The challenges of mandatory cover

Issue 217 | February 2019


Is mandatory travel insurance a burden or benefit? asks Milan Korcok

In 2017, Thailand’s Ministry of Tourism and Sports floated the proposal that foreign tourists be required to have travel insurance to protect state hospitals from losing some three billion baht (approximately US$88 million) annually in unpaid medical bills left behind by foreign visitors. The director of tourism insisted: “We need to push this through (to the nation’s cabinet) as soon as possible because the problem is becoming more serious.” They’re still pushing. For a nation that thrives on tourism (1.78 trillion baht, or US$50 billion, in 2017), any potential impediment to such a source of revenue is bound to be resisted – or, if not resisted, very aggressively justified.

Across the Pacific in Ecuador (including the Galapagos Islands), the Ministry of Health announced early in 2018 that travel insurance would become mandatory in February; then in May; then in July. But with lawyers and the tourism industry raising questions about coverage requirements, documentation inspections, changes to visa rules and other technical minutiae, implementation of the mandate remains murky.


Similarly, in Egypt (plagued by a healthcare infrastructure sorely in need of funding, and troublesome publicity following the deaths of a British tourist couple from alleged stomach ailments at a popular resort), media reports indicated that the Financial Regulatory Authority was conducting a study of mishaps involving tourists that would be used to determine the value of premiums and collection methods prior to a possible mandating of travel insurance for all incoming tourists. After a series of conflicting reports about when or even if such a requirement would be imposed, the Ministry of Tourism announced that there were no ‘immediate plans to introduce mandatory travel insurance for tourists coming to Egypt’. Coincidentally, the announcement came as Egypt was beginning to see a resurgence in tourism, which had plunged from 14 million visits in 2010 to 5.3 million in 2016 but was expected to see up to eight million tourists arrive in 2018.

Cuba had few hesitations about mandating proof of travel insurance for its visitors – business travellers as well as tourists – in 2010

On the other hand, Cuba, which is equally if not more dependent on tourism, had few hesitations or publicly stated rationalisations about mandating proof of travel insurance for its visitors – business travellers as well as tourists – in 2010. And it specified that if tourists could not offer proof of private coverage sufficient to cover their stay, they would have to buy insurance from Cuban companies at the point of entry. No coverage, no entry.


Cuba’s government even went so far as to warn Canadians (the country’s largest supplier of tourism) that though their provincial government health insurance cards would suffice for official entry purposes, they had best be prepared to pay in full for any and all medical services charged by local providers as a condition of being allowed to leave the island. The Cubans were clearly aware that Canada’s government plans paid only a minute share (10 per cent at most) of any foreign medical bills submitted, and they preferred to put their trust in private insurers’ products. Since then, Cuba’s tourism industry has remained on an even keel, the only reversals being temporary and due primarily to a spate of hurricanes. Balancing the need for tourists’ revenues while tolerating their bad debts for expensive medical services can be stressful for international relations. But when push comes to shove, it has to be dealt with – sooner or later.


Half measures


In 2015, the UK’s National Health Service (NHS) revamped its payment rules for visitors to try to recoup some of the £500 million it had lost over time for covering migrants, visitors and former residents who had left. The changes mostly affected people who lived outside the European Economic Area, including former UK residents, and they resulted in charging anyone who did not have personal insurance 150 per cent of the NHS national tariff for the care they received.


For many who couldn’t or wouldn’t pay for those hospital tariffs, the NHS advised: “If you cannot pay in advance, the hospital will ask for a written undertaking to pay. If you cannot provide proof that you can afford to pay, treatment will be refused, and you may be offered the chance to be treated privately.” So there.

the UK has still not gone so far as to require all visitors to show proof of travel insurance as a condition of entry. 

Despite this, the UK has still not gone so far as to require all visitors to show proof of travel insurance as a condition of entry. Neither has Canada, despite the growing deficits being absorbed by general hospitals and physicians for unpaid services to foreign visitors, many of them ageing parents, grandparents or more distant relatives taking advantage of that nation’s high-quality services.


In British Columbia, the Vancouver Sun recently reported that between 2012 and 2017, regional health authorities that administer government-run hospitals had collected CA$334 million dollars from non-residents of Canada; yet in the same period $75 million in unpaid hospital and ambulance bills went uncollected.


Dr Charles Shaver, a general internist in Ottawa, recently wrote in an online healthcare publication that many Canadians were arranging for parents, grandparents and other relatives – many with pre-existing conditions such as diabetes, hypertension and cardiac disease – to visit with them for weeks or months, despite the fact that their conditions precluded them from qualifying for most travel insurance. He wrote that he had worked with a single mother in Ottawa who was caring for her uninsured father from a small Caribbean country. He kept his cardiac investigations to a minimum, not ordering a repeat echocardiogram, keeping costs down as much as he could, in effect replicating an experience that ‘likely occurs quite often’ for his colleagues in larger cities, he said, ‘especially those who are asked to see patients in emergency departments’.


He noted that: “While potential patients who are visiting Canada need to be assured of medical care, and their relatives should not face extremely high physician and hospital charges for a critical illness, physicians deserve fair and prompt payment as well.” Additionally, he warned: “After being without a contract (government sanctioned fee schedule) for over four years, and with major fees cuts and income clawbacks, Ontario MDs are certainly in no mood to offer their services free to visitors.”


As for the US, though it warns its own outbound travellers and those entering its borders of the value of travel insurance, it is not expected any time soon to require visitors to have travel insurance, as it is one of the few developed nations that doesn’t even require its own citizens to have, or to pay for, domestic health insurance. Mainstream Americans are serious (some may say obsessed) about their freedom NOT to buy something they don’t wish to buy. It’s what keeps America from being able to carve out a universal healthcare system.


Where is travel insurance mandated?


To date, a search of the official travel warnings and advisory services of the UK’s Foreign and Commonwealth Office, the US Department of State and Canada’s Department of Foreign Affairs and Development, as well as host country government websites, confirms that Latvia, Estonia, Lithuania, Belarus, Bulgaria, the Czech Republic and Slovakia specifically require documentary proof of private travel insurance sufficient to cover emergency medical services (in most cases up to at least the Schengen Area’s €30,000 threshold) as well as repatriation benefits.


In other countries – Russia, for example – the process of obtaining a visa can be time-consuming and grueling. And though there may not be a specific requirement for private travel insurance coverage stated on the official Russian government website, if travellers expect to get visas, they will find this admonition in the fine print: ‘medical insurance valid in Russia and fully covering the period of the first trip’ is required.

Similarly, travellers to China may not be specifically warned that they need travel insurance with medical and repatriation benefits to earn visas, but they will find that their tour companies are responsible for having insurance to cover any medical emergencies encountered by their customers.


And then there is Schengen


A further twist that often leads travellers astray is the misleading warning that because the Schengen visa covers all of its 26 members (and proof of travel insurance is required to get the visa) all travellers to Schengen countries need to have acceptable travel insurance. However, travellers from the US, UK, Canada, Australia, New Zealand and up to 60 other countries are exempted from the need to have a Schengen visa to travel to any of its member countries. They only need to abide by the rules of each individual country. Travellers from all other countries, e.g. Russia, Cuba, China, Jamaica, Saudi Arabia and 97 others, must have a Schengen visa to visit one of its member countries, and that visa is of itself proof of travel insurance.

Latvia, Estonia, Lithuania, Belarus, Bulgaria, the Czech Republic and Slovakia specifically require documentary proof of private travel insurance sufficient to cover emergency medical services

Though virtually all government travel advisory services advocate supplementary coverage for their residents journeying abroad, there remains a substantial disconnect when it comes to implementing yet another barrier and cost to incoming visitors. But according to some proponents of mandatory travel insurance, there are also some positive elements that need to be elaborated.


Jeff Pudwell, President of 21st Century Travel Insurance Ltd, and Chairman of the Visitor to Canada committee of the Travel Health Insurance Association, told ITIJ that in his committee’s discussions on this topic to date, there has been broad support for the idea of making some amount of coverage mandatory for visitors to Canada. “We’ve all seen the claims; we’ve seen how quickly costs can escalate when a visitor ends up hospitalised with a serious medical condition,” he emphasised. “If proper insurance is in place, our claims payments help support hospitals and doctors in Canada, and insurance payments for services provided to non-residents inject significant funds into the coffers of Canadian hospitals. These are the same facilities that always seem to be scrambling to raise funds in their communities for the purchase of equipment that (government’s) global funding schemes don’t support.”    


Pudwell further asserts that if the visitor has no insurance, ‘it’s very likely that the hospital will be left with unpaid or underpaid bills and that creates a huge cost for the facility’. “Likewise,” he said, “doctors are left unpaid for time they might otherwise have spent treating residents of Canada (paying customers). I believe that if insurance was mandatory, the increased market and premium volume would generate a reliable revenue stream that would lead insurers to adapt and respond in more creative ways to the demand for pre-existing condition coverage. I know from our discussions with representatives from regulators that this is what they see as a big missing piece of the puzzle when it comes to solving the challenge of uninsured visitors.”


For travel insurers, satisfying regulators is no bad thing. Satisfying competing governments is no easy thing. Burden or benefit, implementing compulsory travel insurance is no sure thing.


This article is featured in the February 2019 issue of ITIJ