Health Insurers Explore Savings In Overseas Care

INDIANAPOLIS_Elizabeth Kunz left her dentist's office this spring with a mouth full of problems and no way to pay for them.

The South Carolina resident went out of her way, literally, to find a solution, which turned out to be in Central America. Her trip to the tropics is part of a health insurance experiment for trimming medical costs: overseas care.

As Washington searches for ways to tame the country's escalating health care costs, more insurers are offering networks of surgeons and dentists in places like India and Costa Rica, where costs can be as much as 80 percent less than in America.

Until recently, most Americans traveling abroad for cheaper non-emergency medical care were either uninsured or wealthy. But the profile of medical tourists is changing. Now, they are more likely to be people covered by private insurers, which are looking to keep costs from spiraling out of control.

The four largest commercial U.S. health insurers _ with enrollments totaling nearly 100 million people _ have either launched pilot programs offering overseas travel or explored it. Several smaller insurers and brokers also have introduced travel options for hundreds of employers around the country.

Growth has been slow in part because some patients and employers have concerns about care quality and legal responsibility if something goes wrong. Plus, patients who have traditional plans with low deductibles may have little incentive to take a trip.

But a growing number of consumers with high-deductible plans, which make patients pay more out of pocket, could make these trips more inviting.

In the meantime, the insurance industry's embrace of overseas care has had a pleasant side effect at home: some U.S. care providers are offering price breaks to counter the foreign competition.

This domestic competition and the slumping economy have led to slower growth for medical tourism over the past year, as patients put off elective procedures that involve big out of pocket costs, said Paul Keckley, executive director of the Deloitte Center for Health Solutions.

Last year, the center estimated that 6 million Americans would make medical tourism trips in 2010. But Keckley has since shaved that projection to about 1.6 million people. Still, that more than doubles the roughly 750,000 Americans who traveled abroad in 2007, the last year for which Deloitte had actual numbers.

Keckley expects the medical tourism industry to recover, as more health insurers offer the option and as more people wind up with high-deductible plans.

Health care costs for employers who offer insurance to their workers were projected to rise 9.2 percent this year and another 9 percent in 2010, according to the consulting firm PricewaterhouseCoopers. That could mean double-digit percentage increases for employees through higher premiums, deductibles or copays.

Overseas care can lead to price breaks of more than $40,000, not counting travel costs, for procedures like knee replacement surgery or heart bypasses. Insurers, or employers who provide their own insurance, can save between 50 percent and 90 percent on major medical claims, said Jonathan Edelheit, president of the Florida-based Medical Tourism Association. A lower cost of living and lower prices for medical supplies and drugs help drive down care costs overseas compared to American providers.

While employers or insurers reap much of the savings, these lower costs can be the difference between a manageable expense and a bank-breaker for patients with high-deductible plans. These increasingly popular plans can lead to out-of-pocket expenses surpassing $5,000 for individual coverage and $10,000 for family plans.

High out of pocket costs also are common with dental coverage, which is one reason dental care trips have proven popular.

Kunz, 47, initially doubted the potential savings she might see from visiting a Costa Rican dentist though a program offered by her insurer, BlueCross BlueShield of South Carolina. But a little comparison shopping _ with help from the insurer _ persuaded her to get on a plane.

She had eight crowns replaced, a tooth filled and root canal. The work would have cost her $10,000 out of pocket back home, but she paid just $2,800 after insurance.

Ben Schreiner, a South Carolina resident, would have paid the entire $10,000 deductible on his insurance policy if he had his hernia surgery done last year near home. For that reason, Schreiner, 63, had planned to wait until he turned 65 and qualified for Medicare, the federal health care program for the elderly, before fixing it.

After reading about medical tourism in his insurer's annual report, the retired bank executive flew to Costa Rica and paid about $4,400, including travel expenses. Frequent flier miles covered his flight.

Schreiner said he was initially skeptical about the quality of care he might receive but reading about the doctors who could perform the surgery put him at ease.

"When you read the bios and the backgrounds of the doctors, you kind of lose your skepticism," he said.

However, apprehension about medical travel remains a high hurdle.

"People still do not understand that there could be a hospital in Thailand that can be as good as any hospital anywhere in the world or in the United States," said John Ferguson, chief marketing officer for Georgia-based BasicPlus Insurance Services.

BasicPlus, which underwrites and provides group health insurance plans to employers, started offering medical tourism as part of a benefits package last year. About 200 employers it contracts with around the country now offer that option, but no patients have used it.

Quality can be a legitimate worry, said Harvard Medical School professor Sharon Kleefield, who has worked overseas with several health care systems to establish quality measurements.

The average patient has no way of comparing hospitals worldwide on quality, which can vary widely. But, Kleefield said, insurers are helping to raise standards through careful inspections of hospitals before including them in an overseas network.

Concerns about liability also may be keeping some employers from adding overseas care options to their plans.

U.S. employers who encourage an overseas medical trip could become litigation targets. It can be difficult to sue an overseas provider in U.S. courts, said Nathan Cortez, a Southern Methodist University law school professor who studies medical tourism. And the average malpractice recovery in Thailand is about $3,000, roughly 1 percent of the U.S. average.

To ease this fear, medical tourism companies have started offering insurance that protects employers who send employees overseas from liability.