According to the Telegraph (‘Record numbers go abroad for health‘), “More than 70,000 Britons will have treatment abroad this year – a figure that is forecast to rise to almost 200,000 by the end of the decade.” Many of these individuals are seeking treatment in countries such as India, Hungary, Turkey, Germany, Malaysia, Poland and Spain. Why are these individuals going abroad? Long wait lists and shortages of qualified clinicians (such as dentists – see May 9, 2006 post).
Ezra Klein notes that 100,000 Americans travel abroad for plastic surgery. Why do they do it? Here, wait lists and physicians availability are not the major motivators (living in Southern California, I can tell you that there is no shortage of plastic surgeons). In the U.S., monetary cost is the major consideration for most patients who become medical tourists.
Thus, in both countries, people are trying to find better deals abroad. Health care is expensive in the UK; not in monetary terms, but due to a high time cost from long waiting lists. Health care is expensive in the U.S.; not due to time costs from waiting lists, but from high monetary cost.
Health care systems suffer from Baumol’s cost disease: it’s a labor-intensive service that doesn’t offer huge scope for gains in labor productivity. The number of hours it takes to manufacture a car is consistently falling, but the number of hours it takes to perform doctor’s visits is roughly the same as it has always been. As a society gets richer, in order to attract workers, the labor intensive service has to pay competitive wages with the sectors where productivity is rising rapidly; that means that costs for labor-intensive services rise faster than the general price level.
Bangkok’s doctors are so cheap because a doctor making a modest wage by British standards can have an enormous house and a flock of servants to take care of him, putting him in the very top echelon of Thai earners. Nurses too, can make an American pittance and still live very well. As Bangkok gets richer, the servants and the gigantic house will not be so affordable–and neither will the health care.