Impact of private health insurance on a public healthcare system: the case of cesarean deliveries

In the French DRG-based payment system, both private and public hospitals are financed by a single public payer. Public hospitals are overcrowded and have no direct financial incentives to choose one procedure over another. If a patient has a strong preference, they can switch to a private hospital. In private hospitals, the preference does matter, but the patient has to pay for additional costs, for which they are reimbursed if they have supplementary private health insurance. Do financial incentives drive the physician's behavior? Using exhaustive delivery data from a French administrative district (département) over a 7-year period (2008-2014), we controlled for factors that are known to influence obstetric practices. Restricting the sample to the women with low clinical risk, we found that private hospitals perform significantly more cesarean deliveries than public hospitals. However, for patients without private health insurance coverage, the two sectors differed much less in terms of cesareans performed. We determined the impact of the financial incentive for patients who can afford the additional cost. Affordability is mainly ensured by the reimbursement of costs by private health insurance. The responsibility of the public welfare system is to provide healthcare for normal births, but not for discretionary cesareans. We here show the two sides of the supplementary private health insurance; 1) because 95% of the French population is covered, people's health preferences are generally not based on affordability; 2) in a market-driven public healthcare delivery system, it distorts public policies developed by policy-makers for the benefit of society.