French Health Care, Part Deux

In my last post I talked a little bit about how the French pay for their health care system, the one everybody in the US media thinks is so fabulous. The French pay a 22% payroll tax rate, compared to 7.5% for American workers. This is, of course, more than matched by the employer. Also, it turns out that a lot of French households also carry private supplemental health insurance. This must be sort of like the Medigap coverage that many seniors in this country have, that supplements what Medicare pays medical providers. So that’s where the money comes from, the revenue side of the equation.

But we also have to look at the expense side of the equation. After all, the French pay about 11% of their GNP for health care, compared to over 17% of GNP in the US. Now call me crazy, but I have a hard time believing that the French are more efficient than Americans at anything. A French surgeon doesn’t do a bypass operation twice as fast as an American, and I doubt that French surgical teams have only half as many nurses and techs as American teams.

Although the man hours per procedure may be the same in both countries, it turns out that there is a huge difference in the cost of those man hours. On average, doctors in France make only about one third what doctors in the US earn. This is primarily because the French Social Security fund is the primary buyer of medical care, and they use their near monopoly power to keep reimbursements low.

Another place where the French use the monopoly power of their system is in pharmaceutical purchasing. Basically, the French government tells the drug companies what price they will get for their products. Since the alternative is to lose the French market, the drug companies take the deal.

As a matter of fact, most of the western world does the same thing. That leaves the US as the only unregulated pharmaceutical market. The result is that the US market ends up funding most of the research into new drugs.

So the French system does use the power of the public insurance provider (what we would call the public option) to keep costs lower than in the US. But here’s the rub: Their costs keep going up, just like ours. The French have raised their Social Security tax six times in the last 20 years to pay for their “free” health care.

Insurance companies are not popular in our culture. Neither are pharmaceutical companies. So maybe there is the political will to destroy their business model in the name of lowering costs. I’m not so sure that, as a people, we think it is okay to cut the pay of our doctors in half. Without those kind of savings, providing free care to everyone is just going to raise prices on everyone, healthy and sick alike.