labeled “alternative medicine” here. One member of the audience asked if Aetna would ever start reimbursing clients for alternative medicine treatments like acupuncture. “Absolutely,” Temple replied. “We need to figure out how to get Eastern and Western medicine together.”

By Kirk Nielsen