–Aim Is To Hold Health Deficit To E12 Billion In 2011

PARIS (MNI) – The French government is planning to unveil E2.5
billion worth of spending cuts in the health sector in order to contain
the country’s public health service deficit in 2011 to around E12
billion, the business daily Les Echos reported Thursday.

Some of the planned cuts could be politically sensitive, including
a reduction in the reimbursement rate on certain non-indispensable
medications from 35% to 30%; an increase of 0.5% in the patient
co-payment on medical visits; and a cut in reimbursements for certain
procedures conducted at hospitals, the newspaper said.

Those three together would account for about E400 million of the
intended cuts.

The government also wants to limit the rise in overall medical
reimbursements next year to 2.9%, including a cap of 2.8% for the
increase in hospital spending and a cap of +3.8% for spending on
facilities for aged and handicapped people.

At just above E12 billion in 2011, the health care deficit would be
up only slightly from this year’s expected E11.6 billion shortfall.

The measures are not yet final, and the definitive figures will be
published in the 2011 budget law, scheduled to be released on September
28.

The government plans to launch a serious deficit cutting effort
across the entire budget, not just health care, starting next year. The
deficit would be reduced to 6% of GDP from the 8% that is projected for
this year.

However there appears to be a good chance that the 2010 deficit
will end up being somewhat smaller than 8%, since the unexpected
recovery of the labor market this year is likely to reduce the shortfall
in the social security system to considerably less than the E30 billion
initially feared.

The government aims to cut the public deficit further to 4.6% of
GDP in 2012 and to 3.0% in 2013. This all assumes GDP growth of 2.5%
from 2011 onward, which many analysts think is not realistic.

The deficit cutting efforts include a freeze on nominal government
spending through 2013, with a reduction in operational outlays of 5%
next year and 10% by 2013.

Of the E100 billion in budget savings targeted through 2013, nearly
E50 billion are expected from spending cuts, E35 billion from a recovery
in revenues with the economic upswing, and the rest from the unwinding
of stimulus measures.

On the revenue side, the government intends to tighten or close tax
loopholes and incentives amounting to E10 billion. Levies on investment
returns and high incomes are likely to be hiked as part of this year’s
reform of the pension system.

–Paris newsroom, +331-42-71-55-40; bwolfson@marketnews.com

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