By liberalizing healthcare, developed nations will give poorer ones a chance to gain from health tourism and to retain health personnel. As food and oil prices rise all over the world, consumers are getting a crash course in economics: when demand increases, prices shoot up.

Although food and oil dominate the headlines, life’s other essentials also obey this cast-iron law, including healthcare, which is threatening to bust government budgets all over the world. As with food, part of the solution lies in opening up trade and competition.

The OECD estimates that world average healthcare expenditure in 2007 accounted for 9 percent of GDP, up from just over 5 percent in 1970. The US now spends more than $2 trillion annually on healthcare, eight times the amount in 1980. Its healthcare costs are currently increasing by twice the general inflation, a trend in rich countries.

As populations grow older and more demanding, these inflationary pressures will increase. Politicians are finding cashed-strapped voters increasingly unwilling to support the large amounts of tax needed to fund government health systems, forcing them to deny treatments to patients in a bid to minimize costs. Healthcare costs have become a major issue in the U.S. presidential election.

The last decade, by contrast, has seen very low inflation for other goods, partly because of a massive increase in global trade. The arrival of China and India as major exporters means that most countries are able to import goods cheaply, keeping prices down.

While the role of free trade in driving down prices and driving up quality has long been accepted by economists (and to some extent, politicians), healthcare has been one area in which there has been almost no international trade. It is time for this to change.

Technology makes it increasingly easy for hospitals to outsource services such as diagnostics to laboratories overseas, cutting costs and treatment time.

Patients can also get treatment overseas where costs are lower. Open-heart surgery in India, for instance, costs only one sixth of the price in the US, including travel, accommodation and medicines. A hip can be replaced in Thailand for an eighth of the cost in the United Kingdom.

Medical tourism alone could bring India as much as $2.2 billion per year by 2012, according to a study by management consultants McKinsey and the Confederation of Indian Industry.

These financial opportunities would also give developing countries’ medical staff a far greater incentive to remain at home, reducing the debilitating “brain drain.”

Healthcare doesn’t have to go the same way as food prices. Rich and poor countries should ignore the siren calls of protectionism and liberalize their healthcare for the good of patients everywhere. Health tourism can be healthy for everyone.