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MGEN, an Actor in the French Mutualist Movement

MGEN, an Actor in the French Mutualist Movement. Isabelle RONDOT. Healthcare expenditure in France. Items of current healthcare expenditure in 2008. Current healthcare expenditure: €215 billion. Prevention, research, training, etc.: €26.8 billion (12%).

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MGEN, an Actor in the French Mutualist Movement

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  1. MGEN, an Actor in the French Mutualist Movement Isabelle RONDOT Isabelle RONDOT – May 2010

  2. Healthcare expenditure in France Isabelle RONDOT – October 2010

  3. 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 Isabelle RONDOT – October 2010

  4. France is in second place within the OECD in terms of total expenditure on healthcare. United States: 16% of GDP France: 11% of GDP 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 Sources: Drees, OECD Isabelle RONDOT – May 2010

  5. 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 Isabelle RONDOT – October 2010

  6. The financing of healthcare expenditure in France Isabelle RONDOT – October 2010

  7. The health insurance system in France since1946 Paid by households OPTIONAL health insurance (“complementary” insurance) Private financing (voluntary contributions and direct payments by households) COMPULSORY health insurance (Social security system) Public funding (social security contributions, taxation) Isabelle RONDOT – October 2010

  8. 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 Isabelle RONDOT – October 2010

  9. 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 Isabelle RONDOT – October 2010

  10. 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 Isabelle RONDOT – October 2010

  11. 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 Isabelle RONDOT – October 2010

  12. Mutual insurance societies Isabelle RONDOT – October 2010

  13. 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 Leadership 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

  14. 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. Share of mutual insurance societies In private funding 1950 2008 Source: Insee, National healthcare accounts, 2008 - Processing and analysis: MGEN Isabelle RONDOT – October 2010

  15. 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 Owner Client Directors Shareholders Insured persons Stock companies Elected members Members / Insured persons Mutual insurance societies Source: Adapted from  “On the convergence of insurance and finance research”, Clifford W. Smith – Journal of Risk and Insurance (1986) Isabelle RONDOT – October 2010

  16. 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). Isabelle RONDOT – October 2010

  17. 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. Isabelle RONDOT – October 2010

  18. Mutual insurance societies have been helping France over the years to meet major challenges in the social welfare and healthcare sector. Dependence Key Major national challenges Ageing of population Retirement age raised Technological advances Growing welfare demands ------------------ State withdraws financial commitment Slow-down of economy … Positioning of mutual insurance societies Reconstruction Founding of Social security system: 1946 Development of health system Health Era of industrialisation and mechanisation Retirement Incapacity for work/ Disabilities Increased hardship for families when head of family dies Death temps 1850 1946 1950 1960 1970 1980 1990 2000 2010 Share of healthcare expenditure in household consumption 5.6% 8% 9.7% 11.7% 12.6% 13.9% (2005) Life expectancy at birth (men) Number of employed workers paying contributions per retired person 63.4 years 67 years 68.4 years 70.2 years 75.3 years 77.6 years (2007) 72.8 years 14.3 4 2.3 Isabelle RONDOT – October 2010

  19. 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” Source: Insee, National healthcare accounts, 2008 Isabelle RONDOT – October 2010

  20. 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. Isabelle RONDOT – October 2010

  21. The economic models of mutual insurance societies Isabelle RONDOT – October 2010

  22. 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 long-term. • To adapt the services/benefits and level of redistribution • Toreduce costs, todirect 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. Isabelle RONDOT – October 2010

  23. 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 Isabelle RONDOT – October 2010

  24. 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) 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 Isabelle RONDOT – October 2010

  25. 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 Isabelle RONDOT – October 2010

  26. Expenses reimbursed by mutual insurance societies Isabelle RONDOT – October 2010

  27. 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 Isabelle RONDOT – October 2010

  28. Detailed breakdown of amounts reimbursed by mutual insurance societies in 2008 Source: National healthcare accounts, 2008 Isabelle RONDOT – October 2010

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