# **INTRODUCTION**

The widespread vague narrative about cross-border purchasing of health services is as follows: Increasing numbers of patients receive planned or urgent medically necessary health treatment outside their own country. This outflow of patients happens for various reasons. In Austria, one cause is that the cost of less expensive but more frequent health services – such as dental care – are not entirely reimbursed by the statutory health care system.<sup>1</sup> Rising out-of-pocket expenditures in the past years have been driving patients to countries with lower health care prices, such as Hungary.<sup>2</sup> This paper explores the empirical reality of this narrative with evidence for the country pair Austria/Hungary. What legal provisions exist in Austria to import health care from Hungary? In turn, what provisions are in place in Hungary to receive Austrian health care consumers? What is the quantitative size of this phenomenon? What are the views and future plans of the main health care actors in Austria and Hungary on trade in health care? Do health care actors facilitate cross-border purchasing of health care, or do they obstruct it? If the latter is the case, what are the major obstacles?

The concepts of “trade in health services” and “cross-border purchasing of health services” are used in this paper according to the definition of the General Agreement on Trade in Services (GATS, mode 2).<sup>3</sup> “Trade in health services” is used when referring to health organizations contracting health providers abroad in order to deliver health services outside their territory. The concept of “cross-border purchasing” is used for individual patients who travel abroad to purchase a health service.

Even though there is a growing body of literature, little is known about the extent and shape of the phenomenon of health care purchased in another country. We do not have accurate data on how many patients travel to another country to receive health care and we know little about the barriers to trade in health services. However, there are singular case studies on trade in health services in the United States, Canada or the ASEAN region (see e.g. Katz et al. 2002, Mattoo and Rathindran 2006, Arunanondchai and Fink 2007). This paper aims at improving our knowledge about the phenomenon of cross-border purchasing of health care with the example of Austrians traveling to Hungary to receive health care.

In the first section, the fundamental principles as well as the provisions on the importability and exportability of health care of the Austrian and Hungarian health care systems will be outlined (1). Second, the European Community provisions on crossborder health care will be presented (2). In the third section, the differing views of Austrian and Hungarian health care stakeholders will be summarized (3). Fourth, the available quantitative data on cross-border health care between Austria and Hungary will be presented (4). In the fifth section, the potential financial benefits for three health care areas will be shown (5). Finally, the case study will discuss the major legal, institutional,

> 1 On the reduction of mandatory health risk coverage in Bismarckian health insurance systems, see e.g. Hassenteufel and Palier (2007: 581–84).

> 2 Recent data from Hofmarcher and Rack (2006: 71–72) suggest that the proportion which private households (private health insurance, indirect and direct cost-sharing, private non-profit organizations) contribute to social health insurance fell from 1995 to 2004. However, direct cost-sharing, defined as copayments of private households for benefits covered by social health insurance, rose from 6.5 percent in 1995 to 7.6 percent in 2004 (as a percentage of total health expenditure). The nominal value of private health expenditure rose from 4,210 million Euro in 1995 to 5,339 million Euro in 2004 (ibid: 90). 3 On the definition of consumption of health services abroad, see e.g. Chanda (2002).

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