When I started Best Places in the World to Retire, I had very little knowledge of what it was really like to live abroad. Now, we have more than 500 expats who have answered more than 9,500 questions about living abroad, and no category of answers has surprised me more than those on the topic of healthcare.
It wasn’t that long ago when one of the reasons people from the US were afraid to move to places like Mexico and Panama was because of the fear of substandard healthcare. Now, one of the reasons people from the US do move to places like Mexico and Panama is because of access to what is generally acknowledged to be comparable quality healthcare at a discount of from 50% to 75%+.
In our study, Expat Report: How is Healthcare Abroad? we asked expats who had moved to Panama, Nicaragua and Belize their opinions on the cost of healthcare they received in their new country. 38.2% said their healthcare costs abroad were from half to a quarter of what it cost in their home country and 36.5% said it was less than a quarter of the cost.
In our upcoming study on Mexico, we received similar results, with 40.7% saying that their healthcare costs in Mexico were from half to a quarter the cost of their home country and 31.6% saying that it was less than a quarter of the cost.
In both cases, expats reported that healthcare quality was about the same, so the cost differences are quite striking and significant.
So why does quality healthcare cost so much less in Mexico and Panama than in the US? (You can read how I personally slashed 75% from our healthcare expenses here.) Here are the four main reasons, as provided by the contributors to our site and studies about Panama and Mexico, as well as from my own observations, now having experienced the Mexican healthcare system firsthand.
1. The fear healthcare providers have of being sued is much less in Mexico and Panama than in the US. I found a credible list of the eight countries with the most attorneys per population. The US came in first with one attorney for every 300 inhabitants. France came in eighth with one attorney for every 1,400 people. Mexico and Panama didn’t even make the list.
The fear of litigation greatly increases US healthcare costs in at least two ways:
- The cost for malpractice insurance is pushed higher, a cost which is ultimately passed on to all patients.
- Physicians practice more “defensive medicine,” wherein a physician orders tests and / or treatments that aren’t likely to be useful, but they do so anyway because, if anything goes wrong and they hadn’t ordered the test and / or treatment, they could lose in a lawsuit.
2. Services in general cost less. The reason why services in general cost less in Mexico and Panama is a topic for another article, but for this article, here are some examples: haircuts generally cost the equivalent of around $3 - $4 and my wife can get a pedicure for about $3. (If you don’t believe me, you can see a video of a $2.76 haircut in Mexico here.) By American standards, these extremely low prices set a point of reference throughout the entire Mexican and Panamanian economies, causing other things like healthcare to cost less, as well. (To take a trivial example, if your physician can get a haircut for $3, he or she can charge less for your examination.)
3. Healthcare is generally paid for in cash, as opposed to filing an insurance claim. Insurance is available to expats, but the cost of healthcare is generally so low (usually around the equivalent of $20 - $40 per visit, with no insurance) that expats tend to just pay out of pocket, in cash. As a result, the doctor’s office or hospital doesn’t have to hire an entire back office to deal with insurance claims. In my experience, there hardly is any back office; almost everyone in the facility provides healthcare, as opposed to arguing with insurance companies over payment. Less overhead to process insurance paperwork = less cost to be passed on to the patient.
4. While both Mexico and Panama have state-run or state-sponsored healthcare available, most expats are not part of that system, so for the expat healthcare system, there is very little government involvement.
Having insurance companies and the government for the most part out of healthcare makes for a system wherein the person consuming the healthcare services (the patient) is the one making the decisions as to what is right for himself or herself at what price they are willing to pay out of their own pocket. People who pay for things out of their own pocket tend to be much more discerning than those who pay using other people’s money (in this example, an insurance company’s). Expats choose whatever doctor they want for whatever reason they want at whatever cost they want without interference from an insurance company or government. Doctors then compete for patients based on cost and quality, with reputation being extremely important and a major reason an expat will choose one physician or hospital over another.
Many expats (especially the older ones) have told us that the smaller role played by insurance companies and government, combined with fewer lawsuits in Mexico and Panama, remind them of “how it used to be” in the US… back when it cost less for healthcare there, as well.
Chuck Bolotin is the founder of Best Places in the World to Retire(click on: https://bestplacesintheworldtoretire.com/), a website that provides credible information to those researching moving, visiting, or doing business abroad. Prior to that, Chuck founded, funded, ran and sold two companies. He is a frequent guest lecturer at the Eller College of Management MBA Program, mentored at the Arizona Center for Innovation, and frequently sat on the Desert Angels Screening Panel in Tucson, Arizona. After selling his home in Arizona and completing a one year road trip through Mexico, Chuck now lives in Ajijic, Mexico, with his wife, Jet, and their two dogs.
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