Social Security Budget: In the event of rejection or censure, does Social Security risk a shutdown?

The Social Security's 2025 budget project will be submitted one last time to the National Assembly and the Senate next week, with a possible recourse to Article 49-3 which would carry the threat of government censure.

Care “always reimbursed”

The threat was brandished by former Prime Minister Elisabeth Borne: "If the Social Security budget were to be censored, that would mean that on January 1st, your health insurance card would no longer work", that "pensions would no longer be paid", she stated on LCI.

"This is nonsense!", "false", "alarmist", several specialists in social benefits commented to AFP.

All are formal: unlike the State budget, necessary to collect taxes, the absence of a Social Security financing law (LFSS) does not prevent either the collection of social security contributions or the payment of benefits due.

"The benefits - reimbursements for healthcare, medication, sick leave benefits, retirement pensions, etc. - are rights and will continue to be paid" to policyholders, assures Vincent Dussart, professor of public finance and tax law (Université Toulouse-Capitole).

Pensions “paid and revalued”

Unlike the State budget, the LFSS is not "an authorization" to spend but "forecasts of revenue and expenditure", i.e. non-limiting objectives set by the public authorities, several experts explain.

In the absence of a LFSS, pensions will also be revalued in January, "by applying the revaluation provided for by law", i.e. an indexation of basic pensions on the inflation noted by INSEE at the end of 2024, assures a social security expert.

This rule is written into the Social Security Code. It can be modified by a LFSS. For 2025, the current budget project plans to revalue pensions by only half of inflation, except for pensions below the minimum wage which would receive a supplement in July.

"Financial problem" in a few months

However, one article of the LFSS remains essential, according to these experts. It sets each year the ceiling of the loans that the "treasurer of the Sécu" (the Central Agency of Social Security organizations) is authorized to make.

Since the Social Security is in significant deficit, "the law must authorize raising this ceiling", otherwise "the coffers would be emptied", points out a specialist, estimating that the Social Security has a margin of "several months" before bankruptcy.

But according to the sources interviewed, the executive should be able to resolve this issue even without a budget.

He should be able to find "a degraded legal solution at the beginning of the year, law or decree, to recreate a borrowing authorization" and avoid the interruption of the payment of benefits, estimates Dominique Libault, the president of the High Council for the Financing of Social Protection (HCFiPS).

But no LFSS, "that also means no corrective measures" to straighten out the finances of the Social Security, and therefore "a deficit that is disappearing", warns an expert close to the Social Security administrations.

Hospital financing

Every year in the spring, the government sets the prices of public and private hospitals based on the expenditure target of Health Insurance (Ondam), an integral part of the LFSS.

And if there is no LFSS, "there is no solid legal basis for setting the new rates," notes Dominique Libault.

"In all likelihood, in the absence of new texts, the only possibility would be to renew the previous rates from 2024. And that is not very good news for hospitals," he believes.

Loss of parliamentary power

"Paradoxically, in the absence of the LFSS, parliament would deprive itself of great visibility over social accounts, and of a power of control", leaving the government "a large degree of autonomy", notes a senior official, specialist in these issues, anonymously.

This would be "a huge shock", sowing doubt "on France's ability to steer a budgetary strategy in a context where financial recovery is inevitable", also comments Dominique Libault.

"The cost of borrowing will increase, and so will the deficit and dependence on financial markets," he warns. "By failing to take timely action, we are alienating part of our sovereignty with greater dependence on financial markets, and we are opening the way to even more drastic measures in the future."