Fiscal welfare - the defunding of social security in favor of company supplementary health insurance

Michaël Zemmour - Laboratory for Interdisciplinary Evaluation of Public Policies - Sciences Po

In France, company supplementary health insurance has benefited from a major social contribution exemption scheme since the early 2000s. Initially designed as an incentive and an instrument for governing the health insurance market, this scheme has lost all incentive value since company supplementary health insurance became compulsory in 2016. It now acts as a pure subsidy for certain types of contracts, to the benefit of employees and employers, and to the detriment of the social security system. It also represents a major distortion in the health insurance market, and contributes to reinforcing a structurally unbalanced health coverage system that leaves unemployed people and retirees partly out in the cold. Adopting an analytical approach, we present this scheme, analyze its effects on wage bargaining and the price of supplementary health insurance, and highlight the communicating effect between social insurance and private insurance induced by this scheme.