Reform of the health care system requires liberalisation, not bureaucratic cost containment, says a new study from the Institut économique Molinari

Media Release

Paris, June 9, 2010 – With public finances continuing to deteriorate, French President Nicolas Sarkozy said on 20 May he wants tighter curbs on health insurance expenditures. Cleaning up France’s public finances is absolutely necessary. However, the path taken by the government leads to a dead end and hides serious perverse effects on patients.

Without prior liberalisation of the health care system, cost containment leads inexorably to bureaucratic rationing of care and, over time, to long waiting lists for French patients.

“The French government should draw upon the lessons of the reform carried out in the Netherlands in 2006,” the Institut économique Molinari (IEM) states in a new study analysing the content of this reform.

Waiting lists costing 3.2 billion Euros a year

France’s current cost containment policy is a dead end. Proof can be found by observing the damage where this course was pursued, in the Netherlands prior to the 2006 reform.

The Dutch system relied on health care providers (doctors, hospitals, drug firms, etc.) that in most cases did not have public status, like the independent sector in France or the private hospital sector.

However, as in France, they depended for most of their income on the public health coverage monopoly and, ultimately, on political authorities. Their scope of practice was tightly state-controlled, and their budgets remained under the thumb of the government.

In this context, containment by the public authorities of health care spending resulted automatically in delays in the delivery of care to most of the population.

This meant that, as in the United Kingdom and Canada, waiting lists got longer!

Thus in 2001 about 244,000 patients were awaiting for hospital care. The annual costs of waiting lists – due to loss of welfare, income and productivity, or due to long-term disability, etc. – were estimated at 3.2 billion Euros, representing about 6.1% of total health expenditures that year.

A smaller government role in the health system with the 2006 reform

The Dutch government then had the courage to loosen the government yoke rather than turning to a fully state-run system, to the benefit of patients, care providers and even of better containment of health expenditures.

– The monopoly of the compulsory health insurance system that covered about two-thirds of the population was abolished – a taboo subject in France. The Dutch now can choose between various policies and insurers, encouraging them to “consume” care more responsibly.
– Care providers have several income sources and do not endure – as in France – the power of this monopoly. They negotiate the provision of health care with the various private insurers and can run their businesses more freely, with vertically integrated care networks organised by private insurers and put at their clients’ disposal.
– Fees for many common types of hospital care – such as hip, knee or cataract operations – are left open to negotiation. The portion of care with freely set fees has gradually expanded, reaching 20% of hospital spending in 2008 and 34% in 2009.

Waiting times are no longer seen as a problem since the reform. Moreover, their reduction was achieved with health care expenditures growing less quickly between 2006 and 2008 (+5.3% per year on average) than between 1998 and 2005 (+7.6%).

The Dutch reform liberalising the health care system clearly does not go far enough, and over time the expected benefits may not be as great. It does, however, offer a path to reform worthy of consideration by public authorities in France and elsewhere, the IEM study concludes.

Titled Health care reform in the Netherlands, the study is available on IEM’s website.

The Institut économique Molinari (IEM) is an independent, non-profit research and educational organization. Its mission is to promote an economic approach to the study of public policy issues by offering innovative solutions that foster prosperity for all.

Information and interview requests:

Cécile Philippe, PhD

Director

Institut économique Molinari

+33 6 78 86 98 58

cecile@institutmolinari.org

www.institutmolinari.org