Deficit of the Social security in France

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For 2007

The government counted in September 2006, on a “hole” of 8 billion euros for 2007 in its Finance bill of the Social security (PLFSS) presented by the Minister for health, Xavier Bertrand.

But on September 23rd, 2007 the Commission of the accounts of the Social security (CCSS) envisages a deficit of 11,7 billion euros for the only year 2007.

This degradation is related to the deficits of:

• the branch “ disease ” which would show a deficit of 6,2 billion euros for 2007, after 5,9 billion euros in 2006.
• the branch “ old age ”, of which the deficit 4,6 billion euros in 2007 knows a strong degradation, (1,9 billion euros in 2006), whereas the government envisaged a deficit only of 3,5 billion.
• the branch “ family” would reduce her deficit: 500 million euros in 2007, against 900 million euros in 2006.
• the branch “ industrial accidents - occupational diseases ” would be in deficit of 400 million euros in 2007, after 100 million euros in 2006.

A considerable share of the deficit is related to the losses of receipts resulting from the social contribution exemptions which strongly increased because of two elements:

- the application in year full with the installation to July 1st, 2005 of the single decreasing reduction replacing all the existing devices for the wages lower than 1,6 SMIC

- multiplication of the exemptions in favor of public private individuals (social cohesion plan, emergency plan for employment, services with the person….).

In 2006, these losses of receipts due to social contribution exemptions rose with nearly 25 billion euros is + 12% compared to 2005:

- 18,9 billion general reductions compensated by revenues from taxes poured by the budget of the State;

- 2,9 billion under the targeted exemptions compensated by budgetary equipments;

- 2,7 billion exemptions not compensated by the State (2,1 in 2005; 2,4 in 2006).

The exemptions of contributions granted to the companies represent a very important cost for the community, because, their financing is, in all the cases, in fact, transferred on other economic actors, in particular the households. Indeed when the State pays in the place companies, the social contribution exemptions which were granted to them, it does it starting from the revenues from taxes of its general budget, which is fed with nearly 50% by the VAT paid by the consumers.

It should be noted that in 2006, the abatement related to part-time work was removed and it is programmed that the amount of the not compensated exemptions must increase by 10% in 2007.

In addition, the analysis must also integrate the cost of the social niches . One calls social niches the derogatory devices: exemptions, abatements… of national insurance contributions. According to the committee of supply, the losses of corresponding receipts border 50 billion euros in 2007 :

- 20 billion general reductions of employer contributions,

- 5,5 billion targeted reductions of employer contributions (helped contracts, free zones, activities like the restorers, coffees.)

- 12 billion exemptions under the complements of remuneration (profit-sharing, participation… but subjected to the CSG)

- 7,5 billion under the reduced taxes CSG (returned of replacement).

In 2007 the government must present an detailed assessment of the various devices of social contribution exemption with an aim of quantifying the losses of receipts for the State and the social security.

The Sinking fund of the Social Debt

A Sinking fund of the social debt (CADES) was created by the ordinance N° 96-50 of January 24th, 1996, modified by the law n° 2004-810 of August 13rd, 2004. The CADES amongst other things aims at the rebalancing of the accounts of the Social security.

The Contribution for the refunding of the social debt

See also: Contribution for the refunding of the social debt

Political or social positions

Shared positions

Certain causes of the deficit are recognized by a majority of the political officials and actors of health (FNMF, doctors)

• the growth of the health expenditure is higher than the average economic growth, on which the receipts are based. This growth of the health expenditure is found in all the developed companies and is explained by several factors:

• purpose even of its expenditure, which makes a good " of it; supérieur" within the meaning of the political economy (consumption believes more quickly than enrichment); requirements for health (even " of confort") grow and the interventions yesterday exceptional are standardized, therefore multiply.
• the medical progress, which makes it possible to save people sicker than the average, which increases the number of treatments from which on average an individual during his life profits.
• the medical progress still, which makes available of new technologies and new treatments (sometimes with life!) more expensive.
• If the economic growth makes more quickly grow the expenditure, the stagnation or the deceleration also has the same effect: the social needs increase (more expenditure of services of solidarity in favor of the public ones precarized than is the unemployed or them without employment) whereas the receipts do not follow, even drop (one speaks then about " effect; ciseau").
• the difficult one - not to say impossible - regulation of the French health-care system, although on this point the various actors diverge on the responsibilities for the doctors, the pharmaceutical laboratories, the cases, the State, the " patronat" , of the trade unions, etc

Divergences of opinion enters the State and the " sécu"

The State frequently takes measures which have an impact on the social security offices, directly (by the regulation) or indirectly (via the economic situation). It frequently sometimes happens to him to recognize this fact, and to calculate itself the financial effect, but by doing it with its way. Moreover, once theoretical calculation carried out, it often estimates which there is not place to remake calculation if the result practices seems different ( seems , because the complexity of the factors which returns concerned interdict in practice to quantify the effect of a precise measurement).

Thus, and for example, the State will be able to estimate that overall the effect of the premature retirements is neutral for the cases because they do nothing but change natures of inactive (young people unemployed against young pensioners). Or it will be able to affirm that the social security offices box a surplus of contributions thanks to an addition of growth due to the social measures of reduction in charges, and that compensates for (partly) the authorized exemptions, therefore shortfalls of the cases.

It is understood that the cases do not adhere completely to this kind of interpretations, which however have an direct impact on what the State agrees to pour to them.

Positions on the left

With left and in trade-union organizations, other complementary reasons are advanced. Some estimate that the “hole of the sécu” is not the principal problem (even is a non-problem), for reasons:

• Quantitative: the deficit reported to the colossal budget of the social security as a whole represents only expressed as a percentage one small portion of this one;

• Structural: the social security is a Public service, it can thus be normal that this service costs money, financed by the tax. That does not solve the deficit but the compensation moves some towards the accounts of the State;
• Of the economic situation: according to them, the financial problems come mainly from insufficiencies of receipts. This lack would be caused:
• By the medical lobbys pushing with exponential and not controlled increases medical tariffs which increase more than inflation and the average of the wages.
• By the State directly (which heavy postponed payments indeed),
• By socio-economic factors, the such economic crisis, unemployment, etc
• By the actions of employers to obtain reductions of national insurance contributions, since any fall decreases the receipts of the social security (theoretically however, the State refunds with the Social security the shortfall).
• Political: some consider that by policy option (ideological or mercantile), there would be a will to lead the system to the bankruptcy, or to give him the appearance of the bankruptcy (while at the same time it would go well), with an aim of destroying it with the profit of an other system based on private insurances (including the mutual insurance companies).

Proposals

These reports lead many actors to propose reform tracks, while seeking to maintain a good level of cover. The positions on the reforms to be carried out are very distinct according to the political organizations, trade-union, mutualists or associative, they give place to sharp debates. What explains why the reforms " from the last promised chance but this time that will go it is the dernière" who follow one another almost each year: with the sight of the result, the feeling which prevails is a mixture of incredulity (did one really do something?), of doubt (to what all this stir have-you it thus been useful? ) and of relief (one does not dare to imagine what that would be if one had done nothing…). The same type of feeling, the same doubts, appear with each new announced reform (and denounced at once by those which will carry the weight of them…). The levers of reforms are multiple:

• To remove the exemptions of the derogatory provisions costing 50 billion annually.

• To require French state which it transfers with the social security the supposed taxes to finance it.
• To reduce refundings, the services. It is necessary to distinguish those here wishing overall to decrease the level of the services and those wishing to decrease only those considered to be noneffective (example of the drugs at medical department rendered insufficient);
• To reduce the socio-medical apparatus like the number of medical professionals, the number of hospital, etc (example of the numérus clausus in medicine), to control the practices of them;
• To increase the existing financings (CSG and CRDS), to conceive new receipts;
• To inform the population by campaigns of Prevention S, in order to improve its general health condition and to avoid the recourse to the care while seeking to avoid risks before they are presented. France is one of the countries where the prevention is developed;
• To fight against the frauds (increase in controls, in particular compared to the payment of the contributions by the employers and to the sick leave)
• To rock whole or part of the financing on the contributions by a financing on consumption (social VAT)