Outsourcing retirees to developing countries?

Developing Nations Lure Retirees, Raising Idea of 'Outsourcing'
Boomers' Golden Years
By JOEL MILLMAN
Staff Reporter of THE WALL STREET JOURNAL
November 14, 2005; Page A2

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Thanks to a decades-old policy of offering tax incentives and other perks to attract English-speaking retirees, Costa Rica has pioneered what is fast becoming a popular economic-development tool for the small, largely impoverished nations of the Caribbean basin: importing a high-spending consumer class unencumbered by school-age children, with the expectation that their dollars will quickly follow.

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With the prospect of more than 30 million Americans starting to retire next year, many developing countries expect a windfall. Which raises the question: Should the U.S. "outsource" baby boomers' golden years? Consider one cost of retirement: labor. The U.S. depends heavily on immigrants to serve retirees, in the many kinds of services they need. According to the 2000 Census, more than one million U.S. hospital, nursing-home and other health-care workers were born abroad; nearly 350,000 of them are immigrants from Mexico, Central America and the Caribbean. Sending U.S. retirees abroad represents one step toward closing that intractable labor gap.

Foreign retirement is becoming quite the norm elsewhere. In Europe, more than a million German, Scandinavian, Dutch and British citizens live most of the year far from home -- mainly near the Mediterranean coasts of Italy, Spain and Greece. Those retirees and their hosts enjoy the benefits of a "superstate" joining their nations under the European Union; retirees don't require visas to resettle, and their insurance, pensions and bank accounts are portable across borders. Last year in Southeast Asia, Malaysia launched its "My Second Home" program aimed at attracting rich retirees from Hong Kong. Applicants are allowed to bring one maid. None of those benefits are available yet in this hemisphere, but demand for foreign retirement havens is rising. Today, Costa Rica allows U.S. citizens registered under its pensionado system to pay into the country's social-security system, for as little as $37 a month, qualifying for full hospitalization and pharmacy coverage. Most expatriate retirees here use the local public-health administration as a backup for emergency care and rely on private clinics for most care.

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In the 1980s, Dr. Engler tried to persuade U.S.-based providers of long-term care to establish nursing homes in Caribbean and Latin American countries for retired Americans, as a way to facilitate the return of health-care workers who have emigrated to the U.S. The idea still has merit, he says, but would require U.S. insurance plans to be accessible abroad. In 2001, the U.S. Congress took a step toward facilitating retirement overseas when it authorized Tricare, the health-maintenance organization for retired members of the military, to process claims of veterans retiring abroad. Medicare, the health insurance carried by most seniors, doesn't recognize claims for U.S. citizens retiring overseas.

Write to Joel Millman at joel.millman@wsj.com

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