Pensions, loans, hospital rates, deficit: what can happen without a Social Security budget?

Michel Barnier held the government responsible for the Social Security financing bill by article 49.3 of the Constitution this Monday. This appeal exposes the government two motions of censureone filed by the New Popular Front and the other by the National Rally. If the government falls on Wednesday, the Social Security budget will be rejected.

Without a budget, Social Security will not stop functioning on January 1, 2025. But a certain number of legal and political headaches will very quickly arrive on the table. Increase in retirement pensions, loans, fixing of hospital prices, deficit: what can happen without a Social Security budget? France Bleu takes stock.

Retirees spared?

Under the Social Security Code, basic pensions are revalued each year at the beginning of January, indexed to inflation recorded by INSEE (National Institute of Statistics) for the previous year. To save 3 billion euros, the bill on the Social Security budget planned to under-index them in 2025, up to half of inflation, except for pensions below the minimum wage which were to receive a supplement in July. Without this text, the law prevails and the increase in pensions will be automatically based on inflationassure two experts on Social Security, interviewed by AFP.

Authorize Social Security to borrow

The absence of a dedicated budget would deprive Social Security (or rather its treasurer, Acoss) of borrowing authorization to make ends meet and manage to finance benefits, despite its structural deficit. Experts believe that this authorization should can be given via a special law, or even by regulationwithout the need for a new bill.

However, public law specialists do not all agree on the best way to proceed with a resigning government. There is a little time left to resolve the problem, with Social Security having a few months of reserves before having to borrow again, according to several sources close to the administrations concerned interviewed by AFP.

Monday at the National Assembly, the Social Security budget rapporteur, Yannick Neuder (LR), estimated that a rejection of the budget would not leave “only a few weeks of cash” to public bodies for “pay pensions, reimburse healthcare and finance taxes”. “Next March, who wants life cards to stop working?”he asked, a few minutes before the Prime Minister drew out article 49-3.

Setting hospital rates

The Social Security budget sets each year a national objective for health insurance expenditure (Ondam), which provides, among other things, the financial envelope allocated to public and private hospitals over the year. This envelope (105.8 billion euros in the draft Social Security 2025 budget) then allows the government to calculate the remuneration of hospitals, in particular by setting the prices for care procedures. If this envelope is not determined, “there is no longer a solid legal basis” to do so, Dominique Libault, president of the High Council for the Financing of Social Protection (HCFiPS), recently explained.

Initially, the solution will probably be to renew the rates for 2024, “which is not very good news for health establishments”he estimated. Hospitals, in heavy deficit, estimate they will need in 2025 an increase of 6% of the 2024 envelope. In its budget, the executive planned an increase of 3.1%.

Control the deficit

The absence of a Social Security budget would also deprive the government of provisions supposed to help it control the heavy deficit. The latest version of the draft budget adopted by joint committee (CMP) plans in particular to reduce exemptions from employer contributions by 1.6 billion euros, or to strengthen taxation on very sugary drinks, to provide Social Security with new resources.

The budget also provides tools to slow down Health Insurance expenses, through savings on medicines, or by negotiating new price reductions with biologists, radiologists and approved taxis who transport patients. Without this text, “the deficit in social accounts would reach 30 billion euros next year“, warned Budget Minister Laurent Saint-Martin before the National Assembly. The version adopted in CMP forecast a deficit of around 18.3 billion euros in 2025, compared to 16 in the initial version proposed in October by the government.

Pending reforms

Without a Social Security budget, a certain number of measures will have to wait for another legislative vehicle to be adopted, defenders of the text recalled on Monday. Among them, exemptions from old-age social security contributions for doctors with combined employment and retirement, the alignment of the calculation of agricultural pensions with those of the general system or even the papillomavirus-meningococcal vaccination campaign in college. Direct access consultations with the psychologist as part of My Psy Support will also be affected.