MTT: We hear a lot about employers adopting domestic medical travel vs. international. Do you see a reason why they wouldn’t make the move to international?
JKM: I don’t see any kind of regulatory impediment, and I don’t see a structural impediment.
What I do see is a liability impediment, which is a challenge to all of us. Even if we follow the same success rates and cures rates internationally that we have domestically, we know that some people are going to come home from these trips having been treated poorly.
We know that risk is there and so the question is, “How will our legal system and the employers respond when that one patient (statistically) comes back with a complaint?”
If we respond as adults the same way we always do — which is to cure the problem first and make the patient whole — that would ameliorate any of the differences between domestic treatments vs. international treatments.
If we go off and do something childish — as we all want to do as Americans — and sue, sue, sue, that will be the kind of thing that the industry will have to respond to with higher charges. And that might be what ultimately gives it pause.
MTT: Are you aware of the current insurance policies and the liability policies that are now out there for employers?
JKM: Not specifically.
I can speak a little bit to what is required under an ERISA plan, but HSAs are not offered under ERISA plans. It’s kind of a gray area.
The way this product is positioned is correct: If you are going to have an HSA, even if the employer is going to do the work for you and gets the qualified health plan to cooperate — and even if they’re self-funding the qualified health plan — it’s still on you.
That’s something this country is going to migrate towards because we don’t have any more money to spend for entitlements. Little by little, people are going to assume even more responsibly for themselves when that happens.
The legal system will probably change, and you’ll be much less likely to sue your employer or your insurance company for a bad outcome — and much more likely to sue the guy that did it – the doctor.
MTT: What about procedures that are not approved by the FDA (i.e, certain stem cell procedures) but are available in other countries? How does an individual with an HSA use that money to take advantage of those treatments?
JKM: The answer is they don’t if it’s the HSA money.
Now if you are able as an HSA owner — which is to say if you are an American that has one of these — you can do two things:
First, if you are under the age of 65 and you need to seek a treatment that is not FDA-approved and may be experimental, what you do is tap your HSA resources, pay income taxes and a 20 percent penalty, and get the remainder of your funds to go and do what you’re going to do.
Secondly, if you are over 65, you have a different set of circumstances: There’s no penalty for taking the funds out — you only have to pay taxes if the purpose for which you took the money out is a non-qualified purpose.
Let’s just assume that you are over 65 and are going to be taking your money out of your HSA, paying taxes on that money and seeking out whatever treatments you think are appropriate. This scenario happens inside this country, although not as frequently as it is beginning to happen outside of this country.
That’s how you respond with an HSA: Anything not on that IRS 502 publication wouldn’t be permissible to qualify as an expense. Of course, anything that the FDA doesn’t approve wouldn’t be a procedure that you could have insured in this country.
MTT: How about dentistry? Dental care seems to be a very popular option for medical travel.
JKM: Well, that’s where an HSA really ramps up.
There are some fine lines, so it behooves you as an HSA owner to check that out before you get on the jet.
There are some other optional items, such as food services, that are also covered by HSAs. Here again, it is incumbent upon the individual to double check with his or her insurance company to make certain.
I heard this anecdotally, so I don’t know this for fact: Some international providers are adopting the diagnosis code system that we use in this country so that they can give comfort to the American insurer that, in fact, they are getting a qualified service.
As a result, this can be matched against the HSA deductible and cost-sharing architectures — just as if it was happening in downtown Memphis. That’s a very positive development.
Also, what we just described is that HSA’s are more versatile than most other traditional insurance programs that don’t cover dental or optical – but HSAs do!
MTT: Are you aware of a trend whereby US-based doctors are taking their patients to hospitals outside of the US, actually performing the surgery at those hospitals, and then providing the aftercare back in the US?
JKM: I am not, and as an Executive to the American Bankers Association, it probably wouldn’t be something that we’d focus a lot of our energy on. We’re much more interested in how the products that banks use are used here.
We’re just aware how they are applicable elsewhere. So no, I’m not familiar.
MTT: As a bottom line, what is the American Bankers Association interest in medical travel? Is it on the HSA level? Or is it to simply weigh in and help consumers fund their own medical care and work to make the most out of their medical dollar?
JKM: Let’s go with “yes” as the shorter answer.
The longer answer is that it turns out that we’re seeing a shift in who owns the client. It used to be an employee benefit broker that was autonomous of either an insurer or a financial institution that owned the client and went out to get bids.
But this has changed. The client now actually belongs to the bank.
The HSA is the conduit, and although it started as a complex product, it has been made significantly smoother and simplified by the application of bank and money management technology.
You are seeing a lot of banks buying insurance brokerages, especially employee benefit brokerages for the purpose of being able to offer an integrated service to a variety of customers. The first rank is with the customers with whom they have a lending relationship.
Now they are going to them and saying, “We can handle your employee benefits, and by the way, we can also sell you the insurance product and help you manage it. So let’s open up the accounts and then we’ll do all of the work to get you in touch with a stable of insurance carriers such as Aetna, Cigna, Blue Cross — those kinds of people — and we’ll do that going forward.
Now that they own the client, banks have this way of making you completely aware of all the various things they would like you to do — medical tourism being one of the applications.
And so, when a banker is asked the question: “I’m going to go down and get my knee replaced in Costa Rica. Do you have any idea of what will happen?” he or she will have an answer.
MTT: I read this week about Walgreens getting into this insurance marketplace and I would imagine CVS, Wal-Mart and all the others will follow. Do you think a medical travel benefit is something that would be appealing to offer through a Walgreens?
JKM: I would imagine it would.
I’ve always been someone who is more in favor of competition than less. If there’s going to be other distribution points for qualifying medical insurance for HSAs or for policies that cover you for medical tourism, I don’t see the harm of having that kind of coverage — it would be good.
MTT: You have been referencing Costa Rica in this discussion. What other destinations do you think would be most appealing to Americans – India, Singapore, Korea? New Zealand?
JKM: I’m sure they would be.
There are Americans every place on the planet, so it would be reasonable to expect that services may follow them or they may follow services.
There are some natural gathering points and those gathering points would be in places where Americans are highly congregated.
To me, that sounds like Europe or Central America. Canada is lightening up its regulatory environment, so there are private clinics in British Columbia and Ontario where an American can go, pay some money and get service. They’re both next door and easily accessible by air.
Many of the farther destinations will also draw some people. One of the problems being solved by medical tourism is quicker access to care. But it’s not as easy to reach a hospital in India vs. Mexico.
However, if the patient’s insurance doesn’t cover any of this, many will convert to an HSA – giving them access to a financial product that makes the whole enterprise even more open for discussion.
The interest level in this is rising tremendously and it’s precisely what people want. This is what democratizes this industry.
Previously, you had to have cash to take advantage of these options since this wasn’t something that was going to be covered by insurance.
HSA’s are insurance and they give you something no other product gives you — cash.
MTT: And choice.
JKM: Yes, and choice. Those are huge.
About J. Kevin A. McKechnie
Executive Director of the American Bankers Insurance Association and Director of the Health Savings Account (HSA) Council, McKechnie ealth Savings Account (HSA)represents the ABIA and HSA Council before Congress. He served as Legislative Director to former Congressman William Dannemeyer of California. He holds a B.A. in History and Political Science from York University in Toronto, Canada.
The American Bankers Insurance Association
The American Bankers Insurance Association is the separately chartered insurance subsidiary of the American Bankers Association and is the only Washington, D.C.-based full service association for bank insurance interests. ABIA’s mission is to develop policy and provide advocacy for banks in insurance and to support bank insurance operations through research, education, compliance-assistance and peer group networking opportunities. ABIA Membership consists of banks, and their affiliated agencies, insurance companies, marketing, and administrative services suppliers, non-bank lending organizations and other firms involved in the bank affiliated insurance industry. Additional information on ABIA can be found on the Internet at www.theabia.com.
The American Bankers Association
The American Bankers Association represents banks of all sizes and charters and is the voice for the nation’s $13 trillion banking industry and its two million employees. ABA’s extensive resources enhance the success of the nation’s banks and strengthen America’s economy and communities. Learn more at aba.com.
About The HSA Council
The HSA Council is an organization of banks, insurers and technology leaders committed to increasing the adoption velocity of health savings accounts in the United States. The HSA Council represents its members before Congress, the White House and US Courts in order to preserve the ability of Americans to pay for healthcare using an HSA.