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

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

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

4. The role of Voluntary Health Insurance (VHI) in France (2)
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
Extra-billings (on average + 17% / official tariff for specialists, 40% for surgeons, 30% for ophthalmologists)
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

5. VHI role in financing of health expenditures, by type of care - 2005
Source: National Health Accounts (DREES)

6. Expenditures of VHI, by type of care - 2005
Total VHI expenditure = € 19.3 billion (€ 308 /capita)
Source: National Health Accounts (DREES)

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

8. The market of VHI: Mutual funds (1)
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.
Governed by decisions of members’ representatives
Limited use of risk-rating or risk-selection strategies

9. The market of VHI: Mutual funds (2)
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 manage claims process on behalf of basic health insurance

10. The market of VHI: Mutual funds (3)
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
Source: Roussel, 2003

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

12. The market of VHI: Insurance companies
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
Health represents 5% of their revenue

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

14. VHI market: types of contracts
Individual (40%)
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

15. Type of affiliation and type of VHI (2004)
Employer-sponsored
Individual
% of population covered
56,4
40,1
By type of VHI
Mutual fund
56,6
62,7
Provident institution
19,2
6,4
Insurance company
19,9
28,2
n.a.
4,3
2,6
Note: 3.5% of people do not know
Source: French Health, Health Care and Insurance Survey (ESPS), IRDES

16. 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

17. Regulation (1) Exclusion of medical condition Continuity of protection
Not allowed for collective contracts
Allowed in individual contracts, with two conditions
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
After two-years, the insurer can not unilaterally terminate the contract
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

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

19. Regulation (3) 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

20. Regulation (4) 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

21. 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

22. Regulation: specific rules for complementary health universal coverage (CMU-C)
Inequities in complementary coverage and access to care
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)

23. Regulation: specific rules for complementary health universal coverage (CMU-C)
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%
Non take-up by eligible people

24. A new role for VHI institutions?
Until now, VHI institutions have been passive payers of co-payments
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%

25. A new role for VHI institutions?
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)

26. Impact of VHI on French health system
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
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
Expansion of VHI coverage allows cost-shifting and therefore prevents from more rationale definition of benefit basket insured by basic health insurance

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

28. Thank you for your attention