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Does health insurance impede trade inhealth care services?


  • Mattoo, Aaditya
  • Rathindran, Randeep


There is limited trade in health services despite big differences in the price of health care across countries. Whether patients travel abroad for health care depends on the coverage of treatments by their health insurance plan. Under existing health insurance contracts, the gains from trade are not fully internalized by the consumer. The result is a strong"local-market bias"in the consumption of health care. A simple modification of existing insurance products can create sufficient incentives for consumers to travel. For just 15 highly tradable, low-risk treatments, the annual savings to the United States would be $1.4 billion even if only one in 10 patients who need these treatments went abroad. Half of these annual savings would accrue to the Medicare program alone. The authors examine how measures by destination countries to improve and credibly signal the quality of health care can enhance the scope for trade.

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  • Mattoo, Aaditya & Rathindran, Randeep, 2005. "Does health insurance impede trade inhealth care services?," Policy Research Working Paper Series 3667, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3667

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    References listed on IDEAS

    1. Martin Gaynor & Deborah Haas-Wilson & William B. Vogt, 2000. "Are Invisible Hands Good Hands? Moral Hazard, Competition, and the Second-Best in Health Care Markets," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 992-1005, October.
    2. Mattoo, Aaditya, 2001. "Can no competition policy be better than some competition policy?," International Journal of Industrial Organization, Elsevier, vol. 19(1-2), pages 55-77, January.
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    Cited by:

    1. Waeger, Patricia, 2007. "Trade in health services: an analytical framework," Kiel Advanced Studies Working Papers 441, Kiel Institute for the World Economy (IfW).
    2. Hoekman, Bernard & Mattoo, Aaditya, 2006. "Services, Economic Development and the Doha Round: Exploiting the Comparative Advantage of the WTO," CEPR Discussion Papers 5628, C.E.P.R. Discussion Papers.
    3. Das, Jishnu & Hammer, Jeffrey, 2007. "Money for nothing: The dire straits of medical practice in Delhi, India," Journal of Development Economics, Elsevier, vol. 83(1), pages 1-36, May.
    4. Lukas, Daniel, 2009. "Efficiency effects of cross-border medical demand," Dresden Discussion Paper Series in Economics 15/09, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    5. Picazo, Oscar F., 2013. "Medical Tourism in the Philippines: Market Profile, Benchmarking Exercise, and S.W.O.T. Analysis," Discussion Papers DP 2013-45, Philippine Institute for Development Studies.
    6. BERNARD HOEKMAN & ÇAĞLAR ÖZDEN, 2010. "The Euro-Mediterranean Partnership: Trade in Services as an Alternative to Migration?," Journal of Common Market Studies, Wiley Blackwell, vol. 48, pages 835-857, September.
    7. Arunanondchai, Jutamas & Fink, Carsten, 2007. "Trade in health services in the ASEAN region," Policy Research Working Paper Series 4147, The World Bank.
    8. Robert L. Cardy & Mark M. Suazo, "undated". "Performance Measures: Bandwidth Versus Fidelity In Performance Management," Working Papers 0029, College of Business, University of Texas at San Antonio.
    9. Jovi C. Dacanay & Maria Cherry Lyn S. Rodolfo, 2005. "Challenges in Health Services Trade : Philippine Case," Trade Working Papers 22628, East Asian Bureau of Economic Research.

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