Free Trade and Stethoscopes

People don’t usually ask why highly skilled, highly paid workers aren’t just as vulnerable to the forces of globalization as low-skill workers. Consider doctors and lawyers, for example, which I think conforms to anybody’s idea of highly skilled, highly paid professions, right? Why can’t x-rays be read by a doctor in India? Why can’t foreign competitors set up hospitals in the United States to provide services at lower cost? Why can’t I use an attorney in another English-speaking country to interpret a contract—few of which seem to be written in a type of English most people can understand anyway?

The reason is really quite simple. Free trade of these services would lead to a dramatic reduction of income for those professions. Doctors and lawyers, and their respective lobbying groups, have been mighty successful in preventing foreign competitors from gaining access to U.S. markets. When it comes to highly skilled, highly paid workers, U.S. policymakers claiming to be free traders don’t give up an inch of ground to foreign competition. Lest you think this is only about "even-ing the score," there are some real practical reasons to promote free trade up and down the income ladder, starting with controlling the skyrocketing cost of health care.

In an article that appeared in the Wall Street Journal last week by Jagdish Bhagwati and Sandip Madan, the authors point out that in all the talk about reforming the U.S. health care system, rarely do we hear policymakers talk about freer trade as part of the solution. So far, none of the presidential candidates have mentioned a word about free trade and health care.

Bhagwati and Madan estimate $500 billion in savings per year just in administrative services alone “by shifting claims processing and customer service offshore.” More savings are to be had in what the authors describe as medical tourism: “Costly procedures with short convalescence periods, which today include heart and joint replacement surgeries, are candidates for such treatment abroad. By our estimates, 30 such procedures, costing about $220 billion in 2005, could have been “exported.”’”

Medical tourism may sound weird, but the point is these are not incidental amounts of money, what I suspect would be enough to foot the bill for universal health care. We could stand to have a more open discussion about free trade. Our country's health may depend on it.