Tuesday, December 23, 2008

Our Commentary in FT - Comprehensive Healthcare In US Can Be Realized

On Dec. 23rd the Financial Times published our letter / commentary on the need to import doctors and export patients to alleviate shortages and cut soaring costs. These trade aspects of healthcare haven't yet been mentioned in proposed Obama reforms and incoming Healthcare Secretary Tom Daschle's recent book. Here is our published content (the FT uses "English English" and not "American English") :

From Prof Jagdish Bhagwati and Mr Sandip Madan.

Sir, In his characteristically insightful fashion, Clive Crook ("The long road to healthcare reform", December 15) alerts us to the problems that await the likely approach to comprehensive coverage of healthcare by Tom Daschle, the incoming US secretary of health and human services, as suggested by his recent book on the healthcare crisis.

But the fact that Governor Mitt Romney's similar reform in Massachusetts ran into the difficulty of finding doctors and other healthcare workers for the newly insured, and that Governor Arnold Schwarzenegger had to abandon similar efforts in California because of high costs, raises the question of why Mr Daschle and President-elect Barack Obama have not yet recognised that the systematic and comprehensive embrace of international transactions in medical services can make a big impact on both these problems.

Today, many foreign hospitals and physicians offer a world-class service for a fraction of the cost in the US. Expensive yet standard procedures with short convalescence periods, including heart operations and joint replacement surgery, are candidates for such treatment abroad.

By our estimates, 30 such procedures, costing about $220bn in 2005, could have been undertaken abroad. The "import" of medical services in just a quarter of those cases would have implied a saving in medical expenses of between $40bn and $45bn.

But the scarcity of medical professionals is equally crippling. Under President Lyndon B. Johnson's Great Society, a selected class of foreign doctors were allowed to "stay on" provided they worked for specified periods in under-served areas. The time has come to expand such programmes. We have recently suggested several ways this could be done, while amending the US immigration policy accordingly.

These programmes, "exporting patients" and "importing doctors" as one of us proposed almost 15 years ago, are now essential if comprehensive coverage of healthcare is to become a reality rather than simply an ineffective reform seriously undermined by shortages and high costs. Once you add the savings from online diagnostics and the reduction of administrative costs (conservatively estimated currently at $500bn annually) through further outsourcing of administrative services, the prospects for easing scarcities and costs are even more inviting.

But all this will involve getting over the jaundiced view of international trade that afflicts most of the new Democrats. Will they choose de facto protectionism, masquerading as "fair trade", and sacrifice the invaluable opportunity presented by possible international transactions in medical services? Or will President-elect Obama truly give us genuine leadership and have Mr Daschle override the anti-trade and medical lobbies that hold up effective healthcare reform?

Jagdish Bhagwati,
Professor of Economics and Law, Columbia University
Senior Fellow, Council on Foreign Relations

Sandip Madan,
Founder, Global Healthnet

Copyright The Financial Times Limited 2008

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