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2002 Social Security Funding Law adopted

Download article in original language : FR0112153FFR.DOC

France's Social Security Funding Law for 2002 was adopted in December 2001. The law contains a number of significant provisions, such as a general rise in pensions and increased paternity leave. However, attempts to control healthcare expenditure are flagging, and the new legislation also fails to address important issues such as the future of the various pension schemes and the joint management of social security funds. These issues have been shelved pending the outcome of the presidential election in 2002.

The Social Security Funding Law (Loi de financement de la sécurité sociale) for 2002 was passed by the National Assembly on 4 December 2001.

Many new initiatives

The most important initiatives included in the 2002 Social Security Funding Law are:

  • an enhancement of the Universal Health Insurance (Couverture Maladie Universelle, CMU) scheme (FR0001135F), through elimination of the spending ceiling for dentistry and the extension of the 'direct settlement' system for former benefit recipients whose income now exceeds the statutory ceiling;
  • the creation - within the framework of a policy to improve coverage for industrial diseases - of a compensation fund for asbestos victims;
  • a 2.2% increase in pensions from 1 January 2002, which is the date that a new dependency benefit, the 'individualised autonomy allowance' (allocation personnalisée autonomie, APA), comes into force;
  • the introduction of 11 days of paternity leave (FR0107169F);
  • the overhaul of housing assistance scales;
  • the creation of 30,000 child daycare places; and
  • various measures designed to enhance benefits and facilities for people with disabilities.

Efforts to control health spending stalled

The 'national health spending target' (Objectif national des dépenses de santé, ONDAM) has been set at FRF 739.7 billion (EUR 110.3 billion) for 2002 - up 3.8% on estimated spending for 2001. However, once again in 2002, the ONDAM is essentially of a formal nature. For 2001, it has already become apparent, in the light of spending trends over the first 10 months of the year, that expenditure will not - any more than it did in previous years - fall within the target approved in the 2001 ONDAM (FR0011104F) and no-one expects that the 2002 target will be any different.

For 2001, half of healthcare overspending was due to drug expenditure. The government has developed a drugs policy for 2002, focusing on developing generic drugs and cutting the cost of specific medications, such as those deemed to be 'low-performance'.

In addition to the medication issue, a new healthcare spending control policy would require reforming the 'agreement-based policy' governing the relationship between health professionals and the sickness insurance fund (FR0108159F and FR0105157F). The approved 2002 Social Security Funding Law provides that a multi-tiered agreement with healthcare professionals be reached. A 'basic' agreement covering all health professions is to be supplemented by sector-specific agreements. Under the latter, health professionals will be able to take out individual 'good practice' contracts governing care quality and prescription volume. Potentially, these individual contracts could lead to flat-fee remuneration. The National Sickness Insurance Fund (Caisse nationale d'assurance maladie, CNAMTS) has indicated its support for this approach, and is pushing for the prompt development of concrete terms and conditions.

During the discussion on the 2002 law, in addition to substantive problems relating to control of expenditure, there were also disputes with various categories of healthcare professionals. These included conflicts with: the staff of state-run hospitals over the move to the 35-hour working week (FR0110102N); private clinic owners over disparities between the treatment of clinic staff and those in state-run hospitals; and junior hospital doctors pushing for the implementation of an agreement on working conditions signed over a year previously. In an attempt to stave off these disputes, the government assigned additional funding, thereby further undermining the credibility of the national health spending target.

Pension and funding issues not addressed

On the issue of pensions, members of parliament approved an amendment to the 2002 social security bill establishing eligibility for a full pension for employees under 60 years of age with over 40 years of contributions. The government successfully asked for a new vote to overturn this amendment, arguing that this type of provision could be put in place only within the framework of a comprehensive shake-up of the pension system. In addition to the 2.2% increase in pensions as of 1 January 2002 and the funds channeled into the new Pension Reserve Fund (Fonds de réserve des retraites) on an ongoing basis (FR0105155N), the only other major initiative for older workers in the 2002 law is the creation of the 'pension-equivalent benefit' (revenu équivalent retraite) scheme for unemployed people under 60 years of age with over 40 years of contributions. This benefit – a minimum FRF 5,000 (EUR 762) per month - replaces a previous identical unemployment benefit provision, which the social partners did not wish to prolong.

A major part of the debate on the 2002 Social Security Funding Law – as in previous years – focused on the financial health of the social security funds and on accounting transparency. The social security minister announced a cumulative surplus in the social security general scheme of FRF 2 billion (EUR 305 million) for 1998-2001, drawing a comparison between the current surplus and the cumulative deficit of FRF 265 billion (EUR 40.4 billion) for the 1993–7 period. In an attempt to address criticism from the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF), which has withdrawn from the boards of the various social security funds in protest over the use of contributions to fund the implementation of the 35-hour working week (FR0107167N), the minister has put in place a new form of funding for exemptions from employers' social security contributions related to the introduction of the 35-hour week. This initiative draws on receipts from the alcohol tax, previously used to fund sickness insurance.

However, the debate over the actual state of the various funds remains crucial, even for the trade unions. In the opinion of the General Confederation of Labour (Confédération générale du travail, CGT), there is a 'growing discrepancy between funding arrangements for social security and the objectives set for it (...) The Social Security Funding Bill does nothing to allay major concerns over the capacity to finance the move to the 35-hour working week in hospitals, and crucial staff and equipment-related improvements. The planned boost to pensions under the general scheme falls far short of the expectations of pensioners, who will see their purchasing power further eroded next year.'

The French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT) considers that 'the lack of transparency that we are currently facing must end. Access to the actual figures is now a necessity. In addition, health spending must be in synch with a genuine health policy.' The General Confederation of Labour-Force ouvrière (Confédération générale du travail-Force ouvrière, CGT-FO) challenged the approach whereby 'so-called surpluses' that allegedly exist in other sections of the social security system are channeled into the Pension Reserve Fund. The French Confederation of Professional and Managerial Staff-General Confederation of Professional and Managerial Staff (Confédération française de l'encadrement-Confédération générale des cadres, CFE-CGC) describes the situation as 'murky'.

Commentary

The 2002 Social Security Funding Law fails to address issues regarding health spending control, the future of pensions, the role of the social partners in managing social security funds and the transparency of accounts and funding. In the public debate, discussion on the law was largely overshadowed by MEDEF's proposals on social security put forward in late November 2001. These included:

  • introducing 'structured competition' for sickness insurance;
  • harmonising basic and supplementary pension schemes; and
  • making family policy and its funding a matter solely for the state's jurisdiction.

In the run-up to the general election in 2002, a parliament nearing the end of its term is unable fully to address social security-related issues. However, these matters will feature in the debate for the forthcoming presidential elections. (Pierre Volovitch, IRES)

Page last updated: 04 January, 2002
About this document
  • ID: FR0112153F
  • Author: Pierre VOLOVITCH
  • Country: France
  • Language: EN
  • Publication date: 04-01-2002
  • Subjects: LEGISLATIVE PROPOSAL, PENSION SCHEME, HEALTH INSURANCE, HEALTH POLICY, OCCUPATIONAL HEALTH MEASURE, CHILD CARE, PARENTAL LEAVE