Juppe triumphant over welfare vote

Costly care: France faces most radical reform in 50 years

MARY DEJEVSKY

Paris

The French health and social security system, one of the most generous and costly in Europe, is to undergo two years of sweeping change, designed to end its indebtedness, streamline its functioning, and reduce inequities.

The measures, presented to the French parliament yesterday by the Prime Minister, Alain Juppe, and voted through with an overwhelming majority the same evening, exceeded all expectations. They were hailed by supporters and dissenters alike as one of the most ambitious reforms of the system in its 50 years of existence.

The financial markets were delighted. Shares and government bonds soared, thanks to hopes that a tighter fiscal policy would allow interest rate cuts. The franc rose to Fr3.45 to the German mark.

The proposed changes affect the basic structure of the health and social security system, known as the Secu, as well as the way the system works. No one in France will be untouched, and few will be indifferent.

The mood in government circles last night was euphoric. In what amounted to a personal and political triumph, Mr Juppe had managed to quell concern on the political right about tax increases and united all Gaullists and their UDF allies into supporting him.

The response of employers' organisations was favourable. Only the trade unions and individual lobby groups came out decisively against, with the seven main public sector unions calling for a nationwide strike on 24 November in protest.

The most important change announced by Mr Juppe is the subordination of the Secu's management and budget to parliament, something which will require a change in the constitution. At present, the Secu is funded mostly by workers' and employers' contributions and managed by a council made up of doctors, trade unions and employers. Its virtual autonomy allowed it to run up debts with no reference to the state budget, which then had to service them. This autonomy is to be ended. In future, the Secu will be overseen by a national council answerable to parliament and have a statutory spending ceiling set by parliament.

The most universal of Mr Juppe's measures is a new tax, introduced "temporarily" for a period of 13 years and levied at a rate of 0.5 per cent on an individual's total income, including any benefits and pensions - which is earmarked for paying off the Secu's accumulated debt. The debt, estimated at 250bn francs to the end of 1996 - a sum contested by Mr Juppe's opponents - has been run up since 1991. From 1997, in one of the main purposes of the reforms, the Secu is expected to pay for itself.

For individuals, some of the most immediate effects will be in the provision of healthcare, which is the sector currently running up the highest debt. As from next year, a national ceiling is to be set on spending by hospitals and doctors. An experimental "card" system attaching patients to one GP and limiting the number of specialist consultations for one ailment will be extended to everyone.

The 19 different national insurance schemes that are currently in existence are to be streamlined. The homeless and jobless, who have risked falling out of the system, will receive automatic cover; but - in a concession to the right-wing - it will not be extended to foreigners not legally resident in France.

Among specific losers will be public sector employees, whose right to a full pension after 37.5 years' contributions compared with 40 years in the private sector, is to be "renegotiated".

By limiting tax increases and offering parliament a greater role, Mr Juppe defused opposition from his own side in parliament and yesterday won a handsome victory in the first round of his battle to reform the French social security system. The second round, though, will be with the trade unions and the public sector. And that might have to be fought on the streets.