MGEN, an Actor in the French Mutualist Movement
Isabelle RONDOT
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Isabelle RONDOT – May 2010
Healthcare expenditure in France
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Isabelle RONDOT – October 2010
Items of current healthcare expenditure in 2008
Current healthcare expenditure: €215 billion
Prevention, research, training, etc.:
€26.8 billion
(12%)
Healthcare services and goods: €170.5 billion
Care for institutionalised
older people:
€6.4 billion (3%)
Per diem allowances:
€ 11.3 billion
(5%)
Healthcare services and
goods:
€170.5 billion (79%)
Total 100% = CHE
Total 100% = CHSG
Source: National healthcare accounts, 2008
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Isabelle RONDOT – October 2010
France is in second place within the OECD in terms of total expenditure on healthcare.
United States: 16% of GDP
France: 11% of GDP
France
Germany
Canada
Portugal
Denmark
Iceland
Sweden
Current expenditure
Italy
Gross fixed capital formation
Spain
Finland
Total healthcare expenditure (THE)
DTS = CHE – per diem allowances –
part of prevention, research and
training expenditure + capital
expenditure for healthcare sector +
expenditure for handicapped and
dependent people
Slovakia
Hungary
Czech Republic
Poland
Sources: Drees, OECD
Turkey
0
2
4
6
8
10
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Isabelle RONDOT – May 2010
14
16
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The years when there was significant economic growth enabled a major increase in
healthcare expenditure.
Growth rate of Consumption of Healthcare Services and Goods (CHSG) versus GDP
“The 30 glorious years”
“The 30 glorious years”
Period of strong economic growth between
the end of the Second World War and the 1st “oil crisis”
(1945-1974)
Sources: Drees, Insee - Processing and analysis: MGEN
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Isabelle RONDOT – October 2010
The financing of healthcare expenditure in France
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Isabelle RONDOT – October 2010
The health insurance system in France since1946
Paid by households
OPTIONAL health insurance
Private financing
(voluntary contributions and direct
payments by households)
(“complementary” insurance)
COMPULSORY health insurance
(Social security system)
Public funding (social security
contributions, taxation)
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Isabelle RONDOT – October 2010
Since the creation of the social security system, by far the largest proportion of healthcare
expenditure is financed by the public sector.
Breakdown of healthcare expenditure, 2008
(consumption of healthcare services and goods: €170.5 billion)
€39.5 billion
Private funding
(households, “complementary” insurance)
23.1%
Public funding
(Social security system, State, etc.)
76.9%
€131 billion
Public funding of CHSG v. total CHSG (as %)
Proportion of publicly funded healthcare services and goods, 1950-2008
“The 30 glorious years”
Source: Insee, National healthcare accounts, 2008
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Isabelle RONDOT – October 2010
The breakdown between fund providers varies depending on the nature of expenses.
(Breakdown in %)
Breakdown of healthcare expenditure between fund providers
(in %)
NB: To simplify the reading of the data, the item
“patient transport” is not included in this
breakdown. Given the small amount involved, this
does not significantly change the analysis.
Source: National healthcare accounts, 2008
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Isabelle RONDOT – October 2010
Some items are funded privately for the most part (i.e. under complementary schemes or
directly by households): optical care, dental care, etc.
Breakdown of healthcare expenditure between fund providers
(in %)
Source: National healthcare accounts, 2008
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Isabelle RONDOT – October 2010
In recent years, the rise in healthcare expenditure has been increasingly transferred to
the complementary insurance schemes and private households.
Breakdown of annual increase in consumption of healthcare services and goods between fund providers (in %)
In 2008, more than 21.4% of the annual
increase in healthcare expenditure was
financed by households and 19.2% by
the complementary insurance schemes…
…i.e. more than 40% of the increase in
expenditure was borne by the private
sector (in comparison with 20% in 2000).
Source: National healthcare accounts, Insee - Analysis: MGEN
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Isabelle RONDOT – October 2010
Mutual insurance societies
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Isabelle RONDOT – October 2010
Leadership
Of the three types of private operators present in the are of social protection in France,
mutual insurance societies are the specialists in health insurance and the leaders of the
sector.
Complementary insurance market share
Mutual insurance societies
Market share: 58%
Healthcare turnover: 75%
Insurance companies
Market share: 25%
Healthcare turnover: 4%
Social welfare institutions
Market share: 17%
Healthcare turnover: 42%
Share of health insurance in turnover
Specialisation in healthcare
Source: ACAM , Report of Budget Ministry to Parliament 2009 - Processing and analysis: MGEN
Isabelle RONDOT – October 2010
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Since their origin, mutual insurance societies have covered a large proportion of private
expenditure.
Benefits paid by different private fund providers (in millions of current euros)
Before 1995, national accounts did not distinguish between benefits financed
by insurance companies or social welfare institutions, on the one hand, and
those paid directly by households, on the other.
33,8%
15,7%
Share of mutual insurance
societies
In private funding
Source: Insee, National healthcare accounts, 2008 - Processing and analysis: MGEN
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Isabelle RONDOT – October 2010
What is a mutual insurance society?
•
Voluntary membership
•
Solidarity and social development
•
Non-profit oriented: the mission of the leadership of a mutual insurance society is
both to ensure long-term financial equilibrium and to uphold the interests of the
members of the association.
Leadership
Stock companies
Mutual insurance
societies
Directors
Elected members
Owner
Client
Shareholders
Insured persons
Members / Insured persons
Source: Adapted from “On the convergence of insurance and finance research”, Clifford W. Smith – Journal of Risk and Insurance (1986)
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Isabelle RONDOT – October 2010
The three founding principles of mutual insurance societies
• Not-for-profit
• Solidarity
• Shared responsibility
In France, the creation and functioning of mutual insurance societies are governed by specific
legislation, namely the “Code de la Mutualité” (Code of mutual insurance societies).
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Isabelle RONDOT – October 2010
Origin in the 17th century, development starting in the 19th century
•
In 1823, 148 mutual aid societies existed in France.
•
By 1898, there were 11 355 mutual aid societies providing insurance for persons (particularly death
insurance).
•
By the end of 2008, there were 527 mutual insurance societies active in the healthcare sector (i.e.
associations which bear the insurance risk themselves).
•
The largest mutual insurance society is the MGEN, which caters for 3.4 million people.
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Isabelle RONDOT – October 2010
Mutual insurance societies have been helping France over the years to meet major challenges
in the social welfare and healthcare sector.
Key
Dependence
Major national challenges
Ageing of population
Positioning of mutual insurance societies
Retirement age raised
Reconstruction
Technological advances
Founding of Social security system:
1946
Growing welfare demands
Development of health system
-----------------State withdraws financial
commitment
Health
Era of industrialisation and
mechanisation
Slow-down of economy
…
Retirement
Incapacity for work/
Disabilities
Increased hardship for families
when head of family dies
Death
temps
1850
1946
1950
Share of healthcare expenditure in household
consumption
Life expectancy at birth (men)
Number of employed workers paying contributions per
retired person
63.4 years
1960
1970
1980
5.6%
8%
9.7%
67 years
68.4 years
14.3
70.2 years
4
1990
2000
2010
11.7%
12.6%
13.9% (2005)
72.8 years
75.3 years 77.6 years (2007
2.3
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Isabelle RONDOT – October 2010
Mutual insurance societies bear an increasing share of private expenditure on healthcare,
thus extending the principle of collective solidarity to part of the risks faced by households.
Share of mutual insurance societies in private expenditure on healthcare services
and goods – 1950-2008
Funding by mutual insurance societies v. private funding – Consumption of healthcare services and goods (in %)
“The 30 glorious years”
40%
35%
33,8%
30%
25%
20%
15%
15,7%
10%
5%
19
50
19
52
19
54
19
56
19
58
19
60
19
62
19
64
19
66
19
68
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
0%
Source: Insee, National healthcare accounts, 2008
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Isabelle RONDOT – October 2010
A balance sheet
• Today, close to three in four people in France are
covered by this type of solidarity-based health
insurance (and over 92% of the population has
health insurance).
In France, joining an optional health insurance plan reduces
by half the incidence of patients failing to seek appropriate care.
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Isabelle RONDOT – October 2010
The economic models of mutual insurance societies
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Isabelle RONDOT – October 2010
The fundamental principles of mutual aid underlie the adopted economic models, making
it possible to adapt health insurance coverage to the evolution of social needs in the longterm.
•
To adapt the services/benefits and level of redistribution
•
To reduce costs, to direct the economic results towards the goal of
maximising the benefits to members in the long term
•
To enable a good balance between the administrators and the association’s
managers and professional experts.
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Isabelle RONDOT – October 2010
The absence of shareholders enables mutual insurance societies to provide more
services and benefits to their members than insurance companies.
Costs of insurance services & benefits in 2007 (health insurance)
Source: ACAM, report of the Budget Ministry to Parliament 2009
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Isabelle RONDOT – October 2010
Although rigorous comparisons are difficult (since sometimes different scopes of activity
are involved), the available studies indicate that mutual insurance societies have lower
management costs than insurance companies and the Social security system.
Share of management costs in insurance policies
covering bodily injuries in 2007
Comparison of management costs of health insurers and the
compulsory health insurance scheme (with scope adjusted)
Ratio between
management
costs and
services/benefits
provided by
health insurers
With actual
data provided
by health
insurers
Based on
simulation of
services and
benefits under
compulsory
health
insurance
scheme
Administration
7%
1.5%
Management
of losses
7%
1.9%
3.3%
0.7%
17.3%
4%
Other technical
costs of
services/benefits
Total
Ratio between
management
costs and
services/benefits
provided under
compulsory
health insurance
scheme
4% to 5.5%
Depending on whether or not we take into account the financial costs generated by the deficit
of the general healthcare regime under the Social security system (financial costs of the
CADES, i.e. the government agency that pays off France's social security deficit).
Source: ACAM, Report of Budget Ministry to Parliament 2009
Source: BIPE
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Isabelle RONDOT – October 2010
Some examples of solidarity in the guaranteed services and benefits provided by mutual
insurance societies
• Absence of selection based on medical check-up
• No exclusions (lifetime guarantees)
• The amount of the contribution is not linked to the level of risk.
• Mutualisation of risks
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Isabelle RONDOT – October 2010
Expenses reimbursed by mutual insurance societies
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Isabelle RONDOT – October 2010
Breakdown of expenditure of mutual insurance societies in comparison with public sector
(Consumption of healthcare services and goods – 2008)
Social security system + State
Mutual insurance societies
Source: National healthcare accounts, 2008
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Isabelle RONDOT – October 2010
Detailed breakdown of amounts reimbursed by mutual insurance societies in 2008
Source: National healthcare accounts, 2008
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Isabelle RONDOT – October 2010