French watchdog calls for health insurance cuts to reduce social security deficit

13 Oct 20

Auditors have urged France to cut spending on health insurance payments after projecting the social security system deficit will balloon by more than 20 times its size this year.

 

The Cour des Comptes, France’s national audit office, found Covid-19 will lead to the combined deficit of the general social security system and the old-age solidarity fund being on course to reach €44.4bn in 2020.

This follows a deficit of €1.9bn in 2019, and is considerably larger than the €28bn recorded in 2010 in the aftermath of the global financial crisis.

Lockdown measures caused revenues to fall by €27.3bn, and the pandemic also led to additional expenditure, mainly on health insurance, increasing by €11.5bn.

The social security budget is separate from the state budget, and is financed largely by workers and employers with contributions based on wages.

It takes on debt separately from the government, and a social debt reduction fund has existed since 1996.

The government plans to transfer €136bn to the fund by 2024, but the Cour des Comptes has projected the cumulative social security system deficit will exceed that figure by at least €50bn.

The French social security system is divided into four branches: health, pensions, family and workplace accidents.

The watchdog has urged the government to cut spending in the branch of the system with the highest deficit – health – claiming the other branches have made good progress in the past decade.

“Faced with the increase in expenditure, an increase in revenue earmarked for the financing of social security seems unlikely,” the auditors said in a report.

“It does not appear desirable either, given the deteriorated fiscal trajectory of public finances, to allocate state revenues to social security. Avoiding the increase in social debt therefore supposes acting on spending.”

The report called for action to make the health system “more efficient”, and claimed officials have been too focused on making various cuts to specific budgets, rather than improving the “underlying foundations of health spending”.

The auditors stopped short of providing specific solutions, but said spending “overlaps” between national and regional health authorities should be eliminated, and spending on medical equipment (a wide-ranging category that includes beds, medical machines, medicine and bandages) should not increase by more than 4% each year.

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