Adam Smith Institute

What free markets achieved against the system of state socialism, may also be achieved to undermine socialist health care. The customers of health care, just like the East Germans who tore down the Berlin wall, may vote with their feet and crush the NHS and Medicare. The restriction of customers in these collective systems might be abandoned by as much as six million medical tourists worldwide by 2010. 

Global competition in health care is allowing more patients from developed countries to travel for medical reasons to regions once characterized as "third world."  Many of these "medical tourists" are not wealthy, but are seeking high quality medical care at affordable prices. To meet the growing demand, entrepreneurs are building technologically advanced facilities in India, Thailand, Latin America and elsewhere, and are hiring physicians, technicians and nurses trained to American and European standards to run them.

Health care in hospitals used to be a strictly local, but with technological progress and division of labor it is getting increasingly global. Today treatment abroad in many cases costs between one fifth or tenth what it would be in the US or Europe. The main reason for this is lower labor costs. In the US staff costs account for more than half of hospital operating costs. Doctors and nurses in India earn only half or one tenth respectively compared to their US colleagues. As Adam Smith has shown with his needle factory, the only way the West can offset the comparative advantage of these third world health care providers is through a boost in the division of labor of the health care work force. And the pressure is increasing to do just that.

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