The French Health Care System
In 2000, the World Health Organization (WHO) report on the performance of health care systems created a surprise by ranking the French health care system number 1 in the world, while, according to many, the title should rather have gone to one of the Scandinavian countries. In fact, in none of the analyzed criteria (population health status, public insurance coverage, cost, equity, re-sponsiveness, etc.) did France rank first. It was always behind another country but never the same country and never by a large margin. In the end, the rank-ing resulted from good balance across the criteria rather than from an overall
Surprisingly, the report did not initiate a wave of national pride in France, as it was seen through the prism of local politics. A general fear was that the report gave support to not engage in or pursue health care reforms. From the left, commentators insisted on remaining inequalities and on doctors’ conserva-tism regarding their status and income (especially office-based physicians). From the right, emphasis was put on the excessive tax burden and on the lack of efficiency of the health care financing system. Almost ten years after, the debate remains roughly similar, as the system is still not the most equitable, nor the most efficient, nor the least costly system among Western countries – allowing anyone to find some point of discontent – but still offer a good synthesis, a good balance across these various objectives.
Let us recall some of the basics of the French health care system and review some of the most acute problems it is facing.
- The French population is 100% covered by a public mandatory health insurance which is organized according to the Bismarkian principles of social insurance. Funds are independent of the state, financed by payroll taxes (60%) and, since 1990, by a proportional income tax (40%), called the CSG (“Contribution sociale généralisée”). The funds are ruled by boards with representatives of the government, the main workers unions, and the association of French manufacturers. There are several funds but people do not have the choice of their affiliation, which depends on their professional status. As premiums and benefit packages are actually identi-cal across funds, France has a de facto if not de jure single payer system.
- One of the founding principles is that patients have to co-pay a share (about 20% at the origin) of the financial burden. This is the opposite of the NHS doctrine that care should be “free at point of delivery”. Of course, over time, for equity reasons the copayment was reduced. It was almost completely removed from hospital care and about 9 million people with a severe medical condition are exempted. These people, amounting to 15% of the population, are responsible for about 60% of health care expendi-tures. On average the public reimbursement rate is 77%.
- Practically all the population (92%) holds a complementary private health insurance contract on top of the public insurance coverage. This two-tier health insurance system with a public basement and a private stage is unique in Europe. These contracts, obtained on an individual basis or through the employer, generally cover the copayment so that, on average, out-of-pocket payments do not exceed 9% of total health expenditures. Premiums for these contracts are generally based on income rather than on risk, at least for those obtained through the employer, which is the majority. Since 1999, 4 to 5 million people (out of 60 million), considered too poor to afford such a private contract, may receive a free affiliation to a public complementary health insurance system which provides approxi-mately (but not exactly) the same benefit package.
- Ambulatory medicine is still largely organized on a solo fee-for-service basis. Doctors have always been culturally attached to the “Médecine Libérale” principles, according to which patients are free to choose the doctors they want; doctors are free to prescribe whatever they want; doctors are paid directly by the patients who are subsequently reimbursed by health funds; doctors are free to settle wherever they want. There is no gate-keeping, and patients can directly access any specialist in an ambulatory setting. The project of this “Médicine Libérale” was clear:
to establish a firewall between doctors and health insurance, preventing health insurance from interfering into the medical activity, medically as well as economically. This monument is today almost completely ruined. All the prices are regulated; doctors are directly paid by funds; the list of drugs that are restricted to hospital or to specialist use keeps expanding; there is a growing tendency to issue quality control procedures and clini-cal guidelines which limit doctors’ freedom and autonomy; health funds try to channel patients by imposing a “family doctor” (“médecin traitant”) which is not mandatory but allows patients to be better reimbursed; recently, a pay-for-performance system was introduced, allowing doctors to win financial bonuses if they reached some defined and quantified indi-vidual objectives. The pressure of the public payer keeps increasing and the golden age of the traditional “Médecine Libérale “ is coming inevitably to an end, leaving a bitter taste in the mouths of many doctors, especially in the old generation.
- There are about 3,000 hospitals in France with a variety of status, public, private, non-for-profit and commercial. France has the largest commercial hospital sector in Europe. These hospitals often specialize in obstetrics and surgery, but not exclusively. The field of services they offer is enlarg-ing, but very few have emergency units which remain a characteristic of public hospitals. All short term hospitals – public as well as private – are financed through a diagnosis related group (DRG) system. Nevertheless, doctors’ fees are billed separately in the private sector and are included in the cost of stay in public hospitals, and adjusted DRG payments are higher in the public sector than in the private sector afterwards. This dif-ference should disappear by 2018 but public hospitals strongly argue that their specific expenses for emergency, education, research, public health, etc. justify a higher tariff. Private hospitals see in this difference proof that they are actually more efficient. In fact, public hospitals have difficulties facing the DRG constraints and most of them are in the red. Long term hospitals and mental health hospitals receive a global budget annually. A recent law tends to rationalize the hospitals’ organization, to clarify the governance in public hospitals, to improve their information systems and to promote a more active management style. The results are still to come.
- Finally, France has one of the largest drug markets in the world and the drug consumption per capita is the highest in unit as well as in value. France has long been the champion for consumption of antibiotics, anxi-olytics and antidepressants, herbal products, homeopathy, etc. There is no clear explanation for this. Commercial pressures from drug companies are often cited but they are not superior to what they are in other comparable countries. Market price as well as reimbursement prices of prescription drugs (and of some non prescription drugs) are regulated by the state. They used to be much lower than in the UK and Germany, but this is no longer true at least for newer products. The generic market has developed over the last 10 years and the substitution rate is often above 80%. Drugs are distributed by a very large number of small independent pharmacists. Pharmacy chains are not allowed. >
To complete this short picture of the French system, I would like to raise three pending issues, which are now in the center of the health policy debate in France:
(1) the attempt to reform the doctors’ compensation scheme; (2) the changing role of the state; and (3) and the enlarging financial deficit.
A recurrent problem in the French system is the fact that some doctors – called “sector 2” doctors – were allowed in the 1980s, to price their services above the regulated fees; patients being still reimbursed on the basis of the regulated fee. The extra fee has kept rising in recent years, passing from 10-15% at the origin to 50% and more at present. In some medical professions – especially surgery and obstetrics – and in some regions – especially large cities– it becomes difficult to find a doctor who does not charge these extra fees. As public insurance does not reimburse these fees and private insurance is more and more reluctant to pay the bill, this situation is creating a real access problem. Urged in part by the population, the government is attempting to negotiate with the medical associations how to better control theses extra fees. A progressive reduction is about to occur, along with an extension of the performance bonuses and the introduction of lump-sums for some repeated interventions (for instance the follow-up of chronic patients). In fact the whole doctors’ compensation scheme is under discussion and about to change.
A second issue is the role of the state. While health funds are theoretically indepen-dent, in fact, the state largely controls, regulates, and even manages the system. All the prices and tariffs (doctors’ fees, hospital DRGs, pharmaceutical prices, phar-macists’ margins, etc.) are state regulated, as well as tax rates and copayments rates. The Parliament votes annually on a bill that sets a global budget for public health insurance at the national level. Each year, cost-containment measures are taken to ensure that actual expenditures comply with the planned expenditures. The state exerts a direct control on hospitals – public and private – and through the recent creation of Regional Health Agencies. It attempts to expand its control to am-bulatory doctors, for instance by encouraging group practices and/or to improve the geographical location of medical practices, especially in rural areas. Given this omnipotence of the State, the question arises whether the French system is still a Bismarckian system or whether it has not become a sort of disguised Beveridgian system.
Finally, the most pressing problem is the financial deficit of health funds, which has become permanent since the beginning of the 2000s. In fact, there is no reason why the expenditure growth, which depends on the use of medical resources and on the evolution of prices, and the income growth, which depends on the evolution of the national income (at constant tax rates), should equate. The government’s efforts have tried to curb the expenditure curve and, in fact, have turned out to be relatively successful. The annual rate of growth was thus reduced to 3-4% in nominal terms. Nevertheless, this was not enough to match the growth rate of the economy, especially in the slow growth period after 2000. The economic downturn of 2008-2009 has worsened this situation: the health funds deficit is estimated to amount up to f11 billion in 2009 and projected to be around f17 billion in 2010, which is likely to be financed via additional debts. The net debt of all health funds at the end of 2009 will sum up to around f100 billion.
So what can be done?
Further reducing the growth rate of expenditures is an option, but this would result in more aggressive health care rationing, which the government does not want to do. The health insurance bill has planned a 3% expenditure growth in 2010. Another option might be to raise tax rates, but again, the government is reluctant as a tax increase would jeopardize the economic recovery. What about transfer-ring some expenditure to private complementary insurance companies? This will certainly happen, in spite of the political price attached to what can be seen as a “privatization” of health insurance. In addition, it will remain limited anyway. So are we bound to do nothing and to wait for better economic times? This is definitely the main preference of the government as presumably nothing will happen before the next presidential election in 2010. As a result the French health care system is living on credit. But how long can that last? Of course, this is difficult to say. Maybe on the bright side, the health insurance debt is around f100 billion, the total public debt in France is f1,400 billion, which is about 70% of the current GDP!
So, the health care system’s situation may not be as dramatic as it appears…