From: Foundation for Economic Growth
Ageing and Ailing Societies: Health and Social Security Reform
By Philippe Manière
Oct 31, 2005, 12:00
The healthcare system in France is bankrupt. The interesting and surprising thing is that it has been bankrupt for many, many years, something that would not make sense in most countries – but it does in France. In France, apparently, you can have something that is bankrupt and yet which lasts. So the question is: why?
The system is indeed bankrupt. We run a deficit of several billion euros, very often several tens of billions of euros, in our health system every year. The system is very complex and extremely unjust. Several million French people are completely exempt from paying anything, while on the other hand many people – and it is impossible to know why one belongs to one category or the other – are unable to establish to what extent they will be covered by the official public healthcare system. It is possible to consult a doctor and be pleasantly surprised to discover that you owe him nothing. Sometimes – for example, in maternity – what you have to pay is truly astonishing. One is left completely confused by the irrationality of the system. Officially, most people will not pay at all because most French people have a card that exempts them from payment - either when they consult a doctor or when they go to the pharmacist to buy prescription drugs.
Another peculiarity of the system is that, as someone living in France – and this applies not just to French citizens, but to everybody living in France – you have a right to consult as many doctors as you want and not pay for it, which of course creates a lot of problems. These problems are not only financial. For example, many people who have nothing better to do consult as many as ten doctors simply because it is very interesting to have a conversation with well-educated people. Everybody likes it. There is no limit. Why not consult a doctor every time you get bored? In this way a lot of people simply go to the doctor as they used to go to see the vicar a hundred years ago. Of course, we pay for this, but the majority of the French people are not conscious of this fact.
I could continue to describe the system for a very long time, but let me just mention one last bizarre dimension: the French system is based on what we call a partnership between employers and unions. Officially, the healthcare system is managed by union representatives and an organisation called MEDEF, the major employers’ organisation. Of course, the system does not work, and would not be operational at all if MEDEF were not completely circumvented over any decision they pretend to make. The potential for catastrophe is obvious. It is not very surprising, because the whole system is designed in such a manner that the catastrophe was bound to happen. What surprises me most is the fact that the catastrophe took so long to occur.
There is also a great degree of lobbying by doctors. A peculiarity in France is that doctors lobby the government based on what they call the principle of ‘médecine libérale’ – liberal medicine. They want the right to receive as many patients as they want, and they have an incentive to do so, because each time they receive a patient they also receive funds. On the other hand, there are patients who are getting unlimited funds, because whatever they do it is officially covered. In principle, a system like this should have collapsed much sooner. The miracle is that it has been declining for only ten years.
The need for change is obvious, so why are we so reluctant to carry out reform? Well, there is a belief in France that bad news and unemployment are inextricably connected, and that everything can be explained by this fact. Many people in France, and many politicians I know personally, are absolutely convinced that this system that was so wonderful 50 years ago would work again if only we were able to reduce unemployment.
Of course, any economist looking at the figures could tell these people that one of the reasons we have unemployment is the fact that we have very high taxes, especially taxes on salaries. Labour therefore becomes less desirable, seen from the employer’s point of view. But this is something that most politicians do not understand very well.
The second reason, which is much more important, is the fact that the system was created in 1946/47, at a time when everything was being redesigned on a new basis and on noble principles – principles that were enshrined in the constitution. Few people know it, but the present French constitution, which was created in 1958, makes direct reference to the preamble of the constitution created in 1946. In this preamble we had rights to everything – a right to health, a right to a place to live, a right to work, and so on.
The constitution created a kind of myth, and it generated great expectations. In France there is a collective feeling that the founding fathers were very wise, and what they designed was extraordinarily noble. If there is one thing that simply cannot be done, it is abolishing the system they created. France believes that it is a beacon of light for the world to follow. Thus, it cannot just decide that its principles are to be redesigned. It would be political suicide to promise to eradicate the principles and commitments enshrined in the constitution.
France is not alone in refusing to reform its decrepit system. In the rest of old Europe, even if it is not enshrined in any constitution in such a ridiculous manner, there is a belief that the system is based on noble principles, which should not of course be laughed at, and to which people should always be faithful. The irony is that what we are doing is creating a kind of society that is profoundly unequal and profoundly unfair, but based on very noble principles. The big problem we have, not only in France but across the rest of old Europe, is to make the public conscious of this fact. We need to realise that we have no choice but to change these principles because they just do not work.
Principles that are not applied on a day-to-day basis are worthless.
The final reason why we refuse to change, and perhaps the most important, is what I call the ‘age of capital’. Many ministers and cabinet members in France are fully aware of what we are saying and would like to change things. When you ask them why they do not do so, they point to the president. This person, who began his career in the sixties, lived the greater part of his life in a system that was working by virtue of a miracle (because of economic growth, because of reconstruction, and so on and so forth), and is hence not very keen to change things. We have a problem not only with myths and legends, and so on, but also with the person who is in charge of changing things if they do not work, who is too old to realise that he should reform.
The rest of the population is also part of the reason, simply because it is an ageing population, and it is very difficult to implement change among older people. It is very difficult to tell them that bankruptcy looms, and that they must adjust to reality. The truly awful thing is that with each healthcare reform we pass on the cost to our children.
One small message of hope comes from Alsace, the most eastern region of France, very close to Germany. As a result of the fact that it was occupied by the Germans for four years, Alsace has a completely different system, based much more on competition, with better governance and much better management; nothing is for free. And of course it works, being better financially balanced than the system in the rest of France.
So to conclude, in France it seems that East knows best.
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