The French Healthcare System

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Jack Borders, Manish Kuchakulla, Rutvik Gandhi, Elizabeth Deckler

MGT 270-N

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Contents

Organizational Structure 2

Finance 3

Reimbursement 6

Hospital Care 8

Physician Care 9

Long Term Care 10

Strengths of the System 12

Weaknesses of the System 14

Application to the United States 16

Works Cited 17

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Organizational Structure

The French health care system offers universal health care coverage for its

citizens while allowing for choice within the public-private mix of hospitals and

ambulatory services. Parliament sets the national ceiling for health insurance. The

Ministry of Health dictates the training of health personnel, defines working conditions,

regulates the quality and safety of health organization, and manages methods of

financing by setting tariffs and taxes. The French government is able to regulate many

of the unnecessary costs in a health care system and provide standardized quality care at

a non-burdensome price.1 Freedom to choose physicians and services still exist due to

reimbursement methodologies and the dual health insurance system.

The nationally financed portion of the health care system is called l’assurance

maladie (NHI) and covers a large portion of the list price of medical services.

Historically, the NHI consists of multitudes of private or mutual insurance bodies, but

is now governed under the supervision of the Ministry of Health and French

parliament.2 There are multiple arrangements under which a citizen can apply for NHI

coverage, with the most popular being the Régime General. This general scheme funds

about 85% of the nation including those unemployed and retired and is administered

through the local Caisse Primaire d’Assurance Maladie (CPAM) office. Self-employed

citizens aren’t able to register at a local CPAM and fall under a separate arrangement,

the Régime Social des Indépendants (RSI). Similarly, separate insurance policies exist

for agricultural workers, civil servants, and other specialist professions.

1 Sandier, Simone “Health Care Systems in Transition”2 "French Health System - Health Care in France."

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Registering at the office which manages the corresponding occupational scheme

allows for access to the personal Carte Vitale, the French health insurance card. To

qualify for entrance into the system, residency for 3+ years in France is required.

Everyone that is of age 16+ is required to register at a local CPAM, and those younger

must be encoded onto a parent/guardian’s card. These cards aren’t means of payment

but allow for instant reimbursement from the NHI to the respective bank accounts, and

also allow a physician to access patient records from a CPAM. The cards don’t

compromise the privacy of patient records since they aren’t encoded onto the cards

themselves, but are instead retrieved when both the patient’s card and the provider’s

card are entered into a computer system together. This dual entry is required to retrieve

records and activate the NHI reimbursement protocol. 3

The NHI reimbursement rate is generally around 70% of the list price; additional

voluntary health insurance policy (VHI) called assurance complémentaire can be

acquired through the private marketplace or through employee benefit packages to cover

the remaining charges. 90% of the population is enrolled in a VHI plan that may cover

the remainder of the charges, but for some, the premiums associated with the plans

outweigh the benefits of additional coverage.

Finance

The French healthcare system has high operating costs due to the self-proclaimed

necessity of total citizen coverage. The system requires a vast source of funding to

cover its large expenditures. The NHI, which constitutes 11.6% of France’s total GDP

and is funded by the national government, caused an economic burden with annual per

3 Thomson, Sarah "International Profiles of Health Care Systems."

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capita expenditures reaching $4,086.4 In order to widen the financial base for the

system, the French instituted a national earmarked tax in 1991 called the general social

contribution (CSG). The system is completely publicly funded, with parliament voting

each year on a projected budget. The revenue is primarily collected from the CSG tax

and payroll taxes. Payroll taxes provide about 43% of the revenue, with CSG making up

about 33%.Tobacco and alcohol taxation provides about 8%, state subsidies add 2%,

and residual funding comes from various social security transfers. 5

The CSG tax has a varying rate based on the source of income. Personal assets

are administered a tax rate currently set at 8.2%; included in this are life annuities,

investment incomes, and income from real property. Normally an employer would

deduct 7.5% from employee payments for the tax. Often, a reduced rate of 6.6% is

assessed to people who are receiving early retirement benefits, pensions or disability

benefits. Furthermore, a rate of 6.2% is charged if people are living under subsistence

income conditions, like unemployment benefits or maternity leave. However, if a

persons income does not exceed an annually adjusted vale they often receive a tax

exempt statues.6 The money collected is allocated to the social security budget where it

is disseminated within the system.

After a heat wave crisis in 2004, the National Solidarity Fund for Autonomy

(CNSA) was initiated. The event highlighted the need for more modern support services

for a growing elderly population, which in turn required more funding. The goal of

creating this fund was to bring together social and health services for the elderly and

disabled and also to manage the revenue from a national unpaid working day. This fund

4 WHO5 Healthcare Systems: France6 The French Tax System

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is dedicated to improving community care, nursing care, and other long-term care

services for the disabled.7 The CSNA funds The Personalized autonomy allocation

(APA) and The “Disability compensation benefit” (PCH). The APA is the primary

funder for citizens above the age of 60 who have lost their independence; while the

PCH is dedicated to provide support for people with disabilities under the age of 60.

The funding for these two branches comes from a total budget for the CSNA, estimated

to be about 16 billion Euros.8

Poor citizens who struggle to pay their medical bills receive additional subsidies

from the French government. Previously, the impoverished would receive co-payment

waivers through various medical assistance programs. Since 2000, the Couverture

Maladie Universelle (CMU) introduced a supplementary insurance program that covers

co-payments for all necessary goods and services. A family of four qualifies for this

program if their household makes less than €18,045. This program works by paying the

health professionals directly from the state.9

In France, 85% of all health care expenditures are directed towards patient

services. The other 15% is distributed through cash benefits like maternity leave,

sickness or occupational leave. In recent years the French healthcare system has been

running a deficit averaging nearly 10% of its annual budget. 10 Healthcare is seen as a

right in France and any attempts made to reduce cost by reducing care are heavily

criticized.

7 Healthcare Systems: France8 National Solidarity Fund for Autonomy9 Heatlhcare Systems: France10 Heatlhcare Systems: France

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Reimbursement

The reimbursement rate on medical services depends on multiple factors.

Initially the component charges that the total charge comprises of must be considered.

The official tariff is essentially the list price for any service performed that is

determined by the DRG coding system. This is the price set by the government and is

what the national health insurance has agreed it will reimburse. Private hospitals,

consultants, and specialists reserve the right to charge a supplementary charge in

addition to the official tariff that isn’t covered by the NHI. In addition to the base

charge and the supplementary charge, there is a non-reimbursable fee (the forfait) which

is €1 per doctor’s visit, €0.5 euros per prescription drug, €2 each way for medical

transport, and €0.50 for a paramedic fee if incurred 11. These fees are relatively small

and have an annual cap of €50. Other additional forfaits which can be incurred are €18

euros for hospital treatments above €120, and daily fees of €18.30 euros per overnight

stay only applicable to the first 31 days.

After the total charge has been determined by summing the official tariff with the

supplementary charge, NHI and VHI reimbursements are calculated. Dental and Optical

care are often reimbursed from NHI coverage at a 70% rate on the official tariff. 12

Vaccinations can have a reimbursement rate anywhere between 65-100%, and

prescriptions between 35-100%, with the range accounted for by the efficiency of the

treatment. The more statistically effective a treatment is, the higher the reimbursement

rate will be.

11 Clarke, Emily “Healthcare Systems: France”12 "French Health System - Health Care in France."

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For general practitioner costs, a €1 forfait is given up as per usual, but the

reimbursement rate from NHI coverage depends on cooperation with the “gatekeeping

system”. The French health insurance card allows a patient to designate a general

practitioner that will essentially serve as a “gatekeeper” by performing the initial

diagnosis before determining whether referral to a specialist is needed. Cooperating

with this system rather than going to different physicians every time benefits the patient

by qualifying them for a 70% NHI reimbursement rate on the official tariff as opposed

to the 50% NHI reimbursement rate they would normally receive. 13 Primary care

physicians benefit from establishing relationships with their patients and having better

patient retention rates. The health insurance provider benefits because they are able to

lessen costs associated with unnecessary visits to specialists and create a more “Health

Maintenance Organization” approach by keeping patients with the same physician for

longer which allows for a more holistic approach through the establishment of a larger

medical record.

The 70% reimbursement rate applies solely to the official tariff and not the

supplementary charge that may be incurred. The remaining cost of the official tariff as

well as a part of the supplementary cost can by picked up by a Voluntary Health

Insurance plan acquired from an employer or the private marketplace. Typically, VHI

plans will cover approximately 80% of the official tariff so the combination of the NHI

and VHI will cover 150% of the official tariff with the excess coverage reaching into

the supplementary cost.14 This may provide full coverage of the total cost, however,

treatments in the Optical and Dental fields that have heavier supplementary charges as

13 "French Health System - Health Care in France." 14 Sandier, Simone “Health Care Systems in Transition”

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opposed to official tariffs will have costs that exceed the coverage of the VHI resulting

in a larger out-of-pocket expense to the patient. The reimbursement incentives that seek

to create efficiencies in the system as a whole are well utilized, considering 85% of the

population is registered with the gatekeeping system and 90% of the population is

covered under some form of Voluntary Health Insurance. 15

Hospital Care

The hospitals are a mix of public hospitals, private for-profit hospitals, and

private not-for-profit hospitals with one third of the hospitals being privately owned.

Under French law, both corporations and individuals can own private hospitals. Both

taxation and nominal patient fees fund the public hospitals in France. The National

Health Insurance pays for eighty percent of public hospital fees while the patients pay

for the other twenty percent of the fees. Public and not-for-profit hospitals are also

given additional government funding for education and research.

The government appoints the main administrators of public hospitals, while

private hospitals determine their own leadership. Public hospitals tend to be more

popular in regards to short-term care and average a much higher support staff to

physician ratio. 16 Many specialists work in both state run hospitals and in private clinics. Since

they are self-employed professionals, they can sell their services to whatever type of hospital will

pay them. Both GPs and specialists can refer patients for hospital treatment if is deemed

necessary, and they can send them for treatment in either a state-run hospital or a private clinic,

whichever they consider to be best for the purpose.

15 Thomson, Sarah "International Profiles of Health Care Systems."16 NYU, Victor G. Rodwin and Simone Sandier

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           In 2005, French hospitals moved from the previous mode of payment

dissemination to the DRG method.17 Private hospitals bill one hundred percent of all

fees under the DRG method. Under DRG coding, individual diagnoses and patient

prospects are given an assigned diagnostic number. The DRG method aimed to increase

efficiency in hospitals. DRG coding allows for easier statistical analysis of healthcare

needs and patient outcomes, a vital part of managing the care of millions.

Physician Care

The general practitioner is the cornerstone of the French healthcare system.

52.9% of French physicians practice general medicine. This drastically differs from the

US, where only 16% of practicing physicians work as generalists. 18 Physicians who

work in hospitals are most often salaried employees, though the majority of French

work under private practices.

French residents must apply for a national insurance I.D card, and name a

primary medical provider in order to receive covered non-emergency medical services.

Much like under a Health Management Organization (HMO) in the United States,

patients must first see their primary care physician before seeing a specialist. This

system cuts down extraneous specialist visits and helps keep the bills for physician

services lower. The standard rate for a regular office visit in France is 22 €, whereas a

specialist visit can range from 25 to 45 € depending on the specialty. 19

17 Thomson, Sarah "International Profiles of Health Care Systems."

18 NYU, Victor G. Rodwin and Simone Sandier19 Centre de Mobilite Paris Nord

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After four years of practice, physicians are free to charge rates above the national

standards.20 This practice is most often seen in major cities catering to the wealthy

elite. For example, in Paris, up to 80% of physicians in selected specialties engage in

extra billing, in contrast to the national average of 20% among general practitioners. 21

Patients must pick up the excess financial burden either though private insurance or

directly out of pocket. Patients with chronic conditions in France have less financial

burden for physician services than those who do not since they may be entitled to a

100% NHI reimbursement rate.22 However, physician reimbursement, which is based on

a fee-for-service model, does not change based upon patient condition.

Long Term Care

In France, families play a large in role in financing and providing long term care.

Long term care is mainly for elderly people who have lost their independence and need

help with everyday activities. In theory all people 60 years or older are eligible, but

they only receive benefits if they are deemed to be legally dependent. Dependent status

is defined as, “elderly persons whose health and well-being require follow-up and

people who need help to perform activities of daily living”. 23 Long term care is

provided through public health insurance and also through the allowance for autonomy

(APA).

Present long-term care services involve nursing homes, hospital, home nursing

services, day care centers, and support for informal careers. In France nearly 10% of the

20 AARP analysis on various physician reimbursement methodologies 21 NIH, Victor G. Rodwin22 NIH, Victor G. Rodwin23 Long-term Care in France

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elderly population lives in nursing homes, along with 2/3 of the overall dependent

population.24 The national solidarity fund for autonomy (CSNA) is the national referee

agency for the disabled and dependent persons. The CNSA is key in funding the APA.

The APA provides support for expenses that people may incur due to their dependent

status. The APA covers about 66% of costs incurred from a retirement center while the

remaining costs are paid by the resident or by their private insurance. 25 Anecdotal

evidence suggests some elderly French citizens don’t have a great degree of choice to

pick their institution due to a widespread shortage of beds. Reports of elderly citizens

being forced into private institutions appear frequently in French media.

A medically dependent person is defined as someone who needs technical help

and specialized assistance in order to maintain a safe environment in the home. In some

cases, the elderly need more help with general tasks, and utilize in-home care services

(SAAD). Sometimes they need medical attention in their homes, and this is what is

known as home nursing care. Home nursing care services (SSIAD) are directly and

wholly financed by the national health insurance scheme. SSIADs are usually

considered as an alternative to hospitalize the person. Care is usually provided by

nurses and is managed by public organizations. While many people use home-based

care, there are about 640,000 people that elect to receive institution-based care.

Institution based- care is split into nursing homes, sheltered housing, and long-term care

units in hospitals. There are an estimated 10,305 facilities that exist in France with an

occupancy rate of 97%.26 The elderly population in France is rising steadily because of

24 Long-term Care in France25 Long-term Care26 Long-term Care in France

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healthier lifestyles and modern medical advancements. France is currently racing to

build more dependent housing options because of the high occupancy rate.

The laws and general policies which govern long-term care are defined at the

national level and then adopted by Parliament. In recent years, there have been national

goals to change long-term care to make it more cost-efficient. Primarily, the goal is to

delay dependency by preventing social isolation and building strong social links.

Additionally, support for home care is being extended by increasing development of

home care and informal care-givers.

Strengths of the System

On a treatment level, the French healthcare system garners much of its success in

the methods it employs for emergency care. Unlike in the US, where first responders are

trained paramedics, France employs a team of physicians and nurses directly to an

emergency call, known as SAMU. These professionals are armed with a wider battery of

medical tools and medications which a paramedic is not legally able to administer. In

addition, an acute diagnosis can be made on scene by the attending physician. To

prevent excessive deployment costs, SAMU dispatchers themselves are physicians, and

have the power to delegate what resources and staff are necessary for an individual

case.

After the initial diagnosis, patients are taken to hospitals not based on their

proximity, but rather their condition.27 If a patient has a broken limb, for example, they

would be transported to a hospital with a good record of orthopedic surgical care. As

previously stated, the French liken their system to that of a Health Management

27 CBS Documentary, interviewing the head of SAMU

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Organization, one of the three major healthcare models which are utilized in the United

States.

The French Government sets prices for all care within the Nation, and as such,

has policies and review boards for nearly all major aspects of medical care. The World

Health Organization takes numerous factors into consideration when ranking countries

on their medical policy and success. As of 2010 France had functional policies and

enforcement in place for Cancer, Obesity reduction, Tobacco use, General

Cardiovascular and Respiratory health.28 These preventative measures help reduce the

overall burden of treatment of chronic diseases upon the tax base.

The French also utilize a wide variety of tactics to maintain physician morale.

Medical school debt is virtually unheard of in France, as only a minimal charge is

incurred by French Physicians. Medical knowledge is homogenized thorough the

standards and controls set by the French government on medical schooling. All

prospective medical doctors receive virtually the same education for the first six years

of medical schooling. Those who wish to become general medical practitioners finish

with a two year program on theory and practical application. Specialization in a specific

medical practice such as surgical work takes an additional four to five years after the

initial six year education. 29

Patient care is simplified for physicians after they receive their medical degree

through the national registry for insurance. Patients must choose a single physician for

their primary method of care (however concessions are made for emergency services 30).

This registry process reduces patient turnover, giving doctors more accurate patient 28 WHO report on various features of healthcare systems worldwide29 Dr. Yann Meunier, Stanford Medical Journal. Dr. Meunier studied in both France and the United States in his medical training. 30 Systèmes Nationaux de Sécurité Sociale

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histories, as they are responsible for their individual patients for a much longer

timeframe. French bureaucracy directly handles a large portion of required medical

paperwork, leaving physicians with greater time to focus on the care of their patients. 31

Physicians are able to foster better relationships with patients, as “doctor shopping” is

greatly reduced. Unlike the completely socialized system within the UK, the minimal

payments required and concessions for experienced physicians to charge surplus for

specialized care within the French system are enough to avoid waitlists for care.

Weaknesses

No system of care is perfect, and the French healthcare system is no exception to

that rule. The affordability of the system often leads to overuse by French citizens. The

French lead Europe in prescription drug abuse due to the availability and ease of access.

France has nearly double the number of pharmacies than the United Kingdom, and

painkiller, tranquilizer, and antidepressant use alone is estimated to cost the internal

medical-insurance system more than 20.09 billion dollars a year. 32 In 2004, pill

consumption rates in France were actually 18% higher 33 than the American rate.

As a result, the French medical system is no stranger to prescription drug

scandals, and in 2011 a series of cases involving the diabetes drug Mediator caused

uproar within the country. In 2009, there were 300,000 active prescription of the drug

on the market, with over five million patients estimated to have taken the medication at

some point over its 33 year span on the market. As many as 2,000 people were

estimated to have perished directly from the consumption of Mediator. The French

31 Systèmes Nationaux de Sécurité Sociale32 National Center for Policy Analysis33 Wall Street Journal covering European prescription drug abuse statistics

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government charged Laboratories Servier, the manufacturer, with defrauding the French

health care system. The head of the French medical regulatory body AFSSAPS resigned

in 2011 as a result of the scandal.34

The Mediator scandal played a large role in the shift to the current single

practitioner mandate in France. However, according to the New York Times

investigation into the Mediator scandal:

“At the Afssaps (French pharmaceutical regulatory body), voting members of the

approval committee have long served simultaneously as consultants or employees

of the pharmaceutical firms they are meant to regulate, officials acknowledge.

And while members are expected to declare conflicts of interest, there are no

penalties for not doing so. Consultants or employees from various companies,

including Servier, remain active participants even now” 35

Beyond endangering the populace through overconsumption of pharmaceuticals, the

overuse of medical services places financial burden on the tax base. In 2008 the French

faced a 4.4 billion euro (6.31billion dollar) deficit 36, a number which is only expected to

climb. Attempts are currently underway to reduce this deficit, including the push for

generic medications and increased scrutiny over what is deemed a medically necessary

preventative treatment. Only time will tell whether or not the French system is

sustainable in its current form.

Application within the United States

34 Scandal Over Mediator, a French Weight-Loss Drug, Prompts Calls for Wide Changes 35 New York Times: Quote from Ms. Vincent, spokeswoman for Laboritories Servier36 Reuters (2009)

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In summation, many of the aspects of the French healthcare system can be

applied to the United States. In America, a large portion of the population is without

healthcare. France covers every citizen while also permitting the population to choose

its health providers. Medicare and Medicaid currently only provide government

sponsored health services to seniors, the disabled and the poor. French citizens also live

knowing they have a safety net in the sense that if they become deathly ill, they will not

become financially burdened. Americans have to live with the fact that if they get very

sick, they are going to have to incur many medical costs, and may even face

bankruptcy. To increase quality, France has implemented a national fee schedule that

sets a standard price for health procedures. This policy forces health providers to

compete by improving the quality of care, which is most beneficial to patients. The

United States does not have a system like this, and instead price plays a key role in

competition.

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