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

2. Isabelle RONDOT – October 2010 2 Healthcare expenditure in France

3. Isabelle RONDOT – October 2010 3 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

4. Isabelle RONDOT – May 2010 4 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 GDP France: 11% of GDP

5. Isabelle RONDOT – October 2010 5 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 1 st “oil crisis” (1945-1974) Growth rate of Consumption of Healthcare Services and Goods (CHSG) versus GDP

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

7. Isabelle RONDOT – October 2010 7 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)

8. Isabelle RONDOT – October 2010 8 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

9. Isabelle RONDOT – October 2010 9 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 %)

10. Isabelle RONDOT – October 2010 10 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.

11. 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. 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 %)

12. Isabelle RONDOT – October 2010 12 Mutual insurance societies

13. Isabelle RONDOT – October 2010 13 Mutual insurance societies Insurance companies Social welfare institutions Complementary insurance market share 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. 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%

14. 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. Source: Insee, National healthcare accounts, 2008 - Processing and analysis: MGEN Share of mutual insurance societies In private funding 19502008

15. 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. LeadershipOwnerClient 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 ShareholdersInsured persons Members / Insured persons

16. 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).

17. Isabelle RONDOT – October 2010 17 Origin in the 17 th century, development starting in the 19 th 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.

18. 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. Ageing of population Retirement age raised Technological advances Growing welfare demands ------------------ State withdraws financial commitment Slow-down of economy … Reconstruction Founding of Social security system: 1946 Development 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 185019461950197019801990200020101960 Key Death Incapacity for work/ Disabilities Health Dependence Share of healthcare expenditure in household consumption 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 years68.4 years70.2 years 72.8 years 75.3 years77.6 years (2007) 14.34 2.3 Retirement 13.9% (2005) temps

19. Isabelle RONDOT – October 2010 19 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”

20. 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.

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

22. 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 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.

23. 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. Source: ACAM, report of the Budget Ministry to Parliament 2009 Costs of insurance services & benefits in 2007 (health insurance)

24. 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. 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).

25. 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

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

27. 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

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