Health Care

France's Health-Care System Is Going Broke


The French may bid adieu to taxpayer-funded benefits such as spa treatments, which they have long justified as preventive care

Photo illustration by 731; Photographs by Alamy; Getty Images

The French may bid adieu to taxpayer-funded benefits such as spa treatments, which they have long justified as preventive care

Anita Manfredi got nine massages and 18 mud baths at a luxury spa in November. The French government paid two-thirds of the $1,022 bill. “The treatment has done me a lot of good,” says Manfredi, a French retiree who suffers from arthritis and enjoys a three-week retreat at the southern spa town of Dax every year. “I no longer have flare-ups.”

For decades, France has held up its health-care system as a model to the world. Homeopathic remedies, support tights, and taxi rides to the hospital are among the many costs reimbursed by the health-care branch of France’s social security system, known as l’assurance maladie. Average life expectancy is 81.3 years, longer than in the U.S. Adults are less likely to live with diabetes or die from heart disease, and the rate of infant deaths in 2010, the latest year on record, was almost half that of the U.S., according to the Organisation for Economic Co-operation and Development.

Yet France’s looming recession and a steady increase in chronic diseases including diabetes threaten to change that, says Willy Hodin, who heads Groupe PHR, an umbrella organization for 2,200 French pharmacies. The health system exceeds its budget by billions of euros each year, and in the face of rising costs, taxpayer-funded benefits such as spa treatments, which the French have long justified as preventive care, now look more like expendable luxuries. “Reform is needed fast,” Hodin says. “The most optimistic believe this system can survive another five to six years. The less optimistic don’t think it will last more than three.”

Even as Spain and Greece gut their own costly health-care systems in an effort to control government spending, French President François Hollande is struggling to preserve his country’s enviably generous benefits, which most citizens consider a right. Aware that any attempt to dramatically curtail perks would likely lead to massive protests, Hollande has taken a more modest approach to cost-cutting. France’s health system now requires doctors to reduce the number of drugs they prescribe and to substitute generics for brand-name pharmaceuticals. The government says cuts in the cost of prescription medicines will save €530 million ($702.4 million) in 2013. Patients in other European nations have long used generics, but many French view no-name drugs with suspicion and demand the real thing. In Germany, as much as 96 percent of prescriptions are filled with generics. In June 2011 the substitution rate in France was 71 percent, according to the government. The goal is 85 percent.

Under new rules, patients can no longer refuse a generic offered by pharmacists unless they’re willing to pay upfront for the pricier alternative. And pharmacists who sell too many branded drugs face trouble. Jean-Christophe Girardeaux and his mother, Jacqueline, who co-own a pharmacy in Airvault, a town of about 3,000 in western France, lost their right to offer customers immediate reimbursement for one month in September after they failed to sell enough generics. The younger Girardeaux calls the government’s push for generics “crazy,” a view many French share. In a December opinion poll published by Groupe PHR, 46 percent of those surveyed said the increased pressure to use generic drugs was a violation of their freedom.

The government is also putting the squeeze on free taxi rides for patients in rural areas, who often live far from hospitals. Jonathan Guersoni, a cabbie in the Burgundy region, says 95 percent of his business comes from shuttling patients to and from the doctor in his Mercedes-Benz (DAI:GR). He carries one customer three times a week for dialysis at a hospital 31 miles away, billing the government at a discounted rate, about 7 percent less than what he charges paying customers. Guersoni, who goes by the nickname Joe Le Taxi, fears health authorities will soon demand a discount of more than twice as much. “I am really worried,” he says. “I may have to get a cheaper car.”

The tinkering appears to have succeeded in bringing down costs, though it’s unclear by how much. The government projects the health-care system’s 2013 shortfall will be about €5.1 billion, down from €11.6 billion in 2010. Yet that forecast may be optimistic, since it’s based on the assumption that the economy will grow 0.8 percent—double the European Commission’s estimate. France’s system “is simply unaffordable, unsustainable, and the manner in which it’s financed is a huge burden on the economy,” says Nicholas Spiro, managing director of Spiro Sovereign Strategy in London. “The French are not being realistic.”

The bottom line: The French government says the health system will fall €5.1 billion short in 2013, meaning it may be forced to cut cherished benefits.

Torsoli is a reporter for Bloomberg News in Paris.

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