[The Practical Nomad Newsletter] USA health care reform, travellers, & expats

[Edward Hasbrouck]

The Amazing Race 15, Episode 8 (Health care reform & travel)

This column with links:
http://hasbrouck.org/blog/archives/001784.html

=====

I'm leading a free public workshop on travel writing this Friday
(November 20th) in Boston, as part of an all-day travel forum:

http://hasbrouck.org/blog/archives/001778.html

Hope to see some of you there!

=====

The Amazing Race 15, Episode 8:
Haggvik (Sweden) - Tallinn (Estonia) - Keava (Estonia):

USA health care reform, travellers, and expatriates


Last week's episode pushed the contestants on "The Amazing Race" to  
their physical limits, leading me to explore the physical  
prerequisites for extended independent travel. This week's episode was  
almost equally grueling, and brings us to the question, "What happens  
if you push yourself too far, and get hurt or sick while abroad?"

That's a huge question, involving what level of medical care is  
available, how much it is likely to cost, whether to seek treatment  
locally or return home if you are injured or ill, and how all these  
things vary from place to place. My FAQ About Travel Insurance  
describes some of the general types of specialized insurance for  
travellers, but barely scratches the surface. By popular demand, I  
plan significantly expanded coverage of all these issues in the next  
edition of "The Practical Nomad: How to Travel Around the World".

For now, let's look at just one piece of that problem:

How might health care "reform" in the USA affect medical treatment for  
travellers and expatriates and, potentially, the need for people  
travelling or living abroad to purchase special health insurance to  
meet their needs?

Different categories of travellers and expatriates have different  
stakes in health care reform. Who would be covered by the health care  
proposals now being considered by Congress? Who should be? Who would  
benefit financially and/or medically, and who would lose out? Let's  
consider the taxonomy of travellers and expats from and to the USA:

1. Citizens of the USA travelling abroad
2. Citizens of the USA living abroad
3 Citizens of other countries visiting the USA as travellers
4. Citizens of other countries living in the USA

*1. Citizens of the USA travelling abroad:* Most health care payment  
plans offered in the USA, including health maintenance organization  
memberships, health insurance plans, and government programs such as  
Medicare, offer more limited reimbursement of health care expenses  
outside the USA than within the country. Some programs (e.g. Medicare)  
don't cover treatment abroad at all. Others cover only emergency  
treatment, and/or reimburse a lesser percentage of overseas medical  
expenses than of those in the USA, often by treating all health care  
providers outside the USA as "non-preferred" providers. Most USA-based  
insurance plans and HMO's cut off coverage entirely for people who are  
outside the USA more than 30 days at a time (sometimes 60 days or,  
rarely, 90 days, but almost never longer except for special travel or  
expat policies).

That's stupid of insurers, reflecting motives of risk aversion  
("foreign=unknown=risky" in the minds of most financiers in the USA)  
combined with a lack of actuarial and cost analysis. Health care --  
even sophisticated high-quality high-tech tests and treatments -- is  
cheaper almost anywhere else in the world, including both First World  
and Third World countries, than in the USA. The difference is so  
extreme that many people find surgery abroad, paid for 100% out of  
pocket, costs less than the co-pay for the same surgery under their  
health plan in the USA. Health care payers in the USA could  
substantially reduce their costs (and their premiums, membership fees,  
or tax burden) if they forced sick Americans to get major medical  
treatments (especially non-emergency surgery or labor-intensive  
rehabilitative treatment) abroad. I'm not saying they should do that,  
but clearly they do themselves and the public a disservice when they  
exclude coverage for a class of people -- people travelling and being  
treated outside the USA -- who can be expected to have  
lower-than-average medical expenses.

Christopher Elliott, who was the first to raise this issue, has  
pointed out that none of the health care reform bills on the table  
would require insurers, HMO's, or the "public option" (if any) to  
include coverage or reimbursement for treatment abroad. There's no  
champion for travellers in Congress. International travellers are a  
very small percentage of US citizens, and not perceived as a voting  
bloc. So international travellers from the USA will probably still  
need to self-insure and/or buy special supplemental medical insurance.

*2. Citizens of the USA living abroad:* US-citizen expatriates are a  
mixed lot. Many are dual citizens or permanent residents of other  
countries who are covered under (and pay taxes for) another country's  
national health care scheme. Others self-insure and pay as they go, or  
buy insurance locally, in places where both health care and insurance  
are cheaper than they are in the USA. Neither group wants to have to  
purchase duplicate medical insurance coverage, or see their health  
care costs raised to US levels.

As Paul Karl Lukacs explains in "Why Expats Should Not Be Forced To  
Buy National Health Insurance", the effect of the current proposals  
would be to further punish anyone with a US passport who chooses to  
live abroad. It would be not only a de facto expat tax, but a  
regressive one: The burden of mandatory insurance at US prices would  
be especially onerous for those living on local incomes in lower-wage  
countries. Medical insurance in the USA, on average, costs more than  
the median world wage. That would make it difficult or impossible to  
accept work at local wages (or volunteer at no wage in exchange for  
room and board), even if you were willing to live your life in a local  
way and at a local material standard of living.

It's hard to win public sympathy in the USA for people perceived as  
having chosen to leave their country, even if the least well-paid of  
them are among the people who are doing the most to improve the  
foreign image of the USA and its people. An expat surcharge for health  
care may be popular with many in Washington, and their constituents at  
home. US citizens living abroad can vote for electors for President in  
the state where they last resided in the USA, but not for members of  
the House of Senate. But to the expat community of US citizens, it  
adds insult to the injury of the duplicate US tax on expats' earnings:  
Most citizens of other countries are taxed only once on their  
earnings, regardless of where they live, while most expatriate US  
citizens are taxed twice on the same income, by the USA and by the  
country where they live or earn their money.

The argument that is most likely to persuade Congress to require  
coverage for treatment abroad isn't the desirability of covering US  
citizens travelling abroad (see section 1 above), but the unfairness  
of requiring US citizens living abroad to buy insurance that won't  
provide them with any coverage. Most expats, though would probably  
prefer a provision that bases the obligation to have insurance or  
belong to an HMO on residence in the USA, rather than citizenship,  
which would do nothing for short-term travellers or the large numbers  
of people who live or travel abroad for extended periods as visitors,  
without holding a second passport or establishing legal residence in  
another country.

*3. Citizens of other countries visiting the USA as travellers:* Most  
visitors to the USA already buy special supplemental US-visitor major  
medical insurance.

Some backpackers and travellers from poorer countries gamble and don't  
buy insurance. They hope they won't get sick or hurt, or that if they  
do, they can go home for treatment. Some simply don't think of travel  
health insurance, accustomed as they are to travelling in countries  
with reciprocal agreements between their national health systems, or  
where paying for emergency health care out of pocket is relatively  
affordable. But most have heard the horror stories: a "routine" car  
crash in the USA can leave you with more in medical bills than a  
lifetime of medical expenses in most other countries.

Most standard health or travel insurance plans in the rest of the  
world, except those specifically designed for travellers to the USA,  
completely exclude coverage while you are in the USA. If you're not a  
US citizen or resident, supplemental medical insurance that includes  
coverage while you are in the USA routinely costs twice as much as  
travel medical insurance that covers you everywhere else in the world,  
but excludes the USA.

So those foreign visitors to the USA who feel they can afford it are  
already paying (and paying through the nose) for travel medical  
insurance. They would be unaffected by any of the current proposals  
limited to citizens and residents, but they would be unlikely to see  
any advantage to a system that required insurance for everyone even  
temporarily present in the USA. Their interest, presumably, would be  
in reciprocal agreements between the USA and their home countries'  
national health schemes (difficult to imagine except in the context of  
a single payer system in the USA), and/or a system under which care  
would be provided independently of anyone's ability to pay (even more  
unlikely)

*4. Citizens of other countries living in the USA:* Most foreign  
citizens who live in the USA either buy health insurance in the USA or  
specifically tailored for people living in the USA (if they can afford  
it), or self insure if they can't. Many, perhaps most, self-insured  
foreign residents go back to the country of their citizenship to get  
treatment (either under their national health scheme, or paying  
out-of-pocket in countries where care is much cheaper than in the  
USA), if they need non-emergency care that they can't afford in the  
USA. If they can't afford emergency care, they get dumped into public  
hospitals -- many of which provide the best available trauma and  
emergency care, but can ill afford to absorb the cost of writing off  
treatment of indigent foreigners.

In the absence of a single-payer system or some other way of  
guaranteeing not merely available medical insurance but affordable  
insurance or medical care, it's an open question whether most green  
card holders would see mandatory medical insurance as currently  
proposed as a burden or a benefit. "Foreigners" are perennial  
political whipping boys of jingoism (and not just in the USA), but we  
are talking here, by definition, about about those foreign citizens  
with the legal status of "residents".

I would have expected at least some debate about this, but I haven't  
been able to find a comparison of how the health care reform bills  
would treat green card holders. My impression, though, is that most if  
not all of the current proposals would include anyone who is either a  
citizen or a resident of the USA, thus covering both green card  
holders and US citizens abroad.

Where does this leave us? It's taken as axiomatic in US political  
commentary that domestic concerns will always trump international  
ones, and that's almost certainly true here. Health care, while  
sometimes argued from a comparative international perspective, is  
certainly presumed to be a domestic issue. But as this analysis shows,  
in a world of global movement (even if people can't move about the  
world as freely as capital, goods, or information) and continued  
global diversity in government policies, even such a "domestic"  
question has its international implications -- centering, in this  
case, on international travellers and expatriates.

-- 

Edward Hasbrouck
<edward at hasbrouck.org>
<http://hasbrouck.org>
+1-415-824-0214