Friday, January 9, 2009

"we need free trade in health care"

The title of the WSJ essay by Jagdish Bhagwati and Sandip Madan-- on "the potential of international trade in medical services to address these issues"...

The framework in their article: the four "modes" of service transactions distinguished by the WTO's 1995 General Agreement on Trade in Services.

1.) "arm's length" services typically found online

2.) patients going to doctors elsewhere

3.) creating and staffing hospitals in other countries

4.) doctors and other medical personnel going to where the patients are

The punchline: "All modes promise varying, and substantial, cost savings."

Some of the details...

1.) Arm's-length transactions can save a significant fraction of administrative expenditures (estimated by experts at $500 billion annually) by shifting claims processing and customer service offshore. Nearly half of such savings are already in hand. Foreign doctors providing telemedicine offer yet unrealized savings. We estimate that the savings in health-care costs could easily reach $70 billion-$75 billion.

2.) U.S. patients [going] to foreign medical facilities, was considered an exotic idea 15 years ago. Now this is a reality known as "medical tourism." Today, many foreign hospitals and physicians are offering world-class services at a fraction of the U.S. prices. Costly procedures with short convalescence periods, which today include heart and joint replacement surgeries, are candidates for such treatment abroad. By our estimates, 30 such procedures, costing about $220 billion in 2005, could have been "exported."

3.) [H]ospitals established abroad will offer our doctors and hospitals considerable opportunity to earn abroad. Of course, the establishment of foreign-owned medical facilities in the U.S. is also possible, and could lead to price reductions by offering competition to the U.S. medical industry.

4.) Mode 4...offers substantial cost savings, since the earnings of foreign doctors are typically lower than those of comparable suppliers in the U.S. But the importation of doctors is even more critical in meeting supply needs than in providing lower costs. According to the 2005 Census, the U.S. had an estimated availability of 2.4 doctors per 1,000 population (the number was 3.3 in leading developed countries tracked by the OECD)...


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