Comparison of Health Care in the US and Europe

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National HealthcareA comparison of the French and United StatesInsurance Policies

Peter Gates

12/10/2008

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A Comparison of the United States and French Healthcare Insurance Policies

It has come to the attention of the American public in recent times that the United State

healthcare system is in crisis, and the people are ready toaccomplish something about it. According to

one Gallup poll, support for maintaining the current healthcare system has declined dramatically from

61% in 2002 to an astonishing, below-majority level 41% in 2008. Furthermore, 77% say that the current

healthcare system has either major problems or is in a state of crisis, an increase of almost 10%

since 2000, while just 25% state the other extreme thatthe system has either minor or no problems

at all. Americans perceptions on the quality, coverage and costs of healthcare have been asked as well,

with the results indicating that 55% view the quality as good or excellent, 72% the coverage as being

only fair or poor, and 81% showing dissatisfaction with the total costs of healthcare. Interestingly,

despite the pessimistic views of healthcare overall, 70% viewed their own coverage as being excellent

or good with only 23% stating that it isfair or poor. The conclusion can safely be made that

Americans are concerned about healthcare out there, but are rather comfortable with their own

coverage. In support of such a conclusion, 57% are satisfied with what they personal ly pay for

healthcare while 39% are not, in contrast to the previous statistic that states that 81% are dissatisfied

with the costs of healthcare overall.

A comparison with the French view shows a slight difference between the confidence of the

citizens of France and the United States in their own healthcare systems; 82% of the French and 69% of

the United States are confident in their respective medical systems. However, when the question

changed to whether or not the respondents felt they could pay for their medical costs, 12% of those in

France and 32% of those in the United States expressed concern at having not enough fundsin order to

cover all costs. These facts are further reflected when the CIA World Factbook stated in 2008 that

citizens of France are living, on average, three years longer than those in the United States, 81 and 78

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years respectively. Moreover, the Factbook states that infant mortality rates in the United States, being

three deaths per 1000 births, are almost twice as much as that in France, approximately six deaths per

1000 births. Statistics such as these clearly show a need for change in the United States health system

and the people are more willing than ever before to show support for such arenovation. In order to

help the reader to decide whether such a transformation is possible, or indeed advisable, this papers

primary focus will be on the difference between theways insurance is dealt with in the two nations. The

first portion will deal witha short history of insurance in both countries and will then go on to describe

the different types of insurance available and state various appropriate facts that will undoubtedly

conclude with the opinion that it is advisable for the United States to adopt a similar program to that of

the National Health Insurance (NHI) provided by the French government.

Introduction

Considering the history of the United States, the debate on national health care should not be a

surprise. It is just natural for the nation that has been founded on the basic principle of unalienable

rights to question what those rights are. As a nation, the United States has decided that allpersons,

regardless of their skin color, country of origin, gender or religious status, areequal in the eyes of the

law. That all persons have the right to their pursuit of happiness, whatever that happiness might be,

without the interference of the government. In light of these historic moments, one will easily

understand the importance of the current debate on healthcare. In some ways it is similar to the past

debate on _____________; both raised the issue of competition and government rule, as well as costs

and morals. Both have been brought to the attention of politicians, including presidential candidates in

the presidential debates, and both have had congressmen trying to pass bills one way or another. And

because this debate on the universal coverage of healthcare will affect every American in the nation, the

primary focus of this paper is to compare, contrast and draw conclusions between the United States

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current health care system, and Frances universal health care system, rated by the World Health

Organizations as number one in a worldwide study of healthcare.

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The United States

The key focal points for the healthcare in the United States are, as in most other

countries of the world, the hospitals, clinics, retirement centers and various other institutions related to

the health of the individuals. The major institutions in the treating of sickness is, also as in other

countries, the hospital; as can beseen by the dramatic increase in infrastructure from 178 in 1873 to

6000 in 1946 (Young & Sultz, 1999). That number has been more or less kept the same since then, with

it peaking at around 7000 in 1980and then going back down to decline to around5000 in the 1990s

(Young & Sultz, 1999). After World War II, as technologies erupted in an exponential manner and as

hospitals started to become a key technological focal point in the field of medicine, the demand for

hospital services has increased exponentially, also fueled by the near nonexistent direct cost to the

patient as employers picked up the tab, to such an extent that in 1946 the Hi ll Burton Act, sponsored by

Senators Lister Hill and Harold Burton, was passed by Congress to provide federal moniesey to hospitals

for the purposes of expansion and construction. As a result, more than 4600 additional projects were

started to either expand upon or to construct brand new facilities over the next 20 years(Young & Sultz,

1999).

Added to this golden year for the American people, the Medicare and Medicaid actswere

passed in 1965 as a part of President Lyndon Johnsons Great Society plan, authorized by Titles XVIII

and XIX, respectively, of the Social Security Act as a way of helping the elderly and those in poverty pay

for necessary medical bills (Jonas, 2003). Medicare was constructed as a way of ensuring insurance for

all elderly persons; one does not need to apply or meet any points but is automatically enrolled.

Medicaid on the other hand differs from stateto state with persons seeking aid having to apply and

meet certain requirements as prescribed by the state government. Of the beneficiaries for Medicaid,

45% were children, 42% disabled persons, 29% aged adults and 19.5% non-aged adults (most of



Comment [A4]: Change to: the health of the

individuals?


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nt [A5]: Institutions?


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nt [B6]: If you are talking about just

hospitals, I wouldnt say hospital infrastructure. bit redundant.

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to further explain hospitals and make a new

paragraph for Medicaid/Medicare. Perhaps unde

financial section?


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whomwhombeing mothers with covered children). Despite these statistics, 70% of all expenditures in

Medicaid went towards the benefits for the aged and the disabled(Jonas, 2003). However, with the

rising costs of technology during the 1970s an 1980s, it became apparent that something was needed to

be done for Medicare to continue; and so a system called diagnostic related groups (DRGs)was created

in 1983 by the federal government. In order to lower costs, the government would pay hospitals the

average cost of care for the patients particular disease or condition, regardless of the time spent in the

hospital. If patients stayed in longer than the average, hospitals would lose money, but if patients stayed

for a shorter amount of time than the average hospitals would gainrevenue; similarly, if patients stayed

the average time, it would be at no cost to the hospital(Young & Sultz, 1999). This approach to costs

was quickly adopted by all states and hospital insurance companies and has been expanded to include

patients outside of Medicare as well. Pretty soon, however, it became apparent that such an approach

would result in hospitals discharging patients at sometimes dangerously earlier times in order to gain

more revenue. Many times this policy did not affect patients as such, however other times such

practices led to a later return of the patient with a more serious, and thus more expensive, illness or

chronic disease, contributing to the rising costs of healthcare. (Young & Sultz, 1999)

The rising costs of healthcare due to technology has become apparent in the general sector as

well, not just in Medicare and Medicaid, as Congress found out in Peter Orszags 2008 testimony on the

rising costs of healthcare where many f igures and comparis ons were mentioned. The most striking,

however, is the fact that between 1965 and 2005 expenditures on healthcare has tripled every 20 years.

In 1965 expenditures were $187 billion dollars and 5% of the Gross Domestic Product (GDP) and in 1985

it has risen to $666 billion. The most recent figures, that of 2005, states that national expenditures on

healthcare is now $1.9 trillion dollars, or 15% of the GDP (Orszag, 2008); in other words, healthcare

expenditures can be looked at as 20% of the current United States national debt of $10 trillion as of this

writing, according to Ed Halls National Debt Clock. The reason for such spending has been identified by

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nt [B13]: I would phrase is sometim

discharging patients dangerously early.

dangerously earlier times just sounds awkward

me.


C 6 7 7 8 nt [A14]: Change to Practices?


C 9 @ @ A nt [A15]: Change to: Not just in

medicare and Medicaid.


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and or, so it will be dollars, or 15%


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C H I I P nt [A18]: I think its actually 19-20%



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Senator Orszag as being dependent on six key factors: the adoption and emergence of new medical

technologies and services, which contributed between 38-62% of total medical costs in 2000 as some

technologies may introduce newer categories of spending; the aging population,although it only

contributes 2% as the population ages rather slowly; the growth of personal income (11-22%), as people

gain more income the opportunities for health care willincrease with demand increasing as well; prices

in the health sector also contribute 11-22%; and finally administrative costs which account for 3-10% of

health care costs. Another key factor that was also identified was the obesity epidemic that the United

States faces today. As a person moves up on the scale from beingnormal weight to overweight,

obese, or morbidly obese, the per capita spending on him or her increases with an average of

around $1000 as he or she moves up the scale. When one considers that the populations overweight,

obese or morbidly obese persons has increased from 44.9% in 1987 when the populat ion wasaround

250 million, according to the Census Bureau,to 59.6% in 2001 when the population was just under 300

million, it is easy to see how significant this is in terms of the costs of health care. Added to this is the

fact that the obese category has seen the most increase,from 12.2% to 20.7% between 1987 and

2001, thus resulting in anincreasingly higher number of dollars being spent on that category. If current

trends continue without outside intervention, the expenditures on health careare projected to reach

100% of the GDP by 2082. Even with outside intervention, for example Congressional pressure or

consumer demand, expenditures are still projected to reach 50% of the GDP by 2082 (Orszag, 2008).

The increase in costs has happened despite certain changes to the healthcare systemunder the

default guise of Managed Care Organizations, or MCOs. MCOs Composing the MCOs are ordinarily an

insurance company and many hospitals, physicians, and beneficiaries. The purpose of these

organizations is to help lower the costs of hospitals and increase efficiency throughvarious means,

ranging from negotiations to limits on the use of certain services, and sometimes reaching the point

where the laying off of staff may be needed. There are sevenmajor Managed Care Organizations that

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that was identified was the obesity epidemic


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marks, overweight should be too, as with obese


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considers that the populations content of

overweight, obese or morbidly obese people


C u v v w nt [B26]: In 1990, it was just under 2

million.

http://factfinder.census.gov/servlet/SAFFPopula

?_submenuId=population_0&_sse=on


C x y y nt [A27]: Eek. Thats scary.


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ranging from



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are listed by Steven Jonas, the largest of these beinga group called the Health Maintenance Organization

(HMO) that not only insure groups of people, butprovides the medical services that are under the

insurance coverage. There are two models of the HMO; the staff model where the HMO runs the entire

operation, including employing physicians and paying the appropriate salaries, and the so called group

model, wheree physicians grouped together into separate self-governing multispecialty group services

who then contract with the HMO to provide medical services. The HMO will do everything else in terms

of insurance, salaries and so on, but the physicians are paid through their specific group througheither

aa capitation, fee-for-service, or salary basis.

The other six of the MCOs listed by Jonas include the Preferred Provider Organizations (PPOs)

which are a group of independent providers (private practitioners or medical groups) who contract with

an insurer to provide certain services for predetermined fees, usually for more serious care that does

not fall under the term common care. The fees are many times below the prevailing market rates.

Exclusive Provider Organizations (EPOs) are similar to the PPOs,PPOs; however instead of allowing

beneficiaries to choose whether or not to accept care f rom service providers, EPOs havehas a list from

which all members much choose from to receive any type of reimbursement for care. IPAs, or

Independent Practice Associations, are more closely related to HMOs financially, as they are a group

where physicians are allowed to stay in their own officesand must see only HMO enrollees.

Independent Practice Organizations (IPOs) are similar to theIPAs,IPAs; however physicians are

permitted to care for patients from different insurers other than those from just a particular HMO

company. Finally, the last types of MCOs are the Physician Hospital Organizations (PHOs) or the

Combined Provider Organizations (CPOs) which are a combination of the previous four organizational

types, except for the slight detail that it is organized by the hospital and its staff to allow the staff to

negotiate directly with patients by taking out the middle man, or in other words the PPOs, EPOs, IPAs

and IPOs.

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Despite the complexity apparent in this type of an insurance system, as of 2001, 71% of

Americans had some type of private health insurance(Jonas, 2003). The flip side of the issue however,

is the fact that although the majority of the population is covered by some sort of private insurance,

30% is not. That would constitute to being aroundThis figure translates into almost nine million

uninsured children and a further 33 million uninsured adults in the United States who cannot accept

healthcare charges without serious financial consequences.

France

It might come as a shock to the average United States citizen that France has a nationalized

healthcare that provides healthcare to most of its citizens nearly free of chargeThe French acceptance of

insuring every private citizen with governmental health insurance might come as a shock to many

Americans. In factIndeed, to repeal such a policy is an unthinkable move, akin to eliminating the fireor

and police departments in the United States. Healthcare in France is seen as a right of society that must

be provided by the government a concept which might prove to be easier to understand if one first

understands why the French citizen accepts such an unusual form of healthcare. Three basic principles

play a role in this French way of thought (Minogiannis, 2003): social sol idarity, healthcare as a public

good, and what is called La Mdecine liberale,or liberal medicine. Each of these principles are a key

factor in the French thought and what makes the French so resistant to any kind of drastic changesto

their current healthcare system. Social solidarity is the idea that social assistance provided by the

government is a necessary responsibility, not a shameful situation, if the country of France is to flourish

locally, nationally, and internationally. From this concept follows the idea that health care is a public

good, the logic of which is best described by Panos Minogiannis in his bookEuropean Integration and

Health Policywhen he stated, it follows naturally for [the French population] that the state as the

institutional personification of the nation will have to provide [healthcare], since public good cannot be


Comment [B35]: You make this sound like th

current complex insurance system is doing a goo

job. Id rephrase this to emphasis that ONLY71%

people are covered, especially when compared t

the rest of the western world since your conclus

is we need a universal healthcare system.




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Comment [B36]: Repeal? Dismantle?


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Comment [B37]: You are basically repeating

what you just said in the last sentence here. I wo

rephrase to something like: Each of these tenet

play a significant role in why the French are



Comment [B38]: They are open to reform, I a

sure, but they are opposed to drastic change. I

would use drastic change here.






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produced and allocated efficiently and equitably by the market (2007). The last French basic principle

of thought is the idea of La Mdecine liberale, liberal medicine, which in basic terms is a four-piece

doctrine that ensures the private practice of medicine in a way that guarantees: a patients freedom to

choose his or her physician, the physicians freedom to prescribe as per their best medical judgment, and

a fee-for-service type of payment which will be made directly by the patient to his or her physician after

the appropriate services have been completed.

Once an understanding of these French basic principles has been obtained, it is important to

have understanding grasp of the French healthcare system before the 2005 reforms prior to

discussinghowdiscussing how the French system is as it exists today (Wikelius, et al., 2008). As such, the

primary focus of the next section of this paper will be on the various ways that the French system was

organized preceding the reforms and will further conclude with the way it changed during the last three

years.

Unlike the United States healthcare system, which boasts numerous types of managed care

coverage under which fall various insurances, hospitals, physicians and organizations, the French

healthcare system still has but two types of coverage: that of the governmental general coverage

scheme, and a private supplemental coverage scheme (Minogiannis, 2003). These two schemes

covered nearly 100% of the population and accounted for various percentages of the overall healthcare

expenditures as expressed per the following: the general coverage scheme (Regime Generalor

Assurance Maladie) covered 74% of the total health expenditures, almost 90% of the total hospital

expenditures, where most services were performed, and 57% of the total ambulatory expenditures.

Supplemental coverage also covered these expenses, however not to the extent asRegime General. In

short, supplemental coverage covered 6%, 2.1% and 11% of the total health, hospital and ambulatory

expenditures respectively. To make up the rest of the 100% needed for total coverage of expenses, the

government chipped in 1% for the totalhealth costs, and the patients themselves paid out-of-pocket

C j j k nt [B39]: I would simplify this to just

has or still has.

C j j k nt [B40]: You said two types, but this

reads like three. I would say, the government w

a general coverage scheme and a private

supplemental coverage scheme. Or something

that.


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expenses to cover 19%, 7.5% and 32% of total health, hospital and ambulatory expenditures respectively

(Minogiannis, 2003). With France being named the fourth highest ranking country in terms of

expenditures on healthcare (Minogiannis, 2003), and the number one highest ranking country on the

quality, satisfaction, and reach of that healthcare by the World Health Organization, figures such as

these are very important. Especially so when taken intoaccount is the fact thatFrance has spent almost

$157 billion dollars on health care and devoted 10.2% of its Gross Domestic Product to providing quality

healthcare to all its citizens (Freeman, 2000).

As stated previously, the General Coverage Scheme of France, also called the National Health

Insurance (NHI), covers 74% of the total health care expenses. Before the 2005 reforms, three primary

funds were used to help the NHI cover the price tage of healthcare. The first of these funds, the general

sickness fund, covered 82% of the population and controlled the16 regional funds, that has the

responsibility of capital planning, and numerous local funds whose main responsibility is to oversee

[the] collection of contributions and the reimbursement of claims (Minogiannis, 2003). The second of

the funds, the agricultural fund, covered those in the agricultural sector and its dependents,and thus

nine percent of the population. Finally, the third major fund is for the self-employed and professionals

and their dependents that makes up 7% of the population. All together, these three funds covered 98 %

of the working population with a further 1.5% being covered by otherspecialized funds, and the

unemployed through social security. The general fund set up the basic model of how the required funds

were to be collected, with the other funds following that model, through a combination of employer and

employee taxes, with the employers picking up two-thirds and the employees one-third of the

premiums (Freeman, 2000). The unemployed under the care of social security had, and still has, their

premiums paid for a predetermined time after which, if still unemployed, they may get access to

sickness funds through special individual rates(Minogiannis, 2003). Before the reforms, around 0.5-

1% of the population, or 200 to 500 thousand people, were without insurance at any given time.

Cl m m n

nt [B41]: Already mentioned this last

sentence. Bit repetitive here.

Cl m m n

nt [B42]: Which accounts for?

Cl m m n

nt [B43]: Should this be under the c

of social security or am I missing something her

C l m m n nt [B44]: I know you are trying to ref

to pre- and post-reforms of 2005 with this

construction, but I am not a fan of it. I would usejust have or still have.

Cl m m n

nt [B45]: I like people here better.


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Although 98% of the population was covered through the NHI, a separate Supplemental

Coverage Scheme was in existence to not only envelop the other 2%, but to include issues not covered

by the General Sickness Scheme. Such issues include, in the words of Minogiannis, very serious and

catastrophic illnesses in the form of cancer, AIDS, or other chronic lifetime conditions. Furthermore,

the Supplemental Coverage includes a variety of luxuries, for example separate private hospital rooms,

and also co-payments that the population is expected to pay. These fees charged by physicians are

predetermined by a national committee comprised of all the three major funds and the three physician

unions, where annual negotiations take place on the amount to be charged. The agreed upon fees are to

be applied across the board and are required of each physician, including private physicians.Fees such

as the le ticket moderateurs (moderating tickets) were kept in order to avoid any moral hazard type

of behavior (Minogiannis, 2003), or in other words using the hospital facilities when such facilities were

not needed for such a light condition. About 88% of the population choose to carry supplemental

coverage, while those who do not are usually either financially unable to do so or else just simplydo not

consider themselves to be at risk for chronic conditions.

Reforms in 2005 made the practices that have been going on until thenofficial; namely that the

different funds were aligning themselves closer to the General Fund untilFrance had, in practice, a

single-payer system. In a sudden catch-up played by the government, practice has become theorywhen

the General Funds were renamed the National Union of Health Insurance Funds (UNCAM), and added

the responsibility of negotiating with health professionals regarding the modes of contract that may be

needed to regulate fees and medical practices, in association with supplementaryinsurers and other

professional associations. With UNCAM all General and specialized funds, such as the Agricultural Fund,

has been turned into one, effectively covering the entirety of the living population in the country

(Wikelius, et al., 2008). The coverage has not gone so far as to cover 100% of the costs, so many of the

so-called moderating tickets have been kept in place for less serious issues, as in the case of the dental

C o nt [B46]: Id consider rewording this

seems a bit clunky.


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coverage which covers 70% of the costs. However, more severe conditions require more serious

coverage, and thus 100% of irreplaceable and costly medications are covered under the reformed

health insurance (Wikelius, et al., 2008). Furthermore, in keeping with the concept of le ticket

moderateur, individuals receive one Euro less reimbursement (this fee is non-coverable by

supplementary insurance) for each visit to a physician or other medical service and the cost per hospital

visit has been increased from 14 Euros to 17 Euros.

These reforms were also aimed at reducing costs of the healthcare system to the government,

as can be seen by the slight increase inthe costs mentioned, and to do so three out of five physician

unions have voluntarily signed a contract indicating a commitment to change prescribing practices to

reflect a desire to reduce expenditures. Doctors are now strongly encouraged to prescribe generic drugs

in an effort to reduce pharmaceutical prices. An electronic medical record for every patient and

physician has also been implemented, and the creation of a High Health Authority has been

accomplished to advise UNCAM and the French government on technical health concerns and costson

evidence-based recommendations.

Conclusion

When compared to the French healthcare system, the United States has much to learn in terms

of organization, cost control, and universal coverage. Recent reforms of the NHI have demonstrated a

continuing willingness by the French government to fulfill the threebasic principles accepted by default

by the citizens it has been elected to govern. By insuring almost 100% of the French citizenship, these

reforms form a stark contrast to the current United States healthcare system where 30% of citizens are

without any form of health insurance whatsoever, these percentages translate into almost 33 million

Americans and only 200-500 thousand French being uninsured, pre-reforms, at any given moment in

time. One can gather from such facts that the NHI seems to be more effective at covering, insuring and

taking care of the French citizens than the current system of numerous types of MCOs in the United

C

nt [B47]: Repetitive. Creation of

created. Id scrap this part or the created part

C

nt [B48]: More repetition. Id revise


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States seem to be able to do. As an addedbenefit, the NHI looks to be simpler to navigate as a direct

result of its centralizations and cheaper as well, with it taking only 10% of the GDP versus the 15%

required by the current American health system. It may be said that it is thus imperative for the United

States to take up a similar program of insurance, especially when such results are taken into account as

the American peoples response to Furthermore, the American people seem to exhibitGallup Polls with a

shift in support for change. Indeed, implicit acceptance of certain French principles, such as the concept

of liberal medicine and perhaps even social solidarityhave been displayed as well. Indeed with the ,

polls such as those brought about by the Gallup Pollshowshowing a clear indication by the American

people to change the current system in a way that will reduce costs, allow the freedom to choose

between physicians, and provide a minimal coverage for all Americans.In continuation with the debate

on healthcare, United States politicians have fortunately begun to take note of the current problems of

healthcare, as in the case of Peter Orszags testimony before Congress, and have brought the issue to

the forefront of the political tablethus making the debate on the practicality, morality and

constitutionality of National Health Insurance a forefront of the public mind. It is now up to the

American people to decide whether to accept the conclusions of this and numerous other papers that

national health insurance is simpler, cheaper and more effective than the prevailing form of insurance

available in the United States today.


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Works Cited

Freeman, R. (2000). The Politics of Health in Europe.Manchester: Manchester University Press.

Jonas, S. (2003).An Introduction to the U.S. Health Care System Fifth Edition. New York: Springer

Publishing Company.

Orszag, P. R. (2008). Growth in Health Care Costs. Retrieved November 10, 2008, from Congressional

Budget Office: http://www.cbo.gov/ftpdocs/89xx/doc8948/01-31-HealthTestimony.pdf

Rodwin, G. V. (2002).The Health Care System Under French National Health Insurance: Lessons for

Health Reform in the United States. Retrieved November 2, 2008, from PubMedCentral:

http://www.pubmedcentral.nih.gov/articlerender.fcgi?artid=1447687

Saad, L. (2007).No Increase in Public Pressure for Healthcare Reform. Retrieved November 2, 2008, from

Gallup Poll: http://www.gallup.com/poll/4708/Healthcare-System.aspx.

Wikelius, K., Haase, W. L., Liebert, J., Kendall, A., Leiken, K., Mahar, M., et al. (2008).The Basics: National

Health Insurance Lessons from Abroad.New York City: The Century Foundation Press.

Young, K. M., & Sultz, H. A. (1999). Health Care USA Understanding Its Organization and Delivery Second

Edition. Gaithersburg: Aspen Publishers, Inc.

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Comparison of Health Care in the US and Europe

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