A report by the Center for Economic Policy and Research (CEPR) advocates allowing Medicare and Medicaid beneficiaries to move to other countries and buy into their health insurance systems using U.S. vouchers.  The CEPR says the system would reduce U.S. health care costs while improving quality.  Under the proposed system, the government and the beneficiaries would split the savings obtained from using the non-U.S. systems, which spend, on average, nearly half of the $6,714 that the U.S. health care system spends per-person on health care and achieve longer life expectancies.  In addition, the program would give the provider country a premium above their costs to ensure their participation in the program.  The report estimates the cost savings of such a program based on several projected levels of participation.

From the introduction:

There are large differences between the per-person cost of providing health care in the United States and the per-person cost in other countries with comparable health care outcomes. In 2006, the per-person cost of health care in the United States was $6,714, while the average cost in the 26 countries with longer life expectancies was $2,964. This gap suggests the potential for substantial gains from trade.

This paper outlines a mechanism for taking advantage of these potential gains from trade: a globalization of the Medicare and Medicaid programs. Since most of the beneficiaries of Medicare are retirees, as are a substantial portion of the beneficiaries of Medicaid, they need not live near a workplace. Many beneficiaries have family or other ties to other countries. The globalization mechanism proposed in this paper would allow beneficiaries of these programs to have a voucher that would allow them to move to other countries and buy into their health care systems, with the government and the beneficiaries splitting the gains. To provide an inducement for other countries to participate, they would receive a premium (e.g. 10 percent) above their costs to ensure that they benefit from this process as well.

Full report: Free Trade in Health Care: The Gains from Globalized Medicare and Medicaid (PDF | 269.07 KB)

Center for Economic Policy and Research. (2009). Free trade in health care: the gains from globalized Medicare and Medicaid. Baker, Dean; Jin Rho, Hye.