mgen, an actor in the french mutualist movement
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Isabelle RONDOT – May 20101
MGEN, an Actor in the French Mutualist Movement
Isabelle RONDOT
Isabelle RONDOT – October 20102
Healthcare expenditure in France
Isabelle RONDOT – October 20103
Items of current healthcare expenditure in 2008
Healthcare services and goods:€170.5 billion (79%)
Prevention, research, training, etc.:€26.8 billion(12%)
Care for institutionalised older people:€6.4 billion (3%)
Per diem allowances:€ 11.3 billion(5%)
Current healthcare expenditure: €215 billion
Source: National healthcare accounts, 2008
Healthcare services and goods: €170.5 billion
Total 100% = CHSGTotal 100% = CHE
Isabelle RONDOT – May 201040 2 4 6 8 10 12 14 16
Turkey
Poland
Czech Republic
Hungary
Slovakia
Finland
Spain
Italy
Sweden
Iceland
Denmark
Portugal
Canada
Germany
France
Current expenditure
Gross fixed capital formation
Sources: Drees, OECD
France is in second place within the OECD in terms of total expenditure on healthcare.
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
United States: 16% of GDPFrance: 11% of GDP
Isabelle RONDOT – October 20105
The years when there was significant economic growth enabled a major increase in healthcare expenditure.
“The 30 glorious years”
Sources: Drees, Insee - Processing and analysis: MGEN
“The 30 glorious years”Period of strong economic growth between the end of the Second World War and the 1st “oil crisis” (1945-1974)
Growth rate of Consumption of Healthcare Services and Goods (CHSG) versus GDP
Isabelle RONDOT – October 20106
The financing of healthcare expenditure in France
Isabelle RONDOT – October 20107
Paid by households
The health insurance system in France since1946
COMPULSORY health insurance(Social security system)
OPTIONAL health insurance
(“complementary” insurance)
Private financing(voluntary contributions and direct payments by households)
Public funding (social security contributions, taxation)
Isabelle RONDOT – October 20108
Public funding(Social security system, State, etc.)
76.9%
Breakdown of healthcare expenditure, 2008(consumption of healthcare services and goods: €170.5 billion)
Proportion of publicly funded healthcare services and goods, 1950-2008
Source: Insee, National healthcare accounts, 2008
Since the creation of the social security system, by far the largest proportion of healthcare expenditure is financed by the public sector.
Private funding(households, “complementary” insurance)
23.1%
Public funding of CHSG v. total CHSG (as %)
“The 30 glorious years”
€131 billion
€39.5 billion
Isabelle RONDOT – October 20109
Source: National healthcare accounts, 2008
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.
Breakdown of healthcare expenditure between fund providers(in %)
The breakdown between fund providers varies depending on the nature of expenses. (Breakdown in %)
Isabelle RONDOT – October 201010
Source: National healthcare accounts, 2008
Breakdown of healthcare expenditure between fund providers(in %)
Some items are funded privately for the most part (i.e. under complementary schemes or directly by households): optical care, dental care, etc.
Isabelle RONDOT – October 201011
In recent years, the rise in healthcare expenditure has been increasingly transferred to the complementary insurance schemes and private households.
Source: National healthcare accounts, Insee - Analysis: MGEN
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).
Breakdown of annual increase in consumption of healthcare services and goods between fund providers (in %)
Isabelle RONDOT – October 201012
Mutual insurance societies
Isabelle RONDOT – October 201013
Mutual insurance societies
Insurance companies
Social welfare institutions
Complementary insurance market shareLe
ader
ship
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.
Share of health insurance in turnover
Specialisation in healthcare
Source: ACAM , Report of Budget Ministry to Parliament 2009 - Processing and analysis: MGEN
Market share: 58%Healthcare turnover: 75%
Market share: 17%Healthcare turnover: 42%
Market share: 25%Healthcare turnover: 4%
Isabelle RONDOT – October 201014
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.
15,7%
33,8%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Source: Insee, National healthcare accounts, 2008 - Processing and analysis: MGEN
Share of mutual insurance societies In private funding
19502008
Isabelle RONDOT – October 201015
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
Stock companies
Mutual insurance societies
Source: Adapted from “On the convergence of insurance and finance research”, Clifford W. Smith – Journal of Risk and Insurance (1986)
Directors
Elected members
Shareholders Insured persons
Members / Insured persons
Isabelle RONDOT – October 201016
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 201017
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 201018
Mutual insurance societies have been helping France over the years to meet major challenges in the social welfare and healthcare sector.
Ageing of population
Retirement age raised
Technological advances
Growing welfare demands
------------------
State withdraws financial commitment
Slow-down of economy…
ReconstructionFounding of Social security system:
1946Development of health system
Increased hardship for families when head of family dies
Era of industrialisation and mechanisation
Major national challenges
Positioning of mutual insurance societies
1850 1946 1950 1970 1980 1990 2000 20101960
Key
Death
Incapacity for work/Disabilities
Health
Dependence
Share of healthcare expenditure in householdconsumption
Life expectancy at birth (men)
Number of employed workers paying contributions per retired person
5.6% 8% 9.7% 11.7% 12.6%
67 years63.4 years 68.4 years 70.2 years 72.8 years 75.3 years 77.6 years (2007)
14.3 4 2.3
Retirement
13.9% (2005)
temps
Isabelle RONDOT – October 201019
33,8%
15,7%
0%
5%
10%
15%
20%
25%
30%
35%
40%
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Share of mutual insurance societies in private expenditure on healthcare services and goods – 1950-2008
Source: Insee, National healthcare accounts, 2008
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.
Funding by mutual insurance societies v. private funding – Consumption of healthcare services and goods (in %)
“The 30 glorious years”
Isabelle RONDOT – October 201020
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 201021
The economic models of mutual insurance societies
Isabelle RONDOT – October 201022
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
• 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.
Isabelle RONDOT – October 201023
The absence of shareholders enables mutual insurance societies to provide more services and benefits to their members than insurance companies.
Source: ACAM, report of the Budget Ministry to Parliament 2009
Costs of insurance services & benefits in 2007 (health insurance)
Isabelle RONDOT – October 201024
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.
Source: ACAM, Report of Budget Ministry to Parliament 2009
Share of management costs in insurance policies covering bodily injuries in 2007
Source: BIPE
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
Ratio between management costs and services/benefits provided under compulsory health insurance scheme
Administration 7% 1.5%
Management of losses
7% 1.9%
Other technical costs of services/benefits 3.3% 0.7%
Total 17.3% 4% 4% to 5.5%
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).
Isabelle RONDOT – October 201025
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 201026
Expenses reimbursed by mutual insurance societies
Isabelle RONDOT – October 201027
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 201028
Source: National healthcare accounts, 2008
Detailed breakdown of amounts reimbursed by mutual insurance societies in 2008
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