Friday, October 31, 2008

Who Pays?

As usual, Écopublix provides an illuminating analysis of the proposed social security financing bill. Noting the market power of insurance companies offering supplementary health insurance, Clément argues that the proposed tax on their profits is likely to be passed on in whole or in part to the insured.

6 comments:

Unknown said...

I note that Ecopublix's illuminating analysis does not feature a demonstration that insurance companies in France have indeed the market power necessary. Neither do they demonstrate - as in scientific demonstration - that competition isn't perfect on the insurance market. In other words they do demonstrate that should certain conditions be met, certain things will happen. Fine. Now show me the evidence, doctor...

Unknown said...

Bernard,
You must have missed this passage:

Alors pourquoi les complémentaires pourraient-elles ne pas répercuter sur les cotisations leur nouvelle contribution ? Toujours dans le même élan, le ministre nous dit que c’est parce que leurs profits ont fortement augmenté ces derniers temps. Mais encore une fois le raisonnement est biaisé, et au contraire, si elles ont pu augmenter autant leurs bénéfices ces dernières années, c’est peut-être qu’elles sont en position de force sur le marché de l’assurance maladie complémentaire. Et si elles sont en position de force, il y a fort à parier qu’elles pourront répercuter leur nouvelle taxe sur leurs assurés. Et en effet, le rapport du HCAAM note que les cotisations d’assurance complémentaire entre 2001 et 2006 ont augmenté de 48 % pendant que les dépenses de ces organismes n’augmentaient que de 32 %, notamment du fait d’une "restructuration de l’offre par concentration". Ce n’est donc pas parce qu’ils se sont déchargés sur l’état que les organismes d’assurance maladie complémentaire ont réussi à augmenter fortement leurs bénéfices, mais parce que la concurrence sur ces marchés a fortement décru.

Unknown said...

Good point. However, the report from HCAAM from which the numbers are extracted is significantly less clear, and in fact, the report argues that the market is "concurrentiel", ie that it is not operating in the way the Ecopublix author thinks that it does (page 31 of the report at http://www.securite-sociale.fr/institutions/hcaam/rapport2008/hcaam_rapport2008.pdf ).

The report notes that the profitability of this sector has considerably increased between 2001 and 2006, and that this is due to operating costs increasing much less than "contributions". I think that it would be unwise to have a representation of this sector in France as a few companies with massive market power. I think that this sector has been excessively fragmented in the past with a lot of tiny, inefficient "mutuelles", and that indeed there were economies of size to be realized. I am not sure that the sector is so concentrated that competition is as distorted in the sector as Ecopublix imply.

What would really be interesting would be to have the rise in contributions from the private health insurance companies on the one hand, and from the mutual health insurance companies on the other hand.

As a matter of fact, this little debate is interesting for the USA, as I understand that the reform that led to "managed care" or whatever it is called has generated massively deteriorating efficiency for your private health insurance sector (not least compared to Medicaid), without mentioning of course the public's dissatisfaction which appears to be central to Obama's (victorious?) campaign.

Unknown said...

Bernard,
The word "concurrentiel" appears in the following sentence: "Toutefois, sur un marché concurrentiel, ... une politique volontariste de la gestion du risque et des efforts de productivité devraient permettre ...

To my ear, this conditional statement neither affirms nor denies that the market is currently competitive. It merely says that if the market were competitive, it should be possible to absorb the charges without affecting premiums. Since I am not an expert on the matter, and perhaps you are, I suggest that you post your objections on Ecopublix and see what the author has to say.

As for Obama's health plan, I think it's chief promise is to extend coverage to most of those presently uncovered. It will not, as presently constituted, do much to improve the efficiency of managed care, since existing plans will be left largely intact. It is true that the plan is much more appealing to consumers than McCain's plan, which, by lifting the employer tax credit, would threaten existing employer-paid plans, and by shifting tax credits to individual families would force them to buy insurance from companies that would be free to redefine risk pools to their own advantage, excluding or imposing high premiums on riskier categories of clients. Neither American plan can really be compared with the French system.

Unknown said...

I omitted to say that if the market were in fact competitive, the reduced operating costs that the report credits with leading to increased profits should have led to some reduction of premiums but apparently did not, thus suggesting that the market is not really competitive. That in fact is Ecopublix's point.

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