Traveling for Healthcare: The Promise of Employer-Sponsored Medical Tourism

Abstract

The price and quality of healthcare vary between and within regions in the United States. A surgery may cost $70,000 dollars in one local health market and $30,000 in another market a few states away. Until recently, healthcare was a local activity, and patients rarely ventured outside of their region to receive care. Hoping to take advantage of this geographic arbitrage opportunity, self-insured companies in the past decade have designed medical tourism programs to move their employees from one region to another to find high quality, affordable surgeries. This thesis is a case study in this emergent practice and argues that medical tourism could radically undermine the geographic segmentation of the U.S. healthcare market, thought to be one of its defining characteristics. By de-localizing the healthcare transaction, medical tourism gives employers credible exit from local health markets, giving them significant leverage over providers. Finally, this paper argues that even if medical tourism does not become a standard consideration for patients seeking medical care, it could nonetheless have a powerful deflationary effect on the price of local healthcare in the United States.