Health tourism : trade patterns, trade motives and gains from trade

Abstract

Health tourism refers to patients from one country seeking medical service in other countries in the purpose of saving money, avoiding long waiting time or improving the quality of the service. Like globalization in general, health tourism brings both opportunities and challenges. Some people think it will be the solution to public health care problems in developed countries while others argue that it will create a two-tier society in developing countries. This thesis is an attempt to give a structured analysis of health tourism from developed to developing countries, to discuss theoretically possible welfare gains from it and how to achieve that. It starts with a history review and a snapshot of current development of health tourism in the first two chapters. The first chapter deals with how health tourism came into being. The second chapter first gives a definition of health tourism and identifies the procedures that are feasible to be included in health tourism. It then puts health tourism into the framework of service trade in the WTO-framework and makes a profile of the exporting countries. It concludes with some indicative data which shows the trade volumes and their future potentials. Chapter 3 put forward the question: why health tourism fails to be as prevalent as traditional trade theory suggests, and proposes that there are at least three factors that distinguish trade in health care service from trade in other services. Chapter 4 and 5 go into more detail to answer this question by looking at different factors that have an implication on health tourism, and focusing at three parties involved in health tourism. In developed countries, the lack of portability of insurance contracts prevents health tourism from being more prevalent. In developing countries, governments need to implement regulatory policies to prevent health tourism from causing inequality. The last two chapters deal with these two aspects respectively. A model is set up in chapter 6 to analysis the portability of insurance contracts which is identified as the most crucial dampening factor on health tourism in this thesis. The model simulates the process and discusses the welfare gains of moving from a case of no health tourism through the case of health tourism but no insurance portability and finally the case of full portability of health care insurance. The model shows that Pareto gains will arise when health tourism becomes possible and the portability of insurance contracts decides how this welfare gain is shared between insurance company and patients. Some policy suggestions are made at chapter 7 for governments in developing countries to avoid a two-tier society as a result of health tourism. The conclusion is made in chapter 8, stating that health tourism may have a positive impact on both exporting countries and importing countries