June 1, 2023

Social Security accounts will remain in the red despite pension reform

Despite the pension reform and the desire displayed by the government to control health spending, the Social Security accounts are set to plunge deeper into the red from next year, worries the Court of Auditors which calls for “more vigorous reforms” in an annual report published on Wednesday.

After having plunged like never before due to the health crisis, the Social Security deficit must be reduced to nearly 8 billion euros in 2023. However, “a swallow does not make spring”, alerted this Wednesday the first president of the Court of Auditors, Pierre Moscovici. The deficit should, according to government forecasts, worsen next year to stabilize around 13 billion euros between 2025 and 2026.

Health spending under constraint

The postponement of the legal retirement age from 62 to 64, adopted in pain this year, must, of course, make it possible to generate savings. But the “reform will only have favorable financial effects gradually”, warns the Court in its report. The rise in support measures accompanying the reform, such as the increase in small pensions, is even “faster than that of age measures”. Consequence: the reform will represent an additional cost for Social Security until the end of 2024, before generating a little more than 7 billion net savings in 2030, independently of other schemes (State, Agirc-Arrco, etc.).

The expected worsening of the Social Security deficit is all the more worrying, according to the Court, as this scenario is based on assumptions that it considers to be optimistic. The government is counting in particular on a “particularly ambitious” evolution of health expenditure, note the financial magistrates.

Between 2023 and 2026, the National Health Insurance Spending Target is expected to increase by an average of 2.9% per year, “just slightly more than inflation” (2.8% on average). “In the past, never such moderation could be obtained over several years”, underlines the Court.

Controlling the health expenditure bill will be all the more difficult as the government promises new financial boosts for caregivers. Especially for those who work at night in the hospital.

Reforms needed

“We are not offering additional measures, neither on pensions nor on the hospital”, warns Pierre Moscovici. However, “reforms are needed and would save money while improving the quality of care provided to patients”.

“The main challenge is to implement at the local level, a territorialized strategy that combines the public hospital, private clinics, non-profit or not, liberal medicine…”, according to Pierre Moscovici. The Court of Auditors has already recommended in the past better control of city care expenditure, for example by looking at expenditure related to medical imaging.

In its report, the Court also recommends “re-founding the medicalized control of health insurance expenditure”, supposed to promote effective but less costly medical practices, with a reduced number of acts. It also wishes to strengthen the means of combating social fraud.

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