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Ills of French health system a lesson on reining in costs

par Valentin Petkantchin
mardi 21 avril 2009.

Article first published in the Atlanta Journal Constitution on April 12, 2009.

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At the center of President Barack Obama’s budget is a $634 billion “reserve fund” to help policy-makers achieve comprehensive health care reform. But money alone can’t fix a country’s health care problems. Ask any Frenchman.

The French health system is one of the world’s most expensive. And as the government desperately tries to rein in spending, patients are getting increasingly shoddy care.

At first glance, the French health system seems to provide a blend of private competition and state intervention that delivers decent quality and affordable care to everyone.

All French citizens are compelled by law to contribute to public health insurance. Coupled with a relatively large choice of care for patients with a well-developed private health care sector, it delivered good care, kept patients happy and secured France a high ranking in the World Health Organization’s index of international health systems.

The combination of an aging population and the increasing cost of new technologies started to put immense pressure on the French health system. But the French system of compulsory insurance—something for which many Democratic leaders are calling in America—acted as a Trojan horse, allowing the government to seize control over increasing areas of health care.

When costs became a political issue, the government mounted a cost crackdown. But instead of eliminating inefficiencies through greater individual responsibility, choice and competition, the French government did precisely the opposite : It sought to control costs by piling on more bureaucracy.

The results haven’t been pretty.

French citizens used to be able to choose their physician and specialist surgeons, with the resulting competition ensuring that patient care was prioritized. But in 2004, the French government instituted a mandatory “coordinated care pathway,” which dictated which doctors and specialists a patient could see. Today, if patients decide to get care outside this “coordinated pathway,” they are heavily penalized through lower reimbursements.

Physician autonomy is also under attack. Private physicians currently have the right to set up shop wherever they see fit. The government plans to remove this freedom in order to reverse what it views as wasteful “oversupply.”

Unfortunately, such central planning by government officials is unlikely to allocate resources efficiently. And many are predicting that France will soon experience physician shortages.

The government also thought it could cut costs by putting in a bureaucratically mandated payment structure that clinics and hospitals should charge. But this too can backfire. Too often, artificially low fees don’t represent the true value of services. As a result, clinics and hospitals could refuse to treat people with some diseases — especially if it costs more than is recognized by the authorities.

Rarely a week goes by without the government coming up with some new cost-cutting scheme in which it uses its power over the insurance system to direct health care toward its own ends. Yet almost every one of these interventions has failed to rein in costs.

In 1996, the government created a mandatory cap for annual health expenditures. It has met its own target only once—in 1997. The cumulative deficit for 1997 to 2006 was around 49 billion euros (adjusted for inflation)—$61 billion at current exchange rates—for a population of just 65 million. This total is almost twice as much as the deficit in the previous decade, when these “cost-containment” measures did not exist.

The lessons for America are clear : Attempting to achieve universal coverage through compulsory insurance will not control costs but will certainly undermine quality of care.

Admittedly, France still has superior health care compared with neighbors such as Britain, where the state both owns and pays for health care via taxes. But as France continues down this same path, its population too will eventually suffer Britain’s infamous waiting lists and rationing. America would do well to take heed.




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