many high-income countries. Building on Walmsley (1999) and working with a multi-region CGE model, Walmsley and Winters (2005) estimate that if OECD countries were to expand temporary access to foreign service-providers by the equivalent of 3 percent of their labor force, the global gains would be greater than those associated with full liberalization of merchandise trade. These gains are driven by higher labor productivity and thus wages of the workers that are permitted to move to locations where labor is scarcer. The gains to those who move outweigh losses incurred by those who stay behind, although these losses are partially offset by income that is expected to be remitted back to source countries (based on observed average rates of remittance transfers). Both developed and developing countries (including the citizens that are permitted to move) would share in these gains, and they would be largest if both high-skilled mobility and low-skilled mobility were permitted. There are of course large political obstacles that must be overcome for such mode 4 trade expansion to be feasible, but movement towards liberalization may be possible if designed appropriately. While this is an area where the GATS could play a role, it is more likely that countries will continue to rely on bilateral arrangements to manage such trade, which in turn may be sector-specific.<sup>29</sup> Rutten and Reed (2009) focus on the impact of health worker movement on the cost structure of the UK health system. They find that while a rise in the National Health Service (NHS) budget yields overall welfare gains, a nominally equivalent policy of enhancing access to the UK for foreign health care providers (yielding the same increase in services) yields even higher overall welfare gains. Cross-border health worker movement, whether temporary of permanent, is likely to become increasingly important given demographic trends in the OECD and the willingness of middle income countries to train such workers (as in the Philippines) for export.

Trade in health services can also occur through mode 2 type transactions insofar as patients move to the location of providers for treatment. While other modes will surely also play a role - e.g., providers may want to establish a commercial presence (engage in FDI) or send health providers abroad on a temporary basis - there is great potential for expanding mode 2 trade. A barrier to such trade is the lack of portability of health insurance in many countries. For example, US federal or state government reimbursement of medical expenses is limited to certified facilities in the United States or in a specific U.S. state. This constraint is also significant because it deters elderly persons from retiring abroad. Those who do retire abroad are often forced to return home to obtain affordable medical care. The potential impact of permitting portability could be substantial. Mattoo and Rathindran (2006) find that extending health insurance coverage to overseas care for just fifteen types of tradable treatments could produce savings for the United

> 29See, e.g., Pritchett (2006). See Mattoo and Carzaniga (2003) and Hoekman and Ozden (2010) for discussions of mechanisms that could facilitate agreements to liberalize mode 4 trade.

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