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October 10, 2009The Grass Is Not Always Greener: A Look at National Health Care Systems Around the World – Part 4 – France
In the midst of our national debate about healthcare reform, people on both sides of the debate seem to pick and choose among the facts and myths about the nationalized healthcare available in a number of other countries. The fact is that every nationalized health care system in the world is battling issues of rapidly rising costs and decreasing access to care. But, these systems also have some very attractive benefits. So, let’s take a look at the pro’s and con’s of the French system.
Michael Tanner, the director of health and welfare studies at the Cato Institute, is the coauthor of Healthy Competition: What’s Holding Back Health Care and How to Free It and the author of this series:
France is often seen by liberals as the ideal system. It has universal health care, with few waiting lists. France has the highest level of satisfaction with their health care among all European countries. How can this be? What is their secret?
France provides a basic, universal health insurances through large occupation-based funds. The General National Health Inusrance Scheme covers 83% of French workers, while other occupational specific (e.g.: for agricultural workers, for the self employed, for miners, etc.) cover the remainder. About 99% of individuals are covered by this universal health insurance system.
However, France utilizes more market-based ideas than most people realized. Copayment rates for most services are 10%-40%. About 92% of French residents have complementary private health insurance.
In essence, the French system avoids widespread rationing because, unlike true single-payer systems, it employs market forces. Even the OECD says that the “proportion of the population with private health insurance” and the degree of cost sharing are key determinants of how severe waiting lists will be.
Insured. About 99% of French residents are covered by the national health insurance scheme.
Cost. France is the third most expensive health care system (~11% of GDP). While the system has generally been well funded, in 2005 the health care system ran a €11.6 billion deficit and in 2006 the health care system had a €10.3 billion deficit. No centrally planned health insurance system will be immune from occasional (or even frequent) deficits.
Funding. Most of the funding is from a 13.55% payroll tax (employers pay 12.8%, individuals pay 0.75%). There is a 5.25% general social contribution tax on income as well. Thus, there is an approximately a 18.8% on employees for health insurance. There are also dedicated taxes which are assessed on tobacco, alcohol, and pharmaceutical company revenues.
Private Insurance. “More than 92% of French residents have complementary private insurance.” This insurance pays for additional fees in order to access higher quality providers. Private health insurances makes up 12.7% of French health care spending. These complementary private insurance funds are very loosely regulated (less than in the U.S.) and the only stringent requirement is guaranteed renewability. Private insurance benefits are not equally distributed so there is, in essence, a two-tier system.
Physician Compensation. French doctors are paid by the national health insurance system based on a centrally planned fee schedule, but doctors can charge whatever price they want. The fees are based on an up front treatment lump sum, which is similar to DRGs in the U.S. The patient-or their private insurance-must make up the difference between the fee charged by the doctor and the amount paid for by the universal health care system. The average French doctor earns only €40,000, although medical school is free for them and the French legal system is fairly tort-averse.
Physician Choice. The French have a fair amount of choice in which doctors they choose. However, recently the French have moved towards a more “managed care” practice style where patients have a “preferred doctors” who acts as a gatekeeper for specialists.
Copayment/Deductibles. 10% to 40% copayments.
Technology. The government does not reimburse new technologies very generously and because of global budgets and fee restrictions, there is little incentive to make capital investments in medical technology.
Waiting Times. France has generally avoided waiting lists, likely due to the fairly high coinsurance charges. Recent trends towards Increased restrictions, reduced reimbursement rates, and rationing has increased wait times however.
Tanner’s summary. “To sum up: the French health care system clearly works better than most national health care systems. Despite some problems, France has generally avoided the rationing inherent in other systems. However, the program is threatened by increasing costs and may be forced to resort to rationing in the future.”
Here are links to the entire series: The Grass Is Not Always Greener: A Look at National Health Care Systems Around the World
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Why don’t we in the US extend the eligibility age for Medicare from 65 to 0, guaranteeing coverage for all Americans? People could still purchase supplementary insurance that would cover higher levels of care, but the most important things would be covered by Medicare. We’d be able to save about 25% in administrative costs immediately, and people wouldn’t have to worry about loss of health insurance when they lose their jobs or worry much about medical bankruptcy.