Globalized medicare vouchers


Dean Baker suggests an intriguing innovation to competition in healthcare:

While health care may at first blush not seem suitable for international trade, since the delivery is place specific, on closer inspection there are ways that the United States could benefit from the more efficient health care systems of other countries. The most obvious mechanism is by allowing Medicare recipients to buy into the health care systems of other countries.

The logic of a globalized Medicare program is very simple. Since most Medicare beneficiaries are retired, they don’t need to be close to their workplace. Many beneficiaries have family or emotional ties to other countries and may welcome the opportunity to spend their retirement years in Germany, France, Canada, or some other country. If the government gave beneficiaries a Medicare voucher that would allow them to buy into the health care systems of these other countries, there would be enormous savings that could be split by the government and the beneficiary.

Of course, it would be necessary for the government to negotiate the mechanics of this deal country by country. This would be comparable to negotiating a trade deal like NAFTA, although it would be far simpler and the potential economic gains would be much larger. In fact, we could even pay the receiving country a premium to ensure that they benefit as well from globalized Medicare.

The potential gains from trade in health care are enormous. We calculated that the savings to the government would be $1,700 per beneficiary per year in 2020. This would rise to $7,200 in 2045, and $28,000 per beneficiary per year in 2085. (All numbers are in 2008 dollars.)