"HIGHWAY TO HEALTH":
A FRENCH LOOK AT THE U.S. HEALTH CARE REFORM
(2nd PART)
II. - SPECIFIC TOPICS
13. – The proposed U.S. health care reform is designed to eliminate the problems that “ail” the system. This reform has naturally led to a host of questions and concerns. Political controversy aside, it is instructive to take a closer look at some of the issues that have been a source of longstanding controversy, both in the U.S. and in France.
A. – Refusal to provide medical care
14. – The most shocking aspect of the U.S. health care system is without a doubt the refusal to treat patients, which is a widespread practice. The uninsured or under-insured very often find themselves in situations in which medical personnel refuse to administer them needed care because they do not have health insurance.
On this point, there is a stark difference between U.S. and French (and most European) law. There are no circumstances in France that would justify a doctor’s refusal to provide care (even non-urgent care). Any doctor who refuses to treat a patient would be held criminally and ethically liable.
Even though France’s public hospitals are for the most part unprofitable, a patient will never be denied care in an establishment in which such care is available. Of course, private hospitals (especially those which are run as profit-making businesses - referred to as “clinics” - and whose objective is to “feed” off of social security) can focus on more profitable areas of medicine or surgery (such as cataract surgery for example) instead of less lucrative services that are typically offered by public hospitals as part of a “public service” mission (such as ER or geriatrics). The type of medical care that is offered is influenced by the amount of reimbursements that social security grants to hospitals and which are based on the type of medical procedure that is performed (this “fee for service” system is referred to in France as the tarification à l’activité or T2A, and it is highly criticized on the grounds that it undermines “public service” missions).
If a hospital specializes in a particular area of medicine, it would be unheard of for it to deny medical care to a patient, provided of course that it has sufficient hospital beds and resources to do so. The reason is simple: almost everyone in France has health insurance under the mandatory schemes, and most people have private insurance too, as discussed previously. In truth, only foreigners who are in the country illegally do not have health coverage, and even they are entitled to Medical Assistance for Foreigners (Aide médicale des étrangers or AME, which is financed by the State.
15. – The “right to healthcare” does indeed exist in France, even though there are disparities, as is the case everywhere. Young people, the unemployed and foreigners very often forgo needed medical care, although these inequalities are not very noticeable. The general sentiment is that the French abuse their health care system. They see too many doctors and overuse prescription medicine, which puts a greater strain on social security each year. In a context of an economic crisis, the situation may become unsustainable : the foreseeable security social deficit in 2009 should double and top EUR 20 billion, that is an absolute record!
It is convenient to note that the right to social security and to illness and maternity health insurance is a fundamental right granted by two instruments of the United Nations: the Universal Declaration of Human Rights (article 22), which was proclaimed on December 10, 1948 but which is not mandatory, and the International Covenant on Economic, Social and Cultural Rights (article 9), which was adopted in New York on December 16, 1966 and which is a compulsory treaty in France but... not in the U.S. In Europe, this right is upheld by several other instruments that protect human rights (The European Social Charter of May 3, 1996, the Community Charter of Fundamental Social Rights for Workers of December 9, 1989, and the Charter of Fundamental Rights of the European Union of December 18, 2000). Even before being memorialized in a charter or treaty, the right to health care is ingrained in peoples’ mindsets as a natural right; it is a key aspect of the respect of human dignity, for which no legal ground or explanation is necessary.
B. – Socialized medicine?
16. – Proposals to create a system of mandatory health insurance in the U.S. have always been caricatured as creating communist era-style socialized medicine; in other terms, the government would take over and run the whole system, including hospitals, health care plans, etc. From a French and U.K., perspective, this is completely ungrounded, and even ironic.
The danger which stems from a mandatory social security is thoroughly opposite: the development of what is referred to in France as medicine libérale (the liberal practice of medicine in which patients can see doctors as often as they wish and there are no limits on the amount of medication that doctors can prescribe); a medicine which does not subscribe to the very purpose and ideals of a mandatory social security system; in other words, a medicine in which doctors are more concerned with getting rich than serving the general public.
17. – The fundamental principles of the liberal practice of medicine in France are the following:
- The freedom of establishment. Doctors are free to open up offices where they wish. This has resulted in “medical deserts” where people have to wait months to get an appointment with a specialist, like in rural areas of the U.S, or have trouble finding a doctor on the weekend. In areas like the French Riviera, on the other hand, there is a plethora of doctors just waiting to treat the elderly, sick and…rich.
- The second principle of the liberal practice of medicine is the patient’s freedom to choose a health care provider. Patients can make as many doctor visits as they wish and run up unnecessary prescription drug costs all for the sole purpose of “reassuring” themselves. Doctors who wish to increase their patient base do not hesitate to write out fraudulent prescriptions or issue fake sick notes. The Act of August 13, 2004 attempted to place limits on this freedom by creating a “coordinated care system” under which patients must appoint a “primary physician” who they have to consult with first before seeing a specialist, otherwise they have to pay higher consultation fees or are reimbursed at a lower rate. Five years on, however, this program, which was designed to generate savings, has proven to be unsuccessful due to the fact that people have managed to find ways around the coordinated care system and that the consumption habits of the French are hard to break.
- The third principle is the freedom to prescribe medicine. As mentioned above, doctors in France are not limited with regard to the amount of prescription drugs or paramedical care that they can prescribe (90 % of visits to a general practitioner (“GP”) end up with the patient leaving the office with a prescription for an average of five different types of medicine!). What’s more, prescription drug use is so widespread in France that thousands of people die each year due to deadly drug interactions! France does not have a computer-based system that enables doctors or pharmacists to view the medical history of a patient and make sure that he has not already been prescribed the same drug or verify that the prescription will not result in a dangerous interaction with another drug (a law has approved the creation of an “electronic health record,” a type of “smart card” that will contain such patient data, but its actual implementation is still years away).
Unfortunately, not all French doctors form a group of disciplined civil servants devoted to serving the public interest. The liberal practice of medicine is a wonderful, commercial-driven business that focuses more on making money than improving individuals’ health. Reforms of France’s national health insurance system (Assurance Maladie) have consisted in increasing the government-set fee schedule for doctor visits (the consultation fees that are reimbursed by social security), which physicians’ unions push for when engaging in their periodic negotiations on these schedules with the public authorities. In the end, the government typically agrees to increase the amount of these fees, which in turn results in more social security spending. On the other hand, the physicians’ unions tend not to keep their promise of adopting “good practices.” Bad habits are hard to break: doctors in France still prescribe too many anti-depressants and antibiotics, are too quick to issue sick notes and fail to properly comply with regulations governing the treatment of long-term illnesses [cancer, diabetes, AIDS, etc.], for which care is reimbursed at a rate of 100 % and is thus very costly for the system).
18. – The following should be retained from the French example: it is naive to try to combat unnecessary spending through incentives when the health care providers are clearly unwilling to cooperate. Generally speaking, the medical field is corporatist and defends its (financial) interests.
A typical example may be refered to both in the USA and France. Because of a flawed system for paying physicians, Medicare is scheduled to reduce its fees next year. This means a 21% cut in payments beginning on January 1, 2010. According to a recent survey by the American Medical Association, if Medicare payments are cut by even half that amount, or 10 percent, 60 percent of physicians report that they will reduce the number of new Medicare patients they will treat, and 40 percent will reduce the number of established Medicare patients they treat… French « liberal » doctors behave exactly in the same way towards the low-income patients enrolled in the CMU (see supra) : the denial of care is a daily practice only because physicians are reluctant to get a delayed reimbursement by the social security and are not allowed to ask extra-charges.
France’s physicians’ unions engage in “fee-based unionism,” and have traditionally and almost exclusively, sought to defend the standard of living of doctors (which, however, is quite high, especially among specialists). In my view, it is this very freedom that characterizes the French health insurance system which has contributed to reckless practices, abuse and excessive spending.
Under the U.K.’s National Health Service (which is based on the Beveridge social security model), patients do not have the freedom to choose their health care provider: the last time I checked, this small island country was not yet communist.
There is nothing to fear from mandatory social security. The AAHC would preserve a patient’s ability to choose his doctor and hospital, and would give him the option of maintaining his employer-based health plan. In studying the outline of President Obama’s proposal, I have yet to find any trace of socialized medicine. If there is a risk, it is that the freedom enjoyed by doctors and patients continues to threaten both access to health care and the quality of this care, like in France.
Moral of the story: don’t worship freedoms!
I have a second thought: “Much ado about nothing”... According to Congressional Budget Office estimates, less than 5% of Americans would choose the public option available in the Insurance Exchange.
C. – Public deficits
19. – This third topic is linked to what was discussed above. One of the main fears of opponents of President Obama’s reform is that it will increase Federal and State budget deficits.
In France, like in the U.S., the public deficit is skyrocketing. In 2009, France’s social security deficit is expected to amount to between EUR 13 and 20 billion. Even if there had not been an economic downturn, it still would have been no less than EUR 10 billion. The social security deficit alone accounts for more than EUR 100 billion. While this might not be much for the U.S. economy, for France it is an enormous amount.
The social security deficit has been aggravated in particular by decades of irresponsible management. The French government never adopted a long-term vision for social security financing, and the different political leaders that have come in and out of office over the years have never had the necessary political courage to adopt any sweeping decisions to address the problem. For a very long time, the remedy consisted of increasing the amount of mandatory social security and tax contributions (which presently represent 44 % of GDP - a world record!) instead of reducing spending.
Let’s not kid ourselves: a social security system will obviously weigh heavily on a country’s public spending. But this is not inevitable, and the U.S. clearly has significant breathing room here. The figures speak for themselves.
20. – In 2008, France spent EUR 215 billion on health care, or EUR 3,500 per capita and 11 % of GDP, placing it 2nd after the U.S. [16.1% in 2007]. In the U.S., according to government statistics, between 1993 and 2007, costs for health care doubled, rising from $3,500 per person to $7,400 per person (almost $8,000 today). According to another study, 20 % of the United States’ GDP will be spent on health care in 2017 (more than $4 trillion); this percentage will rise to 34 % in 2040… At that time, the government won’t have money to spend on anything else but health care.
The U.S. spends even more than France on health care, spending nearly three times more per capita. It is thus hard to believe that more than 45 million Americans (16 % of the population) do not have health insurance! This of course begs the question: where does all the money go? This is of course a rhetorical question that I am asking (as everyone knows the answer) in order to get across the following basic idea: the United States could finance an adequate social security system if it spent a lot less (let’s say approximately 11 % of GDP, like France, which is the runner-up to the U.S. in health care spending).
D. – Out-of-pocket costs
21. – The amount of health care spending is one thing. The breakdown of this spending is another. In 2008, France’s mandatory social security schemes (the layer 1 base schemes) reimbursed 75 % of all health care spending. The remainder was paid for by private insurance companies (layer 2 schemes), by households (who only paid for 9,4 % of aggregate spending) and by the State and local authorities.
In the USA, out-of-pocket expenses represent on average 60% of income in low income households. A family that buys insurance on the individual market pays nearly 60% more in out-of-pocket costs such as deductibles and co-payments than a family that gets insurance through work. America’s seniors shoulder an ever-increasing share of the burden. It has been estimated that the typical older couple may need to save $300,000 to pay for health care costs not covered by Medicare alone[i]. More specifically, in 2007, over 8 million seniors have to bear drug costs of hundreds of dollars per month in the “doughnut hole”[ii].
The challenge facing America’s future health insurance program is the following: find a way to finance a major portion of individual and families’ health care expenses, and limit the amount of their out-of-pocket expenses to less than 10 %. The difficulty is that health care costs have skyrocketed as well as out-of-pocket costs[iii]:
- Over the past ten years, spending on health care premiums increased 119 % while wages increased only 34 % and inflation increased by 29 %. In 2008, the average premium for a family plan purchased through an employer was $12,680, nearly the annual earnings of a full-time minimum wage job.
- Furthermore, deductibles have risen substantially over time. Families purchasing insurance through the individual market face deductibles that are more than two times greater than families with employer-sponsored PPO plans[iv]. The percentage of firms offering employer-sponsored high-deductible plans (also known as consumer-driven health plans) has risen from 4 percent to 13 percent from 2005 to 2008.
- Like deductibles, co-payments (a co-payment, or “co-pay” is the amount that people pay each time they visit the doctor) have steadily increased over time (in 2008, one in three people had a co-payment of more than $25).
Individuals can find themselves bankrupt because they are burdened by rising deductible costs, co-payments and other cost sharing mechanisms or by medical-related debts due to a catastrophic illness. Some people even die from the very illness that caused them to go bankrupt several months later because there were unable to get medical care. Health insurance first ruins people financially, then it kills them!
The health insurance reform will cap the amount that families pay out of their own pocket through annual out-of-pocket limits. In addition, families will also no longer face annual or lifetime limits to their benefits.
22. – If one were to draw a schematic diagram of France’s global social security deficit, it would consist of the general scheme (the statutory base scheme for employees), which itself stems in large part from the deficit run up by the health insurance branch of France’s State-run insurance (Assurance Maladie), itself confronted with patients who make excessive doctor visits and overuse prescription drugs (due to the liberal practice of medicine).
The idea of reducing the amount of reimbursements is quite recent.
Deductibles don’t exist in France, at least in the base schemes (layer 1). Copays are used, but they are so low that they do not deter people from going to the doctor. For example, a visit to a GP (who has been declared as the patient’s “preferred physician”) costs EUR 22.00. The State-run health insurance, or Assurance Maladie, reimburses 70 % of this amount, and the patient pays a 30% co-pay (referred to in France as the ticket modérateur) or EUR 6.60. In 2004, France required all patients to pay an additional contribution of EUR 1.00, bringing the patient’s total co-pay to EUR 7.60. The patient thus pays a general physician EUR 22.00, and the Assurance Maladie reimburses him EUR 22.00 - 7.60, or a total of EUR 14.40. That, however, is where the problem lies: patients are often reimbursed the amount of the co-pay if they have private insurance (as we saw previously, this represents 92 % of the population). Thus, a patient who paid EUR 22.00 for a doctor’s visit will be reimbursed by social security, and by his private insurance, for a total amount of EUR 21.00… This is a telling example: the government has tried to reduce public health care spending, but in order to avoid upsetting citizens, and constituents, they make sure that the private insurance companies compensate them for these co-pays. Some people have called this a false “privatization” of French social security. The French President, Nicolas Sarkozy, has stated that the private insurance companies have enough financial reserves to enable them to take over from social security.
Whatever the case may be, these efforts do not get to the root of the problem, and people in France will continue to make unnecessary doctor visits as long as their co-pays are reimbursed.
23. – Oddly, the situation is different in both France and the U.S. even though both countries are facing spiralling health care costs and a skyrocketing deficit. Deductibles and other out-of-pocket costs are extremely high in the U.S. and deprive many Americans of access to health care or lead to bankruptcy.
Cost-sharing expenses are too low in France. They do nothing to stimulate the sense of responsibility of French citizens who see too many doctors and overuse prescription drugs… A happy medium has to be found: universal health care coverage under which the amount of expenses paid for by patients is reasonable.
E. – Standardization of care
24. – The idea of standardizing insurance policies is one aspect of the AAHC. The bill proposes that new Advisory Committee will recommend a basic benefit package based on standards set in the law. The benefit package will serve as the basic benefit package for coverage in the Health Insurance Exchange and over time will become the minimum quality standard for employer plans. The basic package will include preventive services with no cost-sharing, mental health services, oral health and vision for children, and caps the amount of money (out-of-pocket expenses) a person or family spends on covered services a year.
The U.S. government has already decided a massive investment in health-information technology (HIT) and thinks that the problem of escalating health care costs can be tackled in part through a better data processing. All Americans’ health records should be computerized in 5 years to help prevent medical errors and improve health care quality. Above all, the Recovery Act of 2009 has devoted $ 1.1 billion to a comprehensive synthese of research studies on comparative effectiveness of diagnostic and therapeutic strategies (to the reviews of evidence on competing medical interventions and new head-to-head trials): the study will figure out which treatment gets the best outcomes for the least money; the final step could be to create a federal health-care board that would shape Medicare and Medicaid reimbursement plans based on those standards.
25. – Any social security scheme must include a precise listing of medical procedures, medical devices (prostheses, medical instruments, products extracted from the human body, etc.) and drugs that are reimbursed. This is the case in France, which has created an extensive “nomenclature” of procedures and products that is reviewed in light of scientific advances and the medical service that is rendered (the reimbursement rates of certain drugs that are considered to be of limited medical value have been lowered, but this concerns very few types of medicine).
This standardization is the pillar of an efficient and cost effective public health policy.
F. – Fight against waste, fraud and abuse
26. – There is one last important issue: that of the fight against waste, fraud and abuse. The AAHC would establish new tools in order to address these problems, in particular to root up waste and fraud in both Medicare and Medicaid.
The financial stakes are enormous. In France alone, social security fraud has been estimated to amount to EUR 12 billion per year! These figures cannot be verified, but they correspond more or less to the amount of the annual social security deficit... A generous social security system is a highly coveted system. From unscrupulous individuals to international organized crime networks, they are like vultures circling around social security offices so entangled with bureaucracy that they tend to authorize payments without undertaking serious due diligence.
It has taken decades for the public authorities to recognize the extent of this problem and for lawmakers to adopt a course of action. Since early 2000, the Social Security Finance Act (which in December of each year makes social security revenue and expense forecasts for the following year, similar to what the Finance Act does for the national budget) has included provisions on the fight against social security fraud.
In a nutshell, policymakers have tried to put a stop to excessive sick notes by making random visits to peoples’ homes to see if they are truly ill and by going after doctors who engage in these practices. A system of administrative penalties has also been established (imposed by the heads of social security offices themselves) after it was observed that criminal action was very rarely taken against those who abuse the system and that it did not serve as a deterrent. These practices have proven to be quite effective.
In order to render these controls and spot checks even more effective, the law has imposed greater obligations on social security offices in terms of sharing information among each other, and also requires greater cooperation between the social security offices and the tax authorities so that both organizations can report cases of fraud. Individuals who engage in social security fraud generally tend to engage in tax fraud as well. Most importantly, a “right of disclosure” has been set up under which social security auditors are entitled to request from third parties (public agencies as well as employers, banks, telephone operators, etc.) any and all relevant information. Information has thus become the tool of choice in this fight.
Sadly, these legislative efforts are not enough. Their implementation implies setting up computer networks, shared and centralized directories and compatible data bases. Most often, however, technology is not aligned with the desires of lawmakers: setting up a single file network comes up against numerous practical and legal hurdles due to the necessary protection of privacy, and takes years to put in place. For a long time, those who oversaw France’s social security system were incapable of detecting and even estimating the amount of social security fraud. Those who cheat the system still have some good days ahead of them.
The U.S. Government Accountability Office (GAO) has labeled Medicare as “high risk” due to billions of dollars lost to fraud (a growing number of home health providers are abusing the system, especially in certain parts of the country such as Florida) and overpayments (namely to private insurance companies through Medicare Advantage plans[v]) each year. Attempts to cheat the system will only increase with the new mandatory health insurance plan.
CONCLUSION
27. – The repercussions of mandatory health insurance can be felt well beyond the scope of social security.
By setting up a system of mandatory health insurance, the United States is going to equip itself with an impressive social policy tool that will allow the federal government or state governments to exert a strong influence on both public health policy and labor policy, and on how companies manage human resources (where health coverage is an integral component of employees’ salary packages).
While the idea of increasing the power of the federal government may be met with hostility (in a Country where individualism, defense of freedom and skepticism of government are acute), this is, however, a necessary evil.
28. – This reform is also likely to raise serious questions with regard to U.S. Constitutional law. One would tend to think this in light of European case law based on the European Convention on Human Rights (“ECHR”) that is applicable in the 43 Member States of the Council of Europe – not to be confused with the European Union or Community, which has 27 Member States).
In this regard, the European Court of Human Rights in Strasbourg has held that right to the peaceful enjoyment of ones’ possessions that is guaranteed under the European Convention on Human Rights covered the right to “social security benefits”. A mere legitimate expectation to obtain the payment of a “debt” (health insurance, a salary or damages, for example) is considered an “asset,” and the beneficiary thus has a right of ownership to this “debt.” One consequence of this label (which is quite odd for a civil lawyer) is that countries cannot discriminate based on citizenship when granting social security benefits; a European State therefore cannot establish a social security benefit and reserve it for its own citizens to the exclusion of foreigners[vi].
Conversely - and echoing a heated debate in the U.S. - the French Supreme Court has held that the obligation to make social security contributions allocated to the reimbursement of abortion procedures was compatible with the freedom of conscience right that is guaranteed under article 9 of the European Convention on Human Rights[vii].
There is no doubt that American Constitutional law experts will have a field day with the new legal questions that will arise, combining fundamental rights and health insurance. The new mandatory health insurance program will also very likely be the subject of nasty legal challenges designed to take down this amazing, yet at the same time very fragile, social progress. In Europe, constitutional rights and freedoms are interpreted in support of an extension of social security. What could be more natural? The right to social security and the right to health care are human rights. It would be unnatural for the U.S. Constitution to undermine the new health insurance program.
Each citizen must be convinced that this reform is not a highway to hell but a highway to health.
Patrick MORVAN
[i] See America’s Seniors and Health Insurance Reform: Protecting Coverage and Strengthening Medicare: http://www.healthreform.gov/reports/index.html#online.
[ii] A drug benefit was added to Medicare in 2006. However, its benefit includes a gap commonly called a “doughnut hole.” Under the standard Medicare drug benefit, beneficiaries in 2009 pay a deductible of $295, then 25 percent coinsurance until total drug costs equal $2,700. After that, coverage stops until out-of-pocket spending totals $4,350. In 2007, over 8 million seniors hit the “doughnut hole.” For those who are not low-income or have not purchased other coverage, average drug costs in the gap are $340 per month, or $4,080 per year. Evidence suggests that this coverage gap also reduces drug use, on average, by 14 percent – posing a threat to management of diseases like diabetes or high blood pressure. Health insurance reform will cut the drug costs that seniors have to bear in the “doughnut hole” by 50 percent
(ibid.).
[iii] See Hidden Costs of Health Care: Why Americans are paying MORE but getting LESS: http://www.healthreform.gov/reports/index.html#online.
[iv] A deductible is the amount of money a person must pay out of his or her own pocket before health insurance begins to cover the cost of medical expenses. For preferred provider organization (PPO) plans purchased through an employer, the average family deductible increased 30 % in just two years, from $1,034 to $1,344. This effect is more pronounced for small firms, where PPO deductibles increased from $1,439 to $2,367 — a rise of 64 percent. Families purchasing insurance through the individual market face deductibles that are more than two times greater than families with employer-sponsored PPO plans. The average deductible for a family plan in the individual market was $2,753 in 2007; this is an increase of nearly one-quarter from 2004, when it was $2,220.
[v] Part of the rise in Medicare costs – and in premiums for seniors – stems from extra subsidies to private insurance companies. Medicare Advantage is the part of the program that allows beneficiaries to receive services via private plans. Policy changes, particularly in 2003, ratcheted up payment levels to private plans. Medicare currently overpays private plans by an average of 14 percent, with overpayments as high as 20 percent in certain parts of the country.
[vi] CEDH, 16 sept. 1996, Gaygüsüz: D. 1998, p. 438, note J.-P. Marguenaud et J. Mouly.
[vii] Cass. soc., 13 déc. 1990: RJS 2/1991, n° 245. – 9 déc. 1993: Bull. civ. 1993, V, n° 309.
