A strategic “compass” to correct the social accounts in ten years

Posted January 20, 2022, at 10.00Updated January 20, 2022 at. 14:21

Following the health crisis and the logic of “whatever it takes”, we will have to correct the social accounts, so as not to increase the burden that future generations will be left with. We can reasonably give ourselves ten years to achieve this, writes the High Council for the Financing of Social Protection (HCFiPS), in its final report on the sustainability of social finances, published on Thursday after being presented to the Prime Minister.

Ten years take the economic recovery after the 2008 crisis, with € 44 billion in spending cuts (including $ 30.7 billion in the health sector) and € 31 billion in revenue increases.

Climbing the slope will be particularly difficult after the Covid crisis. The financing need for 2020 alone approached 40 billion for the basic schemes and the Elderly Solidarity Fund, plus 17 billion for Unédic. A record.

The spending challenge for the healthcare industry

Social security can return to the green in 2031 if we expand government projections by a 3% increase in nominal GDP. But that means the increase in spending should be limited to 2.5% a year, as in the last decade, with an extra bonus of around £ 60bn in new debt, which would not be ideal. HCFiPS therefore believes that a more diversified strategy is needed to return to equilibrium and proposes a “compass”.

The biggest challenge for the future will come from the financing of health insurance. This branch represented 45% of total expenditure in 2020, but 77% of deficits. In contrast to the unemployment insurance, which was to return to profit this year thanks to the sharp recovery in activity, the health insurance deficit will slowly melt away. That would still be 20 billion in 2022 and 14 billion in 2025.

Really pay attention to the aging of the population. We expect a 50% increase in the number of 75-84 year olds over the decade, followed by a real addiction boom in the 2030s. The average consumption of care increases with age, ”the report points out.

New handles for savings

In this difficult context, the tools of the 2010s will not necessarily work. HCFiPS believes that we will have to “revise the traditional expenditure control mechanisms very significantly” because “Ségur de la Santé has turned the page on wage restraint”. In addition, the government has committed to increase the budget for health products by 2.4% per year.

It will therefore be necessary to activate new handles for savings. Whether it is health, pension or family, “priority should be given to measures with a positive long-term macroeconomic effect”, HCFiPS recommends. This implies more prevention and anticipation of collective risks and efficiencies through decompartmentalisation of health actors or interoperability of social information systems – especially between health insurance and supplementary health insurance. On the other hand, it would be futile to expect miracles from the fight against social fraud, which have already been the subject of numerous actions in recent years.

No taboo on the recipe page

In addition, the High Council believes that there should be “no taboo” on the revenue side. Admittedly, the level of mandatory taxes is already high, but according to him, certain increases “may have no economic consequence”, no risk of recession. Above all, he calls for “being very vigilant about the establishment of pay exemptions”, which tempts certain presidential candidates.

Deficit reduction should be a priority, not social debt repayment, HCFiPS also reiterates. To his dismay, the Covid debt was transferred to the Social Debt Amortization Fund (Cades), triggering an overly hasty repayment plan. He therefore proposes to limit the damage. It would be a matter of treating the Covid component in a differentiated way: no fixed time horizon for reimbursement for it, and therefore no assigned revenue. As a result, part of the Cades revenue could be reallocated to the management of current accounts.

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