Private complementary coverage in France Role, regulation, market, and challenges Valérie PARIS – December 7th, 2006 Joint OECD / Korea Centre of Health and Social Policy

Outline of the presentation Role of the private complementary insurance in France Role of the private complementary insurance in France Stakeholders on the market of complementary insurance: status and regulation Stakeholders on the market of complementary insurance: status and regulation Challenges for the French health system Challenges for the French health system

The role of Voluntary Health Insurance (VHI) in France (1) Mandatory basic coverage by social health insurance Mandatory basic coverage by social health insurance Cost-sharing for most goods and services Cost-sharing for most goods and services Scope for voluntary complementary coverage Scope for voluntary complementary coverage VHI finances 13% of health expenditures VHI finances 13% of health expenditures Share of VHI in total expenditures varies for different types of care Share of VHI in total expenditures varies for different types of care

The role of Voluntary Health Insurance (VHI) in France (2) Voluntary coverage provided by private institutions, which actually provide two types of insurance: Voluntary coverage provided by private institutions, which actually provide two types of insurance: –Complementary coverage for goods and services incompletely covered by the statutory health insurance: Co-insurance rate Co-insurance rate Extra-billings (on average + 17% / official tariff for specialists, 40% for surgeons, 30% for ophthalmologists) Extra-billings (on average + 17% / official tariff for specialists, 40% for surgeons, 30% for ophthalmologists) Prices of medical goods exceeding reimbursement prices Prices of medical goods exceeding reimbursement prices –Supplementary coverage for goods and services which are not reimbursed at all by the statutory health insurance e.g. individual room in private hospitals, alternative medicine non covered by statutory health insurance e.g. individual room in private hospitals, alternative medicine non covered by statutory health insurance

VHI role in financing of health expenditures, by type of care Source: National Health Accounts (DREES)

Expenditures of VHI, by type of care Source: National Health Accounts (DREES) Total VHI expenditure = € 19.3 billion (€ 308 /capita)

The market of VHI: stakeholders Three types of institutions: Three types of institutions: –Mutual funds –Provident institutions –Insurance companies With different characteristics and regulation With different characteristics and regulation

The market of VHI: Mutual funds (1) Have been existing before 1945 Social Security Act Have been existing before 1945 Social Security Act Not-for-profit institutions, mainly financed through members’ contributions, in order to provide providence, solidarity and mutual aid to their members and their families. Not-for-profit institutions, mainly financed through members’ contributions, in order to provide providence, solidarity and mutual aid to their members and their families. Governed by decisions of members’ representatives Governed by decisions of members’ representatives Limited use of risk-rating or risk-selection strategies Limited use of risk-rating or risk-selection strategies

The market of VHI: Mutual funds (2) Several types: Several types: –National funds for civil servants –Company-based, professional, inter- professional –General recruitment Some of them provide goods and services (hospitals, dental and optical care, pharmacies) Some of them provide goods and services (hospitals, dental and optical care, pharmacies) Some of them manage claims process on behalf of basic health insurance Some of them manage claims process on behalf of basic health insurance

The market of VHI: Mutual funds (3) In 2001: In 2001: –549 health funds (covering more than 3,500 members each) –29.9 million people covered –For 20.5 million people contributing –Health = 95% of outlays (health, providence, social aid) Consolidation within the past 10 years, due to European legislation Consolidation within the past 10 years, due to European legislation Source: Roussel, 2003

The market of VHI: provident institutions Private, not-for-profit Private, not-for-profit Initiated by employers and employees, and administered by boards with equal representation Initiated by employers and employees, and administered by boards with equal representation Mainly oriented towards collective coverage and social protection Mainly oriented towards collective coverage and social protection In 2001 In 2001 –78 PI provide health coverage, for 5 million people (through mandatory membership for 80% of them)

The market of VHI: Insurance companies Two types, both private Two types, both private –Insurances: for-profit insurance companies –Mutual insurances: insured members grouped on socio-professional basis and proprietors of the society – not-for-profit About 118 companies operate on the French market for health insurance About 118 companies operate on the French market for health insurance Health represents 5% of their revenue Health represents 5% of their revenue

VHI market (% of VHI expenditures, 2005) Source: National Health Accounts (DREES)

VHI market: types of contracts Individual (40%) Individual (40%) Collective contracts (56%) Collective contracts (56%) –Generally co-sponsored by employers –Mandatory in 50% of cases Inequities in coverage and quality of coverage, according to activity, sector of activity, professional status, age Inequities in coverage and quality of coverage, according to activity, sector of activity, professional status, age

Source: French Health, Health Care and Insurance Survey (ESPS), IRDES Note: 3.5% of people do not know Employer- sponsoredIndividual % of population covered56,440,1 By type of VHI Mutual fund56,662,7 Provident institution19,26,4 Insurance company19,928,2 n.a.4,32,6 Type of affiliation and type of VHI (2004)

Regulation: regulatory bodies and legislation Regulatory body and legislation Mutual funds / Provident Institutions Ministry of social security Code de la Mutualité / Code de la protection sociale Insurance companies Ministry of Eco and Finance Code des assurances The Commission for the control of mutual funds, insurance companies and provident institutions is responsible for consumer protection The Commission for the control of mutual funds, insurance companies and provident institutions is responsible for consumer protection

Regulation (1) Exclusion of medical condition Exclusion of medical condition –Not allowed for collective contracts –Allowed in individual contracts, with two conditions Consumer must be informed of medical conditions excluded prior to enrolment Consumer must be informed of medical conditions excluded prior to enrolment In case of litigation, the insurer has to prove that the condition existed before enrolment In case of litigation, the insurer has to prove that the condition existed before enrolment –After two-years, the insurer can not unilaterally terminate the contract Continuity of protection Continuity of protection –Collective contracts obtained through employment: the insurer is required to offer a contract at retirement, with a premium capped at 150% of the previous premium

Regulation (2) Specialisation Specialisation –Institutions providing insurance coverage can not provide other commercial services –Issue for mutual funds formerly providing medical services Solvency requirements Solvency requirements

Regulation (3) Premiums requirements Premiums requirements –Solidarity principle: premiums can be adjusted to take into account: income, enrolment duration, mutual fund, geographic location, number of beneficiaries, age. Typically mutual funds, PI –If not, no requirement Insurance companies often use health questionnaires to adjust premiums

Regulation (4) Tax incentive Tax incentive –7% of tax reduction on complementary health coverage for contracts compliant with the solidarity principle (i.e. not requesting health information before enrolment and not linking premiums to health status) –Since 2004, contracts must also be “responsible” to benefit from tax reduction

Regulation: benefits requirements Creation of responsible contracts by the Health insurance reform, August 13, 2004, with specific requirements – –No coverage of the deductible of €1 per physician visit – –No coverage of penalties (increased cost-sharing and possible extra-billing) for non-coordinated care – –Coverage of cost-sharing for physician visits up to 100% – –Coverage of cost-sharing for prescribed (important) pharmaceuticals and laboratory exams up to 95% – –Coverage up to 100% of at least 2 procedures in a list of preventive procedures established by the Ministry of Health

Regulation: specific rules for complementary health universal coverage (CMU-C) Inequities in complementary coverage and access to care Inequities in complementary coverage and access to care Creation of CMU-C in 2000 Creation of CMU-C in 2000 –Means-tested access to free complementary health insurance (CMU-C) for the poorest part of the population. –CMU-C provided by VHI institutions OR by sickness funds, in exchange for a flat premium paid by a specific national fund –Benefit basket defined by the State –Providers not allowed to charge extra-billing –Direct payment by third-party payers –In 2005, 4.7 million beneficiaries (7.5% of the population)

Regulation: specific rules for complementary health universal coverage (CMU-C) Remaining issues: Remaining issues: –Non take-up of CMU-C by eligible people –Refusal of care by health professionals –Lack of complementary insurance for people with income above the threshold for CMU-C eligibility Completed by vouchers for the purchase of complementary insurance for people with revenues exceeding CMU-C income threshold by less than 15% Completed by vouchers for the purchase of complementary insurance for people with revenues exceeding CMU-C income threshold by less than 15% –Non take-up by eligible people

A new role for VHI institutions? Until now, VHI institutions have been passive payers of co-payments Until now, VHI institutions have been passive payers of co-payments In 2004, creation of the Board of VHI institutions In 2004, creation of the Board of VHI institutions –Gives advices to the Board of basic health insurance about inclusion of procedures in the benefit basket –Participates in the committee which negotiates drug prices with the pharmaceutical industry Some VHI announced that they will not cover drugs whose reimbursement rate has been lowered to 15% Some VHI announced that they will not cover drugs whose reimbursement rate has been lowered to 15%

A new role for VHI institutions? Recent (and rare) new forms of contracts: Recent (and rare) new forms of contracts: –Bonus contracts: reduced premium associated with a deposit, which can be partly (totally) refunded to the insured if the level of benefits received is lower than the deposit (or null) –Contracts with incitation to “preventive” care (expenditures for supposed “healthy food” partially reimbursed to the insured)

Impact of VHI on French health system Suspected of thwarting cost-containment plans based on increases in cost-sharing Suspected of thwarting cost-containment plans based on increases in cost-sharing Has become indispensable for access to care because of increases in cost-sharing on necessary care Has become indispensable for access to care because of increases in cost-sharing on necessary care Creation of CMU-C for poor people not covered by complementary protection and of vouchers for the purchase of complementary insurance Creation of CMU-C for poor people not covered by complementary protection and of vouchers for the purchase of complementary insurance In terms of equity, VHI is regressive while basic coverage is slightly progressive In terms of equity, VHI is regressive while basic coverage is slightly progressive Expansion of VHI coverage allows cost-shifting and therefore prevents from more rationale definition of benefit basket insured by basic health insurance Expansion of VHI coverage allows cost-shifting and therefore prevents from more rationale definition of benefit basket insured by basic health insurance

Useful references Private insurance in France, T.C. Buchmueller & A. Couffinhal, OECD Health working paper No. 12

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