International Trade in Services.pdf - DSpace at Khazar University

Health without Borders 113
Despite these variations, it is widely recognized that trade in the health sector
has strong growth potential. It is also recognized that developing countries are
likely to be the main beneficiaries of these new trade opportunities. Factors in the
growth of the market in developing countries include the aging of the population
and growing demand in the North (shortages of health care providers) and rising
incomes (and, hence, demand) and the emergence of a middle class in the South.
These factors, combined with a greater control on health care spending in the
North, are creating new trade opportunities particularly for developing countries.
Deloitte (2008) anticipates a 100 percent annual growth in outbound medical
tourism in the United States over the next few years. However, obstacles need to be
removed before trade will really flourish; the nonportability of health insurance is
an example of the barriers.
Not all trade modes are equally developed or have similar prospects. Herman
(2009) suggests that there is a great deal of variation in the different segments of
the international trade in health services. For the most part, trade in the European
Union involves the movement of foreign health professionals among countries
(Mode 4), as well as the presence of foreign health care firms in local markets
(Mode 3). Trade based on the travel of health care consumers to foreign markets
remained limited (Mode 2), but still significantly more active than the international
crossborder trade in health services (Mode 1).
It should be noted also that a number of ancillary services and products are
traded at the margin of the global health services trade. These include medical
education and training, offshore business services, paramedical and wellness services,
health insurance, pharmaceuticals, medical equipment and supplies, and so
on. Sometimes, health services are also commingled with other services, such as
tourism and travel or real estate, for example retirement homes with medical
facilities (box 4.3). The global health market is therefore much larger than the
rough estimates on services suggest.
Mode 1
Evidence on trade in health services under Mode 1 remains largely anecdotal at
this stage, at least if one adopts a narrow definition of health services (Nielson
2006). If one includes the offshoring of other business or financial services,
such as medical transcription or health insurance and claims processing, then
the market is larger and largely untapped. According to the McKinsey Global
Institute (MGI 2005), up to 55 percent of the jobs in such services in the health
sectors of high-income countries could be outsourced (figure 4.3). Most outsourcing
would be done domestically, but some developing countries could
capture part of the market. In the case of the Philippines, exports of medical