FRANCE NOW

The region with the highest population is Ile de France, almost 11 million, about 18% of the total French population. It includes the city and department of Paris which has a population of 2.1 million. Ile de France is followed by Rhone Alpes (main city: Lyon), Provence-Alpes-Côte-d'Azur (Marseille, Nice), Nord-Pas-de-Calais (Lille) and Pays-de-la-Loire (Nantes).

The fastest growth rate, since 1990, has been in Guyana, 37% over nine years and in the overseas departments. In mainland France, growth rates are significantly lower. Among the regions, Languedoc-Rousillon at 8.5% growth over nine years is followed by Alsace, 6.8% over the same period. Within the regions, specific departments may have grown faster elsewhere. Haute-Garonne (Toulouse) in the Midi-Pyrénées grew at 13%, faster than the 12.8% growth in Herault Department (Montpellier) in the Languedoc-Roussillon region. Other double-digit growth departments were Haute-Savoie (Annecy), Seine-et-Marne (near Paris) and Var (Toulon).

Three regions have even experienced a negative growth rate: Limousin (including Limoges) and Auvergne (including Clermont-Ferrand) located right in the middle of France and Champagne-Ardennes, slightly further North. At departmental level, 23 out of France's hundred departments saw a negative growth rate over the nine years. The highest depopulation was in Creuse (in Limousin) and Cantal (in Auvergne). Even Paris saw a negative growth rate.

Region-wise Population 1990-99

No	Region	Population 1990	Population 1999	Increase ('90 to '99)	% increase ('90 to '99)
1	Alsace	1,624,372	1,734,145	109,773	6.8
2	Aquitaine	2,795,830	2,908,359	112,529	4.0
3	Auvergne	1,321,214	1,308,878	-12,336	-0.9
4	Bourgogne	1,609,653	1,610,067	414	0.0
5	Bretagne	2,795,638	2,906,197	110,559	4.0
6	Centre	2,371,036	2,440,329	69,293	2.9
7	Champagne -Ardennes	1,347,848	1,342,363	-5,485	-0.4
8	Corse	250,371	260,196	9,825	3.9
9	Franche-Comté	1,097,276	1,117,059	19,783	1.8
10	Ile-de-France	10,660,554	10,952,011	291,457	2.7
11	Languedoc-Roussillon	2,114,985	2,295,648	180,663	8.5
12	Limousin	722,850	710,939	-11,911	-1.6
13	Lorraine	2,305,726	2,310,376	4,650	0.2
14	Midi-Pyrénées	2,430,663	2,551,687	121,024	5.0
15	Nord-Pas-de-Calais	3,965,058	3,996,588	31,530	0.8
16	Basse-Normandie	1,391,318	1,422,193	30,875	2.2
17	Haute-Normandie	1,737,247	1,780,192	42,945	2.5
18	Pays-de-la-Loire	3,059,112	3,222,061	162,949	5.3
19	Picardie	1,810,687	1,857,834	47,147	2.6
20	Poitou-Charentes	1,595,109	1,640,068	44,959	2.8
21	Provence-Alpes-Côte d'Azur	4,257,907	4,506,151	248,244	5.8
22	Rhône-Alpes	5,350,701	5,645,407	294,706	5.5
	Sub-total Mainland France	56,615,155	58,518,748	1,903,593	3.4
1	Guadeloupe	386,987	422,496	35,509	9.2
2	Guyana	114,678	157,213	42,535	37.1
3	Martinique	359,572	381,427	21,855	6.1
4	Réunion	597,823	706,300	108,477	18.1
	Sub-total Overseas Departments	1,459,060	1,667,436	208,376	14.3
	Total France	58,074,215	60,186,184	2,111,969	3.6

The 35-hour week

Since 1997, the government has been talking about this. It has taken two and a half years to implement this much. It will take another two years before the small enterprises will also have to restrict the work-week to 35 hours.

All this was done to stimulate employment. Rather, to share the employment with the unemployed. Not without opposition from employers. Because they could gloat in the situation where they could tell their employees that there were millions without a job and that the employees would do well not to ask for a raise. And opposition from incompetent managers who could not figure out how they would manage with more people and less time per person. The State subsidised consultancy services to these managers explaining how the 35-hour week would work. There was also opposition from all who pointed out that the cost to the company would go up.

Initially, since June 1998, the contractual parties, the employers and the employees, were asked to negotiate the manner of reducing the work-week. The government even started a system of exoneration of social security charges as an incentive to those who reduced the work-time, which actually meant a reduction in the total cost of enterprises. Half the enterprises responded to the incentives and either reduced the work-time or are in the process of negotiating this. Two and a half million salaried people have been covered by about 20000 individual corporate accords and about a hundred accords conducted by branch of activity. The total private sector employment is around 14 million.

Already, about 150,000 jobs are attributed to the progress made till December 1999. 85% of this is due to new jobs created and the balance 15% due to jobs preserved (which would otherwise have been lost). Most employees are happy with the quality improvement in their life and work situation.

This is the background to the new law, passed last month, heralded by that of June 1998 and awaited by the work populace. It takes into account the results of all the experiments conducted during the initial incentive-based phase. And now it makes it obligatory for all but the smallest of companies (less than 20 employees) to establish a 35-hour week. A one-year adaptation period is granted with a special regime of supplementary hours. A special treatment is also made for managers and for those working part-time.

Moreover, it seeks to make permanent a system of reduction of employers' share of social security for all those who have reduced the work week to 35 hours. This means that large enterprises would have a comparative labour cost advantage vis-a-vis the small enterprise who wishes to exploit its staff for 39 hours every week! The latter should therefore think seriously and get into line as soon as possible, instead of holding out obsessively till 2002. This exoneration is a supplementary exoneration to the one made in the law for financing social security for those earning less than 1.8 times the SMIC.

For enterprises with less than 50 salaried employees, the accords are by branch. For larger ones, the accords are for each individual enterprise.

For those earning the SMIC, on full time or part-time, the government has found a way of ensuring that they get the same monthly wage as earlier.

The law was challenged before the Constitutional Court which struck down some of its provisions. First, the provision requiring all enterprises to first try out a 35-hour week proposal before any layoffs, was declared unconstitutional because the legislator had neither determined what constituted the "trying out" nor what would be the penalty for not doing so.

A tax on supplementary hours worked to fund the reduction of social security charges was considered to be unequal treatment of workers. Those working supplementary hours were to be paid a 25% bonus if they were on a 35-hour week but only a 15% bonus if they were on a 39-hour week, the difference of 10% going into a fund to finance the reduction of social security charges. The employer paid 25% in both cases, but the workers of the 39-hour week worked longer and effectively paid the tax by getting less for their supplementary hours. The annulling of this provision means a loss of FF 7 billion of expected receipts and this would create a disequilibrium in the Social Security Financing Act which had been counting on this receipt. President Chirac therefore hesitated before signing the law.

Finally, the disposition requiring that all contracts signed since June 1998 which do not respect some of the provisions of the second law should be modified within a year, was annulled since the first contract was legal when it was signed and remains legal till a new accord takes its place.

Next month's France Now will include a resumé of the details of the law.

Reform of French Justice Cancelled

A critical factor to the reform was the delegation of increased powers to the Conseil Supérieur de la Magistrature (CSM), reducing the control of the Minister of Justice. Since the CSM is constituted by the constitution, a constitutional reform was required to be voted in requiring a three-fifths majority of the combined assemblies after the amendment bill was approved by the two houses independently. While the socialists voted this in the National Assembly, the opposition controlled the Senate and managed to dilute the reform to a restructuring of the CSM and, if anything, reducing the power of the magistrates.

It would seem logical that the Senators would vote for the law which they had amended in the Senate. But no, the opposition decided that their role was to play the opposition and defeat any bill of the ruling party, even if the President is a leader of the opposition party. In fact, Mme Alliot-Marie has clearly distanced herself from Jacques Chirac to indicate her opposition to the law.

The position of the opposition is considered "stupid" by some political analysts. But Mme Alliot-Marie, the new President of the RPR, needs to take into account various factors. One, the opposition has to oppose. Second, the opposition lost credibility in 1993-97 due to the Chirac-Juppé duo systematically bringing in socialist measures when voted in on a right-wing ticket, trying to show that they were fairly central, in order to crowd out a future Socialist return. This backfired, the RPR lost its right-wing support, and the Socialists came back to power. Now, for the next legislative elections, the RPR wants to distance its image from both Juppé and Chirac. Third, if the opposition can create enough chaos, they can undermine the credibility of the Socialists.

Why did the Socialists accept to withdraw the Amendment? First, there was lack of support from some of their coalition partners. This, however, could have been whipped in or bought out. Second, the diluted Constitutional Amendment (see our December 1999 issue) reduced the power of judges, instead of increasing it, as was initially proposed. All the proposed laws which are to follow (see below) also go in this direction. So, the overall balance would not be maintained. Even the nomination of the prosecutors was not conferred to the CSM; only the possibility of confirming was. The educated French public would soon have noted that by reducing the power of magistrates, in all the laws, the French politician is trying to keep himself above the law. Already considered corrupt, this absolute and relative reduction of the power of the justice may have had repercussions in the next elections.

What about Jacques Chirac? First, the failure of the constitutional amendment was obvious. So, Jacques Chirac decided to propose its cancellation. Lionel Jospin agreed and consented to countersign the cancellation decree. Second, Jacques Chirac is aware that his popularity increases if he does nothing. To be reelected for a second term, this is all he needs to do. The French are quite happy, perhaps amused, to have him as their President, at least to provide a symbolic counterweight to Socialist abuse of unbridled power, perceived from the Mitterrand era. This "maintain status quo" attitude also satisfies the vested interests who are merely keen that the boat should not be rocked and that their business continues as usual. They would therefore back him for Presidency in the next elections.

Since this amendment was a foundation stone to the wider reforms of French justice, many other aspects of the reform will now be put aside, because the whole cannot stand up if a part of the foundation is eroded.

The other proposals are:

1. Currently, justice is often perceived as a political decision. The Minister of Justice can intervene and direct the prosecutors. A bill proposes that the Minister of Justice should no longer be empowered to give directions for specific individual cases. He would, of course, be allowed to give general directions and orientations to apply to all cases. As a counter party to their increased power, if the Public Prosecutors classify a case, they must notify the plaintiff indicating the reasons. Plaintiffs could then appeal to the General Prosecutor. A major step for the foundation for this measure required that the nomination of the General Prosecutor be independent of the Minister of Justice and be made by the CSM. But this was already diluted by the Senate to "confirmation by the CSM". Without the complete independence of the General Prosecutors, the proposed law loses a large part of its force.

2. The presumption of innocence is proposed to be widened. Currently, an examining judge can detain an accused by an arrest warrant. This power is proposed to be transferred to a special judge for provisional detention. At the same time, the suspects and civil parties can now ask the examining judge to conduct all the operations that they consider necessary. The duration of the examination has to be fixed in advance. Most important, the accused can have an opportunity to consult a lawyer from the first hour during which he is detained. The text also prohibits photographing people in handcuffs and undignified positions. This text has been passed by the Assembly and is pending in the Senate.

3. A bill lying with the Assembly permits plaintiffs and defendants to appeal to a commission against the behaviour or impartiality of the Magistrate.

Social Security Financing Act passed

The two tables summarise the total receipts and expenses of the different regimes.

Breakdown of receipts in billions of French Francs

Resource	Budget 1999	Budget 2000
Effective Contributions	1062,9	1043,7
Fictive contributions	194,8	200,7
Public contributions	63,8	68,8
Taxes	438,7	516,8
Transfers received	5,2	4,7
Capital Gains	1,4	1,7
Other resources	32,6	37,1
Total	1799,4	1873,5

A total surplus of about FF 21 billion is expected in 2000 as compared with a budgeted surplus of FF 10 billion for 1999.

The breakdown of total expenses in billions of French Francs

	Budget 1999	Budget 2000
Illness-maternity, invalidity, death	697,8	731,0
Old-age, widow	781,4	802,9
Work Accidents	53,0	54,7
Family Welfare	256,9	264,0
Total	1789,1	1852,6

Some of the provisions of the act are listed below.

I. Resources

* A "Fund for the financing of the Reform of the Employers' social security contributions" has been created. It is expected that the fund will have expenses of around FF 100 billion per year. For 2000, the budgeted expense is about FF 65 billion. Of this, FF 40 billion is for existing exonerations of social security charges related to employees with low salaries. The balance FF 25 billion pertains to incentives given for employers to shift to the 35-hour week and for new reduction of social security charges in view of a "Reform".

The receipts of this fund would include a fraction of the duty on tobacco (FF 40 billion), the new social contribution on the profits of enterprises, (FF 4 billion), a tax on polluting activities (FF 3 billion), 47% of the duty on alcohol, and the balance would be State contributions of various sorts.

* The employers already receive an exoneration of social security paid on those earning low salaries, up to 1.3 times the SMIC. This has been extended to those earning up to 1.8 times the SMIC. For this, the government needs to find funds to replace contribution. So it has decided to impose a surtax, named "Social Contribution" which would be 3.3% of the corporate income tax. This would apply only to enterprises with a turnover of more than FF 50 million. Neither the forfeit tax not franking tax credits can be knocked off against this contribution. However, an abatement up to FF 5 million has been visualised.

The government expects to obtain FF 4 billion from this measure and this will be transferred to the new "Fund for the financing of the Reform of the Employers' social security contributions".

* Last year, the government introduced the General Tax on Polluting Activities. Now, the base of this tax is being enlarged to include detergents, pesticides and specified polluting installations. The entire receipts of the tax (expected at about FF 3 billion) are being earmarked to the "Fund for the financing of the Reform of the Employers' social security contributions".

* The receipts of the CSG and 40% of the duty on alcohol are given to the Medical Insurance Funds to compensate them for the reduction in the employees' contribution to social security at the time of introducing the CSG. The basis of allocating the money has been simplified and the percentage of duty on alcohol given to medical insurance funds is being raised to 45% in view of the introduction of the Universal Medical Coverage.

* The" Social solidarity contribution on Companies" is a tax of 0.13% on the turnover of enterprises whose turnover exceeds FF 5 million. The proceeds are given to the Medical Insurance and Old Age insurance funds of non-salaried non-agricultural workers. A penalty is charged if the tax is paid late. Now, permission has been given to the Director of the taxing organism to waive part or all of the penalties.

Encouraging new enterprises

* The medical insurance contribution of non-salaried non-agricultural workers and the old-age insurance of artisans, industrials and commercial professionals is based on their income. During the first two years of their activity the income cannot be known and the tax base is estimated on the basis of forfeits. These forfeit bases are provisions and are actualised later. However, if the base is estimated at a very high level, it discourages entrepreneurs from entering the market, since there will be high medical and old-age contributions to be paid, while the actual situation in the first two years is likely to be a loss.

Now, it has been decreed that this provisional tax-base should be restricted to 18 times the monthly family welfare allowances base during the first year and to 27 times this base for the second year.

* Young farmers (18 to 40 years old) have been granted a partial reduction of their social security contributions for the first three years as long as their farm holding is less than a specified size. The reduction is 65% during the first year, 55% during the second and 35% during the third. Nevertheless, a ceiling on reductions and a minimum contribution will be fixed by decree.

II. Expenses

A. Family welfare

* The base for calculating family welfare allowances is indexed to the expected increase in the consumer price index (including tobacco), actualised a year later. For 1999, the expected increase was 1.2% but the actual increase was about 0.5%. So, the indexed increase for 2000 has to be lowered by 0.7%. The increase in the CPI for 2000 is expected at 0.9%. The indexing for the base for social security should be reduced by 0.7% to stand at 0.2%. Nevertheless, the government has decided to increase this indexation by 0.3% to a total of 0.5% so that lower-income families share the benefits of economic growth.

* To benefit from any of the family welfare allowances, the child is subject to a common age limit. This limit is determined by regulation and is currently at 20 years. The parliament has decided to increase the age limit to 21 years for two of the allowances (complementary allowance and housing allowance) for children born on or after 1.1.1980.

B. Old-age

* Last year a reserve fund had been created within the fund for old-age solidarity (FSV) to take care of France's major social security headache: more and more retired people drawing pension thanks to increase in life-span and reduction of retirement age. The excess of the Social Solidarity Contribution of Companies is poured into this reserve fund. This reserve fund is also financed by surpluses from the solidarity section of the FSV. Now, the surpluses from the funds managed by the CNAVTS (the old-age fund for salaried workers) are also going to be placed in this reserve fund. FF 3 billion are also being taken exceptionally for 1999 from the CDC (Caisse des Dépôts et Consignations).

* The base for calculating old-age allowances is also indexed on the expected increase in the consumer price index (including tobacco), actualised a year later. For 1999, the expected increase was 1.2% but the actual increase was about 0.5%. So, the indexed increase for 2000 has to be lowered by 0.7%. The expected increase in the CPI for 2000 is 0.9%. The indexing for the base for old-age allowances should be reduced by 0.7% to stand at 0.2%. Nevertheless, the government has decided to increase this indexation by 0.3% to a total of 0.5% so that lower-income families share the benefits of economic growth.

* In view of the unemployment problem (2.7 million officially unemployed), retired people drawing a pension are not allowed to work for remuneration. This provision is being continued for the next year. Moreover, if the provision is not extended, working people could start asking for their retirement benefits from the age of sixty, causing a huge funding problem for the old-age branch of social security.

A commission is examining the issue to come out with a comprehensive law on the subject of retirement, pre-retirement schemes and working alternatives, instead of the annual extension of the prohibition of cumulating work and pension.

* 1700 members of the Geometricians and Agricultural Experts Fund find themselves in an ageing profile, unable to assure their future complementary pensions. The government has therefore decided, with the consent of all the various funds, to merge them into a larger (63000 members) and more solid complementary fund of liberal professions. However, some aid from the basic pension fund of liberal professionals to the complementary fund would still be needed. The law has allowed this transfer.

C. Illness

Medical insurance expenses for all the basic compulsory regimes are budgeted at FF 658.3 billion for 2000, an increase of 4.5% over the budgeted 1999 expenses and 2.5% over the actual expenses of 1999 estimated at FF 643 billion. The breakdown of this includes FF 288 billion for private consultancy practices, FF 253 billion for public hospitals, FF 42 billion for private clinics, FF 45 billion for socio-medical expenses and FF 15 billion for expenses abroad (mostly in the overseas departments).

* The State pays for the Free and Anonymous Detection of Illnesses (such as AIDS) costing about FF 27 million per year and the Centres for Family Planning and Education costing FF 3 million per year. For simplification, these are being transferred to the medical insurance organisations.

* Since 1970, the French State pays for the fight against alcoholism and drug addiction, including sanitary relief accorded to alcoholics and addicts. From January 2000, the cost of the detox treatment will be assumed by Medical Insurance organisations. This includes the cost of the patient living in the treatment centre. The patient is not charged anything for the treatment. The State will reimburse the cost by way of an annual transfer to the Medical Insurance funds. The transfers are expected to cost FF 73 million. The State will continue to finance the rest of the expense, such as equipment required for the treatment centres, directly.

* FF 2.5 billion of the medical insurance expenditure, is accounted by health centres (centres de santé). Health centres are essentially day care centres. There are about 1,454 health centres. Of these 29 are medical centres, 377 are dental centres, 691 are nursing centres and 357 are polyvalent. In all, they employ 15000 medical and paramedical staff and another 5000 people from other disciplines.

Till now, they could be managed by any legal entity: associations, mutual funds, congregations, social security funds, collectivities, commercial enterprises, foundations, hospitals, etc. But from now on, they have to be managed either by nonprofit organisations or by territorial collectivities. They have to be certified by an administrative authority to be authorised to dispense medical treatment. The 20 to 25 existing profit-making centres, run by insurance companies, have been allowed to continue.

The Medical Insurance funds provide the health centres a subsidy to repay a part of their medical insurance contribution for the professionals they employ. This is similar to the exemption for doctors. But profit-making centres will not get this benefit.

In return, the health centres exempt their patients from paying the part which in any case will be reimbursed to the patient by the medical insurance organisation. This eases the paperwork of the Medical Funds who provide a global cheque to the Health Centers instead of a payment to each patient.

The relationship between the health centres and the medical insurance funds will be determined by a national accord. This accord will determine the obligations of each party, including conforming to nationally determined tariffs for the different medical acts. The accord will also determine preventive action to be taken by the health centres and how they are to be reimbursed for this. The national accord will be applied to those health centres who wish to adhere to it.

* Last year, the government had started a system of conventions with doctors (generalists and specialists), organising rules of good conduct and malpractices, and including a global budget for the expense linked to the profession.

This year, the government is extending this type of budgetary control to paramedical staff, notably nurses, massage-physiotherapists and laboratory analysts. A global expense will be fixed for all the medical professions together. Within this global budget, the different parties and funds can decide the allocation for each branch, region, etc. The government will review the actual expense against the budget at the end of every four months (April and August). Individual tariffs and the total budget are no longer decided contractually between the doctors and the funds: they will now be unilaterally imposed by the funds or by the government. Doctors who are not bound by the convention have to nevertheless apply the regulated tariff to beneficiaries of the Universal Medical Coverage Scheme. They may also be subjected to an individual ceiling for each act or an annual ceiling for all excesses from the regulated tariff.

The medical transportation (eg., ambulances) expense is also being reorganised to include rates for each act of transport, with a global budget.

A special feature is the creation of a medical network of different specialists who could be called in to treat chronic and serious illnesses. A global charge could be determined for the illness and each participant could be paid on a contracted rate for the illness, instead of being paid for each act.

New experimental forms of remuneration are also permitted to doctors for public health services, preventive care, and their continuing education.

* The Medical Insurance funds are also permitted to reduce the quotation relating to any medical or paramedical act by up to 20%. This is a new measure expected to reduce the total medical expense, in addition to the two existing measures: reducing medical tariffs and reducing unnecessary acts.

* For doctors, special efforts are being made to control the value of prescriptions. On the average, a doctor costs FF 1.6 million of which a third are his honorariums and the rest are the medicines he prescribes. The latter have been rising at 5%, much faster than the honorariums (1%). Last year, the government had tried to penalise a doctor for exceeding budget limits on the growth of his honorarium and prescriptions. The Conseil d'Etat had declared this unconstitutional. Otherwise, FF 6.7 billion of the excess prescriptions would have formed the basis of a penalty. This year, therefore, the government is doing the reverse. An incentive will be provided to the doctor on the basis of savings made on prescriptions.

* Doctors are reimbursed part of their contributions for medical insurance, old-age and family welfare. The paramedical staff is reimbursed only for their contributions to medical insurance. These reimbursements may be increased if the medical staff agree to certain good practices. These practices which the medical staff have to observe, compulsorily, include evaluation, continuing education, letting the medical control authority supervise their activity, prescribing bulk drugs instead of branded medicines, desisting from unnecessary and illegal practices, and observing the recommendations of good practices.

Optional features include creating new networks of professionals, committing to certain activity levels and allowing the Medical Insurance Funds to direct his activities. In short, the increased reimbursement of social security costs to doctors is in return for sacrificing their independence.

* For according an employee leave on medical grounds, the doctor now has to explain why the employee should be accorded this leave. He has to do this also for prescribing reimbursable transport.

* 5% of French people account for half the medical expenses, 10% for 60% and 25% for 80% of the expenses. This means that some sick people are consuming a lot, paid by everyone else. An average French person consumes FF 12,000 per year of medicines. The 10% large consumers are those who consume over FF 16,000 per year, usually consuming an average of FF 48,000 of medical care. Most large consumers are old people with many diseases or young people with serious ailments. Half of the large consumers are reimbursed up to 100%, in view of their illness. But the other half need to be examined and their expense reduced, if possible.

From 1.1.2000, to control people who are large consumers of medicines, if the expenses presented for reimbursement seem particularly high, the medical control services of the Medical Insurance Fund can call the patient and propose an appropriate treatment in consultation with the patient's doctor.

* A "fund to help the quality of care given by private practitioners' consultancies" was created last year with a budget of FF 500 million to help develop new networks and practices leading to improvement in medicare. The fund has not yet started operating. Nevertheless, another FF 500 million is being poured in.

One wonders if the excess of the taxpayers money is being hidden in these non-operational funds, instead of being refunded to the taxpayer through lower taxes.

* Non-certified pharmaceutical enterprises who have grown faster than the budgeted growth in medical expenses have to pay a tax. The rate of tax is determined by the rate of budgeted growth. It was supposed to be the rate of budgeted growth vis-a-vis previous year budget. This would have been 4.5%. At this growth rate, a tax of 2.3% was supposed to be imposed on non-certified pharmaceutical companies. But the government decided to limit this to a comparison of budget 2000 with expected expenses of 1999. Even this would have been 2.5%. The government then decided to take into account only private practitioners' consultancy expenses, which are growing only at 2%. For 2000, the tax would therefore be 1.3%, that associated with taking the medical sector growth rate at 2%.

The advantage to these pharmaceutical enterprises is considerable. It makes one wonder if the government found it difficult to impose the higher rate of tax because it would not have got the consent of the enterprises. In which case, the credibility of maintaining the rate structure is in question. Admittedly, the government and parliament are not experienced in handling the social security budgets since they took this over only two years ago, but the principles they need to apply are the same as those for any budgetary control. Once targets have been fixed and consented, and the associated penalties too, these must be implemented. Otherwise, the credibility of the budgetary process is lost. Obviously, now, the pharmaceutical enterprises will feel it is better for them if actual sales for 2000 far exceed the budget for 2000 because this will lead to an increase in budget for 2001 and less tax, besides, of course, the fact that higher sales mean higher profits. In other words, the perceived budgetary commitment will have little force.

* In 1996, the government had imposed a levy on the pharmaceutical industry based on their sales of reimbursable medicines, deduction being made for R & D expenses incurred in France. The EU found this went against the EU treaty. To avoid reimbursing the proceeds of the tax, the government is levying an exceptional contribution to cover the 1.2 billion francs collections of 1996.

The new levy is payable by pharmaceutical enterprises whose group turnover in France exceeds FF 100 million for reimbursable medicines. The rate will be between 1.2% and 1.3% of their 1999 French sales of reimbursable medicines.

* All non-medicine medical dispositions are governed by the TIPS (Le tarif interministériel des prestations sanitaires). This includes 8000 types of items, each having one to a dozen brands, certified and reimbursable, all at different prices. The items are divided into four kinds: treating material and healing applications (eg., beds, injections); external aids (cavities, reading glasses); implants and implant equipment (cardiac stimulants) and vehicles for the physically disabled (manual, electric). The reimbursement is normally limited to 65% of the tariff, but in some cases it can be 100%. But the prices in the market are generally far superior to the tariff base on which the reimbursement is calculated. About FF 10 billion is reimbursed by the CNAMTS and another FF 3 billion by the other medical insurance funds on the TIPS. The average growth rate is about 15% per year for the last few years. Part of the growth is because of a transfer effect: since care at the domicile is being preferred to care at the hospital (since it is much less expensive), the medical dispositions are classified as individual reimbursable expense instead of featuring in the hospital's budget. Nevertheless, the government wants to bring some clarity to the field.

From 2000, therefore, it is reorganising the committees which approve the dispositions included in the reimbursement list. One committee will look at the technical aspects, another at the economic aspects and fix the basic tariff. It will also suggest a price to be fixed by the minister.

The unusual feature is that all enterprises who grow at a rate faster than that approved, will have to pay a tax to subsidise the Medical Insurance Funds if they want to continue to get the benefit of their products being included in the list of reimbursable items.

D. Work-accidents

More categories of workers coming into contact with asbestos have been included in the disposition relating to early retirement.

* Our thanks to medical journalist Vincent Bargoin for reading through this article.