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France is no model for health reform

par Valentin Petkantchin
jeudi 15 novembre 2007.

Article published exclusively on the Institut économique Molinari’s website.

When the entire health care system finds itself legally subjected to the overall control of a centralising monopoly, patients are bound eventually to suffer from its pernicious effects without having the least choice in their health coverage or the way they get their health care.


The French health care system is increasingly cited as an example overseas. In his latest film, Sicko, Michael Moore seems to regard it as a solution to the problems affecting the U.S. health care system. However, the French system, relying on a mandatory public health insurance monopoly, is far from a panacea.

First, it is illusory to think of it as a solution for controlling health expenditures.

In France, successive plans in the 1980s and 1990s for rationalizing the public health insurance system, as well as the more recent cost containment reforms in 1996 and 2004, have simply failed to deliver. After 1988, health accounts have regularly been in the red, with deficits reaching many billions of euros.

In the 1996 reform, the government imposed cost containment measures on public health spending based purely on accounting considerations. This was named the “national target for health insurance spending” (known by the French acronym ONDAM). Nevertheless, deficits accumulated from 1997 to 2006, reached more than 49 billion euros (adjusted for inflation). This was twice as much as deficits in the previous decade when these cost control measures did not exist.

To prevent further overspending beyond the ONDAM, a new Warning Committee was set up as part of the 2004 reform. The Committee is supposed to sound the alarm once health expenditures begin again to get out of hand. And that’s exactly what it did, on 29 May, judging that there is “a serious risk of overspending”. Despite decades of a public heath insurance monopoly, health expenditures are obviously still out of control in France.

But there is something worse than ineffective controls over public health expenditures.

Instead of relying on greater individual responsibility, broader choice and more competition in the health insurance field, thereby providing real incentives to cut on costs where it is truly relevant, regulations have instead proliferated in France with the aim of controlling the overall health care system.

However, such regulations are the source of increasing bureaucratisation of the system, with its own pernicious effects on patients and health care professionals.

Patient choice, the freedom for private-office-based physicians to practise and the existence of private funding and private health care providers clearly make the French system attractive to many Americans. These are indeed the pillars that guarantee better health care for the French, without waiting lists of the sort found in countries where the health care system is completely under state control, as in the U.K. or Canada.

However, following the mirage of public cost containment, these pillars are being questioned increasingly, with the risk that French patients may face the same shortages and waiting lists as in some other countries.

For example, even if it is not yet obligatory, a new “coordinated care pathway” scheme encroaches on patients’ freedom to select medical care from the physician or specialist of their choice. Before consulting a specialist, patients are required to consult their attending physicians first, just as occurs with general practitioners serving as gate-keepers in the Canadian and British systems.

In the event of non-compliance with the new regulation, there are provisions for financial sanctions for the insured. Following the latest statement from the Warning Committee, the National Sickness Fund (CNAM) has already announced higher financial penalties for patients not complying with the “coordinated care pathway”.

Little by little, patient choice is on the way out. And unlike a situation where there is competition, the insured do not have the choice of opting for a competing insurance plan but must continue to pay their taxes, even if they judge that those cost containment measures are of no value to them.

Regulations affect health care providers as well. For example, the freedom for private office-based physicians to choose the location where they practise is being brought into question. Bureaucratic treatment guidelines for sound medical practice can turn into means for sanctioning physicians who do not comply with the official targets limiting health expenditures. Rather than care for patients’ health, physicians risk being obliged to change their practice solely to provide savings for the public health insurance monopoly.

Conditions in clinics and hospitals are also increasingly regulated. Since 2004, their financing has been based on a bureaucratically decided payment structure (called “casemix-based financing”) for pathologies and hospital stays that are categorized into supposedly homogeneous groups.

But the homogeneity of individual pathologies is a matter of degree, and differences from one case to another can influence the cost of the treatment for each patient. Ill-conceived homogeneous groups and inappropriate bureaucratic fees could therefore lead hospitals to discard pathologies or patients whose cost exceeds the financing provided by public authorities.

When the entire health care system finds itself legally subjected to the overall control of a centralising monopoly, patients are bound eventually to suffer from its pernicious effects without having the least choice in their health coverage or the way they get their health care. Compared to the problems in the U.S. health care system, a mandatory public health insurance monopoly “à la française” may be tempting, but is not a good idea.

Valentin Petkantchin, directeur de la recherche, Institut économique Molinari

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