As food and oil prices rocket all over the world, consumers are getting a crash course in economics: When demand increases, prices increase. Although food and oil dominate the headlines, life’s other essentials also obey this cast-iron law, including healthcare, which is threatening to bust government budgets all over the world. As with food, part of the solution lies in opening up trade and competition.
The Organization of Economic Community and Development estimates that world average healthcare expenditure last year accounted for 9 percent of GDP, up from just over 5 percent in 1970. The US now spends more than US$2 trillion per year on healthcare, eight times the amount in 1980. US healthcare costs are currently increasing by twice general inflation, a general trend in rich countries.
As populations grow older and more demanding, these inflationary pressures will increase. Politicians are finding cashed-strapped voters increasingly unwilling to stump up the large amounts of tax needed to fund government health systems, forcing them to deny treatments to patients in a bid to constrain costs. In the US, healthcare costs have become a major issue in the presidential election.
The last decade, by contrast, has seen very low inflation for other goods, partly because of a massive increase in global trade. The arrival of China and India as major new exporters has meant that most countries have been able to import goods cheaply, keeping prices down.
While the role of free trade in driving down prices and driving up quality has long been accepted by economists (and, to an extent, politicians), healthcare has been one area in which there has been almost no international trade. It is time for this to change.
Communications technology makes it increasingly easy for hospitals to outsource services such as diagnostics to laboratories overseas, cutting costs and treatment time.
Patients can get treatment overseas where costs are lower. Open-heart surgery in India costs only one-sixth of the price in the US, including travel, accommodation and medicines. If only 10 percent of US patients went abroad for 15 types of treatment, they and insurance firms could save US$1.5 billion a year, including travel.
Patients are already voting with their feet. In 2006 alone, Singapore treated 500,000 foreign patients, India treated 600,000 and Thailand around 1.2 million. Other favorite destinations include Malaysia, South Africa and Cuba. Taiwan’s Council for Economic Planning and Development believes it could bring in NT$7 billion (US$230.4 million) a year.
While the benefits of free trade in health are clear for rich countries, developing countries also stand to gain. Most obviously, there are opportunities for much-needed investment of foreign capital.
These financial opportunities would also give developing countries’ medical staff a far greater incentive to remain at home, reducing the debilitating “brain drain.” As more money came into the health sector, some of the burden on government healthcare would be removed.
Despite the significant benefits, only two developed countries have ratified a WTO agreement on trade in healthcare — Iceland and Norway. While developing countries such as Gambia, Jamaica, Malawi and South Africa are prepared to liberalize, wealthier countries seem bent on protectionism.
This reluctance is largely down to lobbying by interest groups in developed countries. Public sector unions seek to protect their members and industries from competition. Non-governmental organizations ideologically oppose trade in healthcare, claiming that only governments can ensure “equity” and “universal” treatment — even though public healthcare in most of the world fails patients miserably.
This is a massive wasted opportunity. Free trade in healthcare could help rich countries keep the lid on healthcare inflation while helping poorer countries attract investment and skills and retain valuable medical professionals.
For this to happen, developed countries must encourage insurers to cover overseas treatment and open up their medical sectors to international competition. Developing countries need to standardize their qualification and licensing requirements in order to attract customers and improve skills.
Healthcare doesn’t have to go the same way as food prices. Rich and poor countries should ignore calls for protectionism and liberalize their healthcare for the good of patients everywhere. Health tourism can be healthy for everyone.
Fredrik Erixon is director and Lucy Davis a trade policy analyst of the Europe Centre for International Political Economy, a think tank based in Brussels.
Why is Chinese President Xi Jinping (習近平) not a “happy camper” these days regarding Taiwan? Taiwanese have not become more “CCP friendly” in response to the Chinese Communist Party’s (CCP) use of spies and graft by the United Front Work Department, intimidation conducted by the People’s Liberation Army (PLA) and the Armed Police/Coast Guard, and endless subversive political warfare measures, including cyber-attacks, economic coercion, and diplomatic isolation. The percentage of Taiwanese that prefer the status quo or prefer moving towards independence continues to rise — 76 percent as of December last year. According to National Chengchi University (NCCU) polling, the Taiwanese
It would be absurd to claim to see a silver lining behind every US President Donald Trump cloud. Those clouds are too many, too dark and too dangerous. All the same, viewed from a domestic political perspective, there is a clear emerging UK upside to Trump’s efforts at crashing the post-Cold War order. It might even get a boost from Thursday’s Washington visit by British Prime Minister Keir Starmer. In July last year, when Starmer became prime minister, the Labour Party was rigidly on the defensive about Europe. Brexit was seen as an electorally unstable issue for a party whose priority
US President Donald Trump’s return to the White House has brought renewed scrutiny to the Taiwan-US semiconductor relationship with his claim that Taiwan “stole” the US chip business and threats of 100 percent tariffs on foreign-made processors. For Taiwanese and industry leaders, understanding those developments in their full context is crucial while maintaining a clear vision of Taiwan’s role in the global technology ecosystem. The assertion that Taiwan “stole” the US’ semiconductor industry fundamentally misunderstands the evolution of global technology manufacturing. Over the past four decades, Taiwan’s semiconductor industry, led by Taiwan Semiconductor Manufacturing Co (TSMC), has grown through legitimate means
Today is Feb. 28, a day that Taiwan associates with two tragic historical memories. The 228 Incident, which started on Feb. 28, 1947, began from protests sparked by a cigarette seizure that took place the day before in front of the Tianma Tea House in Taipei’s Datong District (大同). It turned into a mass movement that spread across Taiwan. Local gentry asked then-governor general Chen Yi (陳儀) to intervene, but he received contradictory orders. In early March, after Chiang Kai-shek (蔣介石) dispatched troops to Keelung, a nationwide massacre took place and lasted until May 16, during which many important intellectuals
RSS