No cut in sickness insurance contributions despite budget surplus

Download article in original language : LU0012154FFR.DOC

Although Luxembourg's sickness insurance funds have a budget surplus, the November 2000 general meeting of the Union of Sickness Funds maintained the reduction in benefits and increased contribution rates decided in 1999. The OGB-L trade union confederation has called a general strike in protest.

The general meeting of the Union of Sickness Funds (Union des Caisses de Maladies, UCM), the umbrella group for Luxembourg's various sickness insurance funds, brings together the social partners in November each year. The purpose of the meeting is to fix a balanced budget.

In November 1999, despite protests from employee representatives, the general meeting reduced certain benefits and increased contribution rates. It also agreed extra funding of about LUF 1 billion from the government (LU9912118F).

As the 2000 general meeting approached, doctors and dentists organised a strike (LU0011150N), whereupon the government withdrew a bill making doctors contribute 5% to cover the cost of certain hospital treatment. This had been proposed as part of a process of financially balancing the sickness insurance scheme while waiting for a working group to publish its conclusions.

According to the Prime Minister, the 2000 UCM general meeting had to find a solution that all the actors could accept with a view to balancing the sickness funds' structural deficit through contributions from the government, scheme members and service providers.

Trade union positions

Since the decisions were taken in 1999, the UCM budget deficit has turned into surplus in 2000. In this context, in the run-up to the November meeting the Luxembourg Confederation of Independent Trade Unions (Onofhängege Gewerkschafts-Bond Lëtzebuerg, OGB-L) and the Luxembourg Confederation of Christian Trade Unions (Lëtzebuerger Chrëschtleche Gewerkschafts-Bond, LCGB) distributed a leaflet to households arguing for "a responsible approach to the problem of financing the sickness funds". Furthermore, this should not be done "solely on the backs of insured patients, but with the supportive participation of all parties". According to both trade unions, scheme members who fall ill are doubly penalised: as insurees, they see their contributions go up; and as patients they find themselves contributing more to the costs of healthcare. OGB-L and LCGB believe that, while insured members, patients, employers and the government contribute, they do so unequally.

The trade unions threatened to take action if the representatives of the employers and the government refused to change the current arrangements. They said that they would have nothing to do with a situation in which additional reserves were paid into the funds at the expense of insured patients, and they called for the 1999 measures to be overturned.

LCGB believes that the principle governing how UCM general meetings are conducted is undemocratic. Of the votes given to delegates, 210 are allocated to trade unions, which represent insured members, and 210 go to representatives of employers' associations (industry, commerce, crafts, the liberal professions and the agricultural sector). One vote is held by the government, which is represented by the president of the UCM. LCGB claims that "it can happen that this single vote is decisive: in the event of a tie between the employers and the trade unions – and it happens often enough – the government has the casting vote. Last year, for example, the government voted against the insured members by supporting their additional contribution." The union therefore demanded a reform of the voting procedure to make it "more democratic".

As the UCM funds show a surplus of LUF 647million for the year 2000, and a surplus of LUF 1.5 billion is estimated for 2001, the funding system needs to be re-examined, according to LCGB. There is also a perceived need to find new ways of keeping costs under control - for example, by encouraging preventive medicine and thereby reducing the costs of curative medicine.

As OGB-L shared the views of LCGB, both trade unions held a protest meeting half an hour before the UCM general meeting.

Employers oppose reviewing 1999 package

The representatives of the employers, the self-employed and the agricultural sector at the UCM general meeting stated that the measures agreed in 1999 had been adopted in order to distribute charges equitably: contribution rates had gone up for both employers and employees, and these increases had been a precondition for the government raising the state's contribution to funding the sickness insurance scheme. The employers said that nobody could claim that the UCM is "awash" with money, particularly as the projections suggest a tendency towards deficit in the medium term.

Given these facts, the employers' representatives believed that it would be counter-productive to reopen the package that had been agreed at the general meeting in November 1999. For the employers, it was more a question of working out solutions that would also ensure the sickness and maternity insurance scheme's funding in the long term. The decisions to be taken should guarantee that Luxembourg's economy continues to be competitive, and that the healthcare given to insured members is of a high quality.

Unions fail to achieve goals

The general meeting on 15 November 2000 went on into the evening. In the course of it, the trade unions deplored an "absence of solidarity", with some representatives even claiming that social dialogue was dead. Not even trade solidarity was complete, as the General Public Sector Confederation (Confédération générale de la fonction publique, CGFP) abstained on certain votes, particularly on withdrawing the 1999 increases in members' contributions. With regard to the provisional budget for 2001, CGFP voted with the representatives of the employers' associations and the UCM president - as a result, the measures adopted in 1999 were retained.

According to CGFP, it was inconceivable that the decisions taken in 1999 to make good the provisional deficit could be overturned when the state, insured members and some providers were helping to cover expenses, and there was good reason to abide by the commitments made earlier.

The provisional UCM budget for 2001 provides for an operational surplus of LUF 991 million, of which a little under LUF 300 million will be placed in reserve. This will leave a surplus of LUF 693 million, to which an estimated surplus of LUF 671 million for 2000 should be added. The employers' representatives said that, although the budget currently shows a surplus, the "structural problem of funding the sickness and maternity insurance scheme has still not been resolved." LCGB argued that the UCM is pursuing "an accounting policy, not a health policy", while OGB-L deplored the absence of social dialogue, and stressed the need to carry out legislative reforms to change the operation and overall policy of the sickness funds.

OGB-L threatens general strike

With sickness fund benefits reduced from 1 January 2000 on the one hand, and the government granting the doctors a reprieve by lifting their "solidarity contribution" on the other, OGB-L claimed that the government and its parliamentary majority are seeking to create a "two-speed society". It stated that the government's refusal to repeal the higher members' contributions to sickness schemes – despite large surpluses in the funds – is likely to affect people living on low and medium incomes and pensions.

The sickness funds issue was apparently the last straw for OGB-L. On 21 November, its national committee, after listening to reports on the economic and social situation in the country and observations on developments in recent months, voted unanimously to call a general strike. This move, it said, was prompted in particular by the government's attitude, which might be summed up as "a kind of dictatorship".

Through the proposed general strike, OGB-L is not only demanding better social security and the best healthcare irrespective of income, but is also claiming an immediate increase in pensions in the private sector and a pay rise reflecting enterprises' record profits.

Commentary

The issue of the Union of Sickness Funds budget crops up periodically, and always arouses particular interest among those concerned. The deficit was balanced in 1997 through an increase in contribution rates that sparked a storm of protest from employers and the government (LU9712135N). A reduction in contribution rates in November 1998 met with general approval (LU9812184N) and in 1999 and 2000, it has been the employee representatives who are unhappy.

In 1999, it was suggested by the author that the four partners involved (the government, the social partners, health professionals and service providers) should have an in-depth, serious discussion on the structural measures needed to maintain the sickness insurance system instead of waiting until November 2000 and having a simple vote, the result of which could not be predicted. The same suggestion holds good for 2001. (Marc Feyereisen)