Health & Science blog

By Ross Tieman

How is it that France manages to have the world’s best health care system (according to the World Health Organization) yet spends no more, as a percentage of national wealth, than the US?

Not only does France’s system rank higher on quality, but it covers all 62m residents, whereas the US census bureau reported in August last year that 45.7m Americans, 15.3 per cent of the population, had no health insurance.

One striking element of the French system is the extent to which it is built upon ‘commercial’ business models. Whereas in the UK, the flow of national insurance contributions into the National Health Service is indistinguishable from taxation, in France health insurance clearly buys treatment.

L’Assurance Maladie, the state owned system overseer responsible for ensuring cover for 55m beneficiaries, can tell you where its funds came from, and what it spent them on. It also has a business plan and a multi-year contract to deliver targets set by the government.

And its key principles are equal access, high quality and cross-subsidy by those who can afford to pay to those who cannot.

Three big self-governing funds, responsible to contributors, and headed by Assurance Maladie, plus a clutch of ‘special régimes’ for state industries, and even church ministers, collect contributions from workers and employers.

In 2007, L’Assurance Maladie collected €130bn. Of that, only 47 per cent came from contributions. Hypothecated receipts from a supplementary healthcare tax on richer families, the CSG, provided 34 per cent, and the balance comprised revenues from taxes on alcohol and tobacco, and from the pharmaceutical industry.

It paid out €128bn for care of the insured, spent €5.2bn running itself and wound up with a deficit of €4.6bn.

Contributions for a self-employed worker earning the national average wage of about €22,000 amount to about €1,400 a year. But the proportion of medical costs covered by the compulsory funds ranges from 100 per cent for most hospitalizations to around 40 per cent for dental care, so many families also take out a “mutuelle” top-up insurance to cover the balance. So each worker contributes roughly €2,150 a year – or about 10 per cent of pre-tax revenue.

In 2006 the average payout per insured person (who include dependents, the jobless, and retirees) was €1,889. The cash was paid to a mixture of state and private hospitals, general practitioners, therapists, pharmacies and so on all supplying services under contract at agreed prices. Patients can choose either.

As you can imagine, there’s no end of wrangling and protesting as the funds, the private insurers, and the government, which runs the state hospitals, try to contain upward pressure on costs. But that’s a healthy symptom of a system where market forces oppose the concentrated purchasing power of the insurers against the relatively dispersed but often unionized power of the suppliers.

Sure, it’s an imperfect system. But as so often in France, the mix of partial competition, of public and private suppliers and buyers, seems to produce better outcomes than more ideological alternatives.