by Anna Devon-Sand
Key Principles that Define a Successful Health System
This analysis will compare the French and American health systems utilizing the following metrics: equity, static efficiency and dynamic efficiency. The realization of all three principles represents the ideal health system. Health equity, as defined by the World Health Organization, is a state where individuals have equal opportunity to reach their full health potential, including access to health-promoting services and care (1). Static efficiency is the judicious use of available resources, including the reduction of unnecessary expenditures. A health system with high static efficiency would reduce inappropriate services, eliminate excess administration and streamline processes, for example (2). Dynamic efficiency is the degree to which a health system encourages innovation and supports new technologies (2). This dynamic efficiency framework will focus on nations’ use of technology, such as electronic medical records.
Health System Indicators that Measure Progress toward Key Principles
Indicators were selected on the basis of relevancy and available data provided by The Commonwealth Fund. Health equity can be measured by individuals’ access to services and care. Equity is not a measure of health potential, but a measure of accessibility to facilitators of health. The ability to get a same-day/next-day appointment when sick is an appropriate measure of equity because it reflects access to health-promoting services that contribute to individuals’ ability to achieve their health potential (1). To measure the static efficiency of a nation’s health system, this analysis utilizes the following indicators: hospital spending per discharge and rates of rehospitalization (3). Lower spending, however, is only a measure of efficiency if it does not compromise quality. Therefore, rates of rehospitalization are a good measure of quality in the context of lower spending per discharge. If a nation spends less per patient stay and patients are readmitted at a lower rate, it is statically efficient. This analysis examines a specific component of dynamic efficiency—the use of technology to promote health, including technology to expedite and refine diagnostic processes (MRI machines) and to ensure proper stewardship of health information (EMRs).
Structure of the French Health Care System, As Compared to the United States
Health Care Coverage & Finance Structure: In France, healthcare coverage is universal and compulsory. Distinct from the multi-payer system in the United States, the French system is essentially single-payer. It is provided to all citizens by France’s non-competitive, Statutory Health Insurance (SHI) (3). SHI is publicly sponsored health insurance, financed by employer and employee payroll taxes (50%) and a national earmarked income tax (35%). The remaining 15% is subsidized by taxes on tobacco and alcohol, the pharmaceutical industry and voluntary health insurance companies (13%); and state subsidies (2%) (3). French citizens pay higher income taxes than do American citizens to subsidize SHI (4). The French Federal Government sets the national strategy for healthcare spending. It budgets expenditures for hospitals, ambulatory care, mental health and services for residents living with disabilities (3).
Individual Costs & Voluntary Health Insurance: France’s SHI reimburses at a rate of 70-80% (4). French patients pay the remaining 20-30% out of pocket (4). While French citizens pay greater income taxes than do U.S. citizens, they pay significantly less out of pocket costs for health care than do their American counterparts (4). French citizens have the option to enroll in voluntary health insurance (VHI), which is complementary to SHI and covers co-payments for usual care, balance billing, and vision and dental care that are minimally covered by SHI (3). This insurance is provided by not-for-profit, employment-based mutual associations or provident institutions (3).
Health System Spending: Unlike the United States, the French system operates under a budget, which is re-evaluated each year (5). Parliament sets annual expenditure targets, which include spending targets for specific components of health care. If hospitals and physicians exceed their targets, prices are negotiated downward the next year (5). In 2014, the French health care system constituted 12% of the country’s GDP and, in 2017, cost half of the United States healthcare system. In that year, France spent $4,900 per capita and the United States spent $10,200 per capita (3, 4).
Reimbursement Structure: Under SHI, insurers reimburse providers according to nationally set rates. All hospitals are paid the same amount for hospital services. Likewise, all physicians receive the same reimbursement under a national fee schedule (5). This reimbursement scheme is distinct from the payer-mix structure of the United States where different insurers reimburse hospitals and physicians at different rates. Under SHI, French doctors make less than their American counterparts—$111,769 versus $218,173 per year—however, they do not pay for their medical education (4).
Quality: Overall, France has longer life expectancy and lower infant mortality than does the United States (4). In France, 3.5 children die for every 1,000 live births versus 5.7 in the United States. Life expectancy in France is 82.5, compared to 78.5 in the United States (4).
Health System Indicators that Measure Progress toward Key Principles – How Well Does France Perform?
The structure of the French health system, outlined above, helps to explain France’s performance on key indicators—those that measure progress toward equity, static efficiency and dynamic efficiency. To measure equity, this analysis examines each nation’s 1) ability to get a same-day or next-day appointment when sick and 2) proportion of the population that experiences a barrier to access because of cost in the past year. In 2014, 56% of the French population could get a same-day or next-day appointment when sick, as compared to 51% in the United States (3). That year, 17% of the French population experienced an access barrier because of cost, compared to 33% of the United States population (3). Moreover, in the first quarter of 2016, 27.3 million individuals in the United States did not have health insurance, representing 8.6% of the population (3). In France, every citizen is insured. And because all physicians are reimbursed at the same rate for their services, physicians do not discriminate based on the patient’s insurance carrier. Furthermore, French SHI reimburses nearly 80% of the cost of care (4). Additionally, 95% of the population is covered for voluntary, supplemental health insurance either through employers or via means-tested vouchers (3).
To measure France’s progress towards static efficiency, this analysis examines spending per patient discharge and rates of rehospitalization. Hospital spending per discharge in France is $10,591, compared to $21,063 in the United States. Also, rates of rehospitalization are 5.3 times higher in the United States. As detailed in section II of this analysis, these metrics indicate high static efficiency in France. Structural factors that contribute to France’s efficiency include lower administration costs due to the Carte Vitale – a card that stores patient insurance information and streamlines the reimbursement process. Also, administrative costs are capped at 5.5% in France. By contrast, administrative costs can be up to 20% of a bill in the United States. In terms of rehospitalization, patients in France tend to stay longer in the hospital, which may contribute to lower return rates (4).
In terms of dynamic efficiency, France utilizes less technology than does the United States (3). For example, in 2015, primary care physicians’ use of electronic medical records was lower in France than in the U.S.—75% compared to 84%(3). France’s high rate of taxation on corporate revenue is a structural factor that could explain these poor dynamic efficiency indicators, as corporate taxes may impede private sector investment in technology (6). In other words, while federal revenue increases via corporate taxes, return on investment diminishes for private sector entities, which may hinder innovation and technology.
Lessons Learned from France’s Health Care System
This paper proposes that the United States prioritize the adoption of France’s all-payer rate setting to elicit results with the greatest immediacy. All insurers should pay the same price for hospital services and all physicians should receive the same reimbursement under a national fee schedule that is negotiated every year (5). In 2017 in the United States, private health plans paid more than double the amount that Medicare paid for identical health care services (7). Utilizing an all-payer rate would not require conversion to a single-payer system, necessarily. It would merely require a restructuring of the current payers’ reimbursement scheme. It would decrease competition among insurers and place the competition among health care providers to attract patients by offering efficient, quality care. It would incentivize hospitals and physicians to accept patients with any insurance type, allowing patients to have greater choice in providers and greater access to care. It may lower physician salaries, which could generate push-back from the physician community; however, it may also incentivize medical students to become primary care physicians. Investing in preventive and primary care could lead to fewer emergency room visits and fewer avoidable, expensive interventions in the future. Additionally, if insurers negotiate jointly, prices per hospital visit may decline, as they did in the 1980s when some states opted to institute an all-payer rate (8). The United States should learn from France’s success in the areas of equity and static efficiency. To expand access and reduce costs over the long-term, the United States should eliminate its payer mix in favor of an all-payer rate.
(1) WHO | Health equity. Available at: http://www.who.int/topics/health_equity/en/. Accessed Nov 19, 2019.
(2) Lecture 9: Comparative Health Systems. 2019 October.
(3) Durand-Zaleski I. The French Health Care System Common Wealth Fund 2016 2015.
(4) How French Health Care Compares to The US System. 2019 May 18.
(5) Rodwin V. The French Health Care System. 2018 March 28.
(6) Smarter research spending would boost French innovation, says OECD – OECD. Available at: https://www.oecd.org/science/smarter-research-spending-would-boost-french-innovation.htm. Accessed Nov 21, 2019.
(7) Hospitals are paid twice as much (or more) by private insurers than Medicare, study finds. Available at: http://www.advisory.com/daily-briefing/2019/05/13/hospital-prices-rand. Accessed Nov 25, 2019.
(8) Kliff S. All-payer rate setting: America’s back-door to single-payer? 2015; Available at: https://www.vox.com/2015/2/9/8001173/all-payer-rate-setting. Accessed Nov 25, 2019.