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January 2007
Unsustainable Health Care Premium Increases
By John Paul Galles

It is now 2007 and we still have done nothing to improve access to health care in our state or in our nation. Healthcare costs as well as healthcare premiums continue to skyrocket each and every year. In fact, according to the Kaiser Family Foundation, premiums for employer-sponsored coverage have risen by 87 percent over the last six years. You would think that we would be more outraged by this broken health care system.

I am curious. We certainly appreciate and enjoy very high quality health care, but the costs are immense. At what point are healthcare costs no longer sustainable? At what points are there so many paying so much for health care or going without healthcare coverage at all that Americans demand change in our overwhelmingly expensive healthcare system? Maybe we are beginning to reach that tipping point. Even before the government can act, international economic forces are offering new alternatives. How can that be?

In the shadow of higher and higher healthcare costs, American patients are being lured to surgical enterprises in places like Costa Rica, India, China and Thailand for services ranging from heart surgeries to joint replacements and dental repair that may only cost 20 to 30 percent of what it would cost in American medical institutions. Even some healthcare insurers are getting into the act by reimbursing care in these countries when they see the savings that can be achieved by allowing their insureds to receive health care at remarkably lower costs at reputable health care centers in other countries. Even when you add in the costs of flying and staying in another country, the total costs are substantially below costs at many American facilities.

Over the last 20 years we have witnessed the outsourcing of many industries. It began with the decline of American steel and auto manufacturing as industries moved overseas. Since then, many other American manufacturers have also failed, downsized or closed their operations, predominantly because they cannot compete with low wages in other countries. In the last five years, even American banks and other service-oriented companies have learned to outsource many of their call centers and technology based operations.

Outsourcing health care provides new competition to the American healthcare industry. As an indication, a heart valve replacement in India would be $7,000 versus $150,000 or more in the United States, according to the Raleigh-based company IndUShealth.com. While we have experienced some competition from Canada and other countries for the delivery of drugs and pharmaceuticals to Americans, there has never been much competition to the practice of American health care that has driven down costs because it is primarily delivered locally. American regulation intended to slow increases in healthcare costs including Medicaid and Medicare reimbursement limitations have substantially failed.

Concerns about the quality of foreign medical care are being assuaged since many of the physicians themselves have been educated and trained in the U.S. Many of these facilities also offer board-certified physicians and meet the accreditation standards of American care centers. However, they are not subject to American malpractice and liability laws and regulations, and seeking redress in a foreign country’s court system may be challenging at best.

No doubt with a presidential contest in the offing for 2008, we will witness an increasing debate about American health care. Whether or not we reach a political consensus to reform our health care system, we will not likely see federal and/or state action that will change our dysfunctional system dramatically.

Nevertheless, costs and premiums may be reaching the critical point at which alternative “outsourced” providers may become viable options for containing costs and offering new avenues for affordable care. It is still a shame that we cannot do more within our own country.

John Paul Galles is the publisher of Greater Charlotte Biz.
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