Alongside fiscal stimulus, the other great policy iniative of the Obama administration is healthcare reform. Few would doubt that the US system is in need of change. Indeed, from a policy making perspective, America pretty much foots the league of desirable healthcare models.

To add insult to injury, the country that comes out top is France – at least accordining to the World Health Organisation. But here's the thing: In terms of essential characteristics: the French and American systems are remarkably similar.

In a thought-provoking piece for the Atlantic, Pascal-Emmanuel Gobry sets out the facts:

  • First of all, the French healthcare system is built on a large, highly-regulated private sector. Unlike Britain's NHS, the government doesn't own everything. Some hospitals are public, but many are private and for-profit. Indeed, there are publicly-traded hospital chains, just like in the US…
  • Secondly, there's a crucial feature at the heart of the French healthcare system that is also at the heart of the US healthcare system–and that all US wonks hate: employer-provided insurance. 

So, why is the French model so much better than its American twin? Gobry doesn't dodge the complexities, but this is his main conclusion:

  • I think the defining thing is: costs. Costs are just much higher in the US. You see this with doctors: American doctors just make way, way more money than French doctors, which drives up costs across the board.

As to what explains this differential, the answer is basically this: The US Government allows its healthcare sector to get away with it, the French Government doesn't. Perhaps it all comes down to one fundamental principle: Say yes to competition, but no to vested interests.