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Measures for curbing health expenditure

Partner Institute: 
Institut de Recherche et Documentation en Economie de la Sant (IRDES), Paris
Survey no: 
Zeynep Or
Health Policy Issues: 
Funding / Pooling
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no yes no no no


In October the French government presented the major lines of its 2011 ?budget project? for social security, to be voted on in November. This budget presents the major strategies for reducing the deficit, which is estimated to reach 23 billion Euros in 2010. Statutory Health Insurance, which is a major contributor to this deficit, is expected to save 2.5 billion Euros in 2011. To achieve this, the law targets the pharmaceutical industry but also complementary insurance funds and patients.

Purpose of health policy or idea

In October, within the framework of the annual vote on the national budget, the government presented the key measures for tackling health expenditure growth and for reducing the deficit of the Statutory Health Insurance Fund. The deficit increased significantly from 4.5 billion Euros in 2008 to about 14.5 billion in 2010, due to the economic downturn.The target set for the Statutory Insurance Fund is to economize 2.5 billion Euros in 2011 so that a health expenditure growth rate of under 3% is reached.

In order to reduce the budget deficit the government has taken a scatter-gun approach. Statutory Health Insurance imposes price reductions for drugs and medical services. Moreover, healthcare costs are increasingly shifted to patients and to complementary health insurance funds. The major propositions are summarised below:

  • Price reductions: Prices of reimbursed drugs and medical devices will go down in 2011 (saving about €500 million), as well as payment rates for radiologists and biologists (€200 million). Moreover, prices for some hospital services (DRG-payments) will also be reduced by aligning prices for public and private hospitals. Despite the strong opposition of public hospitals, the Health Insurance Fund is starting to pay the same prices for (about 40) selected DRGs to public and private hospitals in 2011. The cheapest price (often this is the private one) will be taken as reference.
  • Reduction in public coverage: High blood pressure is taken out of the list of "costly chronic diseases" (ALD). The costs accrued by these diseases are all covered by the public Health Insurance Fund (no co-payment). Transport expenditure for ALD patients will not be reimbursed systematically anymore either.
  • Higher cost sharing:
    • The reimbursement rate for about 100 drugs for common diseases which are classified as "non vital" (vignette blue) will de reduced from 35% to 30%;
    • In hospitals, the co-payment for expensive tests will increase from 18 to 24 Euros.
  • Cost efficient provision of care: Few measures are introduced for encouraging better medical practice, such as home dialyses (40% cheaper than dialysis in a centre) or generic prescriptions. The Statutory Insurance Fund estimates that 550 million Euros can be saved through more generic prescription in the ambulatory sector. The Government relies on the P4P contracts which are proposed recently to individual generalists in order to encourage generic prescription (see HPM report P4P for generalists).

Moreover, in order to create new income sources for the Health Insurance Fund, the Government wants to introduce new taxes for the cigarette industry: a 5% sales tax for cigarette producers, as well as 25% tax on profit growth (from one year to the other).

There also are propositions for taxing some social compensation plans (severance pay, etc.) and inheritance (5% increase which could represent about 5 billion Euros for the Health Insurance Fund), but it is not clear at all if these will be adopted by Parliament, as they are subject to ongoing discussions.

Main points

Main objectives

The objective is to reduce the budget deficit of the Health Insurance Fund, and to decrease the growth rate of health expenditure to 2.9% in 2011 (ONDAM target).

Type of incentives


Groups affected

Patients, complementary health insurance funds, pharmaceutical companies, public and private hospitals

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Characteristics of this policy

Degree of Innovation traditional traditional innovative
Degree of Controversy consensual controversial highly controversial
Structural or Systemic Impact marginal marginal fundamental
Public Visibility very low low very high
Transferability strongly system-dependent system-dependent system-neutral

This budget project falls short of addressing any of the major efficiency issues and does not propose any useful measures for altering health care provision and consumption patterns. The economies searched are short term but the small incremental shifts from public to private finance may be regressive in the long term. Without altering the underlying patterns of incentives for healthcare providers there is a risk that the current approach to control healthcare-spending will undermine equity in finance and delivery.

Political and economic background

The 2011 budget introduces the biggest annual budget-deficit cut of the past 20 years, in order to address concerns of the European Union and to avoid being downgraded in international credit rankings. The government has pledged to cut the public deficit from 7.7% of gross domestic product (GDP) in 2010 to 6% of GDP in 2011, and to 3% by 2013.  

The mechanism used to control health expenditure growth is a national target ceiling for Health Insurance Spending (ONDAM, Objectif National des Dépenses d'Assurance Maladie), approved by Parliament under the Social Security Funding Act (LFSS, loi de financement de la Sécurité sociale) each year. 

Every October, within the framework of the annual vote for the state budget in Parliament, the government presents the statement of accounts for the Social Security Funds (LFSS) and prospective spending limits (ONDAM) devoted to public health insurance. Out-of-pocket payments and private and complementary health insurance payments are not included. ONDAM is divided into four main categories with their own target levels: ambulatory care (GPs, specialists, nurses, drugs, etc.), public hospitals, private hospitals, and care for the handicapped and elderly.

Since ONDAM does not have a compulsory nature (payments are made even when targets are exceeded) in case of a deficit the government presents strategies (in the form of laws) for improving revenues and for controlling expenditure.

Between 2008 and 2009, the deficit of the Social Security Funds (including family, old-age and work accidents) doubled, rising from about 10 billion to 24 billion Euros and is estimated to rise to 32 billion Euros in 2010 if nothing is being done about it. This is largely the result of reductions in revenues (employee/employer contributions) due to the economic downturn in 2009. With a deficit of about 11.5 billion Euros in 2009 and 14.5 billion in 2010, the Statutory Health Insurance Fund contributes significantly to this chronic budget deficit. Moreover, the growth rate of public health expenditure, which was around 3.7% in the past three years, is considered unsustainable, despite a significant improvement in the period before (average annual growth rate of 6% between 2001 and 2006). Ironically, since its introduction in 1997, the ONDAM-spending ceiling was respected for the first time in 2010, with a growth rate of 3%. The objective is to reduce this percentage to 2.9% in 2011.

Purpose and process analysis

Current Process Stages

Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no yes no no no

Initiators of idea/main actors

  • Providers
  • Payers
  • Patients, Consumers

Approach of idea

The approach of the idea is described as:

Stakeholder positions

The medical unions of generalists and specialists working in the ambulatory sector think that these measures are particularly unfair, as they have effectively respected the objectives set (ONDAM) for their sector in 2009/10. Clearly, they are against price reductions and interventions of the Insurance Fund on their medical practice. 

Patient associations are, quite rightly, worried about the impact of these measures on access to care, particularly for those with chronic diseases and for those who do not have good private insurance coverage.

Complementary health insurance funds (mutuelles) are vigilant about the policy of shifting costs from public to private insurance funds. In fact, they have succeeded to refute the initial proposition of the government to increase the co-payment rates (covered by complementary insurance) for a doctor´s consultation from 30% to 35%. Now, they are also considering to reduce their reimbursements for drugs which are classified as "not very effective" by the public insurance.

Actors and positions

Description of actors and their positions
Physiciansvery supportiveopposed strongly opposed
Public hospitalsvery supportiveneutral strongly opposed
Private hospitalsvery supportiveneutral strongly opposed
Health Insurance Fundvery supportivevery supportive strongly opposed
Mutuellesvery supportiveopposed strongly opposed
Patients, Consumers
Patient organisationsvery supportiveopposed strongly opposed

Influences in policy making and legislation

The Government was careful to not make big cuts in healthcare benefits, but to rather introduce a series of small cuts, with regard to the mass demonstrations that had been carried out against the plan of the government to change the pension system in France.

The draft legislation was discussed and voted on in different commissions in Parliament in October. The revised version will be discussed in a plenary session in Parliament and voted on in the Senate before the end of November.

Legislative outcome


Actors and influence

Description of actors and their influence

Physiciansvery strongstrong none
Public hospitalsvery strongneutral none
Private hospitalsvery strongneutral none
Health Insurance Fundvery strongvery strong none
Mutuellesvery strongstrong none
Patients, Consumers
Patient organisationsvery strongnone none
Health Insurance FundPublic hospitals, Private hospitalsPatient organisationsPhysicians, Mutuelles

Positions and Influences at a glance

Graphical actors vs. influence map representing the above actors vs. influences table.

Expected outcome

The measures proposed by the Government are not original and fail to put forward any of the desired changes in governance for curbing the growth in health expenditure. Instead of tackling structural issues for improving efficiency and reducing variations in medical practice, the government prefers to adopt a piecemeal approach based on two cursory measures: price control and reduction in public coverage. Price regulation has long been the preferred regulatory tool in France for containing costs, and drug prices have already been reduced in 2010 to reach budget targets. This approach, however, appears to only have a limited impact on health expenditure growth. Health care providers tend to compensate reduced revenues by increasing the volume of services they provide. 

Reducing the package of services covered by the Public Health Insurance Fund at the expense of complementary health insurance, and ultimately of patients, has been a recent trend. Different forms of co-payments for patients have been introduced in the past couple of years. This budget effectively confirms this trend and endangers the principle of solidarity. Increasingly, the cost of health care is paid by the sick rather than by general contributions. Moreover, given that 7% of the population still do not have complementary insurance, given that the quality and coverage of these complementary insurance contracts vary largely, cost of care can become a real barrier to health care for less wealthy people. 

The few measures proposed for "improving medical practice" are not really convincing. The preliminary results from P4P contracts are not particularly promising and the cost of introducing these contracts is estimated to be twice as high as the cost savings expected.

Impact of this policy

Quality of Health Care Services marginal marginal fundamental
Level of Equity system less equitable system less equitable system more equitable
Cost Efficiency very low low very high


Sources of Information

PLFSS 2011, Porteil de la Securité Sociale:

Projet de loi, étude d'impact et compte rendu du conseil des ministres:

Author/s and/or contributors to this survey

Zeynep Or

Suggested citation for this online article

Zeynep Or. "Measures for curbing health expenditure". Health Policy Monitor, October 2010. Available at