Controlling Healthcare Spending in France: Issues, Challenges, and Strategies for a Sustainable System
Controlling healthcare spending in France has become a key priority for public authorities and stakeholders in the healthcare system. Faced with constantly rising costs, it is essential to identify effective measures to ensure the sustainability of a high-quality healthcare system that is accessible to all. This article examines the issues, challenges, and strategies being considered to control healthcare spending in France, drawing primarily on OECD analysis and supplementing it with insights from the Court of Auditors and a parliamentary report on the appropriateness of care.
The Current State of Healthcare Spending in France: An Overview
France allocates a significant portion of its gross domestic product (GDP) to healthcare spending. In 2015, these expenditures amounted to 11% of GDP, a relatively high level compared to other European countries. Among the countries of the Organisation for Economic Co-operation and Development (OECD), France is among those that devote the most resources to healthcare spending, across all funding sources (government, mandatory health insurance, supplementary health insurance providers, households), reaching 11.8% of GDP in 2023, compared to an average of 10.4% for European Union countries. Only Germany (12.6% in 2023), with its older population, had a higher level. In terms of financing, the French healthcare system relies heavily on mandatory health insurance, which covers the majority of current healthcare expenditure as defined internationally. Out-of-pocket expenses for patients are thus relatively low in France, amounting to €426 per capita in 2022, compared to an average of €516 in the European Union, after adjusting for price differences. However, this generous system is accompanied by a steady increase in spending. Over the twenty years preceding 2018, healthcare spending increased steadily relative to GDP. In the wake of the health crisis, the sharp increase in the National Health Insurance Expenditure Target (ONDAM), excluding COVID-related expenses, calls for stricter control over the pace of spending. The ONDAM—excluding COVID spending—is set at €265.4 billion for 2025, representing an annual increase of 4.8% since 2019. This increase led to a rise in the share of national health insurance expenditure (ONDAM) in GDP, reaching 8.9% in 2025, compared to 8.3% in 2019. loading="lazy">
Factors Driving Increased Healthcare Spending: Challenges and Issues
Several factors contribute to the rise in healthcare spending in France. Among these, demographic trends—including an aging population and increased life expectancy—are driving growing demand for long-term care and services. Technological progress and medical innovation, while improving quality of life and life expectancy, can also lead to higher costs, particularly due to the price of innovative drugs. For example, net spending on cancer drugs is expected to increase from €2.4 billion in 2022 to €7 billion in 2028, representing a 20% annual increase.
Other factors related to the organization and operation of the healthcare system also play a role. The OECD highlights, in particular, the risk of supply-driven demand and social disparities in access to healthcare. The French Court of Auditors points to medical practices and their associated expenditures that are sometimes inappropriate. Examples of inappropriate prescriptions or reimbursements have been identified, such as vitamin D overdoses or the excessive prescription of proton pump inhibitors (PPIs). Waste within the healthcare system is also a major issue. In 2017, the OECD estimated that nearly one-fifth of healthcare spending made no or very limited contribution to improving the population’s health. The Court of Auditors also highlighted what it considered excessive reliance on certain procedures, such as in the field of medical imaging. Finally, the complexity of the financing system and the methods of remunerating healthcare professionals can influence spending. Fee-for-service billing, for example, can potentially encourage the proliferation of procedures, whether or not they are always necessary. The National Health Insurance Expenditure Target (ONDAM): a control tool? The National Health Insurance Expenditure Target (ONDAM) is voted on annually by Parliament as part of the Social Security Financing Act. It serves as a tool for managing healthcare spending. The National Health Insurance Expenditure Target (ONDAM) covers the expenditures of the mandatory health insurance system and the State, representing approximately 78% of total healthcare spending. It is divided into several sub-targets corresponding to sectors of healthcare provision, such as outpatient care, expenditures related to healthcare facilities, and facilities and services for the elderly or people with disabilities. The government hopes to maintain the growth rate of the ONDAM at a historically low level. However, the Court of Auditors points out that the cost-saving measures necessary to stay within the ONDAM trajectory are not always precisely documented. Furthermore, the ONDAM does not include certain significant expenditures, such as daily maternity and paternity allowances. Despite its role in setting the budgetary framework, the effectiveness of the ONDAM as a tool for controlling spending is a subject of debate. The defined objectives remain indicative for many stakeholders, who make decentralized spending decisions. The Court of Auditors has thus noted overspending on the National Health Insurance Expenditure Target (ONDAM).
Strategies for controlling spending: the OECD approach
The OECD proposes several ways to improve the efficiency of the French healthcare system and control its spending. The organization emphasizes the need to supplement overall budgetary control with incentives to make healthcare delivery more efficient.
The OECD's recommendations include:
- Strengthening efforts to lower the cost of medicines and promote generic drugs. Despite these initiatives, the share of generic drugs in the French pharmaceutical market remains below the OECD average. Increasing the use of generic and biosimilar medicines would lead to significant savings.
- Developing incentive-based payment systems. The OECD encourages a shift toward healthcare professional compensation models that prioritize the quality and efficiency of care over the volume of procedures. Episode-based payments or flat fees could promote coordination among stakeholders and more comprehensive patient care.
- Strengthening the effective and appropriate use of primary care and hospitalization. This requires better coordination between community-based healthcare and hospitals, preventing avoidable hospitalizations, and expanding outpatient surgery.
- Stepping up efforts to promote the appropriate use of healthcare and the effectiveness of procedures. The OECD emphasizes the importance of combating waste and interventions that do not add value to health.
The OECD also emphasizes the crucial role of prevention in reducing the use of curative care over the long term. Targeted and coordinated efforts among the various stakeholders are necessary to improve the effectiveness of preventive health care.
The Court of Auditors' proposals for greater efficiency
The Court of Auditors puts forward a number of concrete proposals to improve the efficiency of national health insurance spending (ONDAM). These proposals are structured around several key areas: The fight against fraud: The Court recommends intensifying efforts to combat health insurance fraud by setting ambitious targets and strengthening controls. Improving the appropriateness and quality of care (medically managed cost control): The Court emphasizes the need to better target medically managed cost control measures, particularly in areas of fastest growth such as those related to long-term illnesses (ALD). It also recommends strengthening medically managed cost control by drawing on the recommendations of the French National Authority for Health (HAS) and justifying the expected savings. Optimizing management: The Court proposes increasing efforts to optimize health insurance management, particularly regarding the management of healthcare products, medical transport expenses, and the outstanding debt of healthcare facilities. It emphasizes the need to strengthen the actions of the Economic Committee for Health Products (CEPS) and to promote the use of generic and biosimilar medicines. The Court highlights the need to mobilize healthcare professionals and insured individuals around targeted prevention approaches and to coordinate the actions of the numerous institutional stakeholders. The Court also calls for a better sharing of the burden among healthcare system stakeholders, given the scale of the financial efforts required to restore the financial balance of the social security system branches. It suggests, in particular, rethinking the scope of reimbursement by health insurance and reducing the amounts allocated to new measures in the draft social security financing bill.
The appropriateness of care: a key factor in cost control
The appropriateness of care—defined as providing the right care: care that is suitable, strictly necessary, tailored to patients’ needs, and in line with the best clinical standards—is recognized as a key factor in controlling healthcare spending. Numerous studies have highlighted a degree of waste within healthcare systems, including in France, linked to interventions that do not add value to health. The OECD estimates that this could account for nearly one-fifth of healthcare spending.
Improving the appropriateness of care involves addressing several aspects:
- The Appropriateness of Drug Prescriptions: Combating Iatrogenic Effects and Promoting the Use of Generic Drugs.
- The Appropriateness of Hospital Stays and Care Pathways: Reducing Potentially Avoidable Hospitalizations and Inappropriate Use of Emergency Services.
- The appropriateness of care delivery methods: Promoting outpatient surgery when appropriate and optimizing the length of hospital stays.
- The appropriateness of diagnostic and therapeutic procedures: Streamlining prescriptions and avoiding unnecessary or redundant procedures, particularly in imaging and laboratory testing. medical.
For several years, health insurance providers have been implementing medically guided measures to improve the appropriateness of care. However, healthcare professionals have sometimes viewed these approaches as overly bureaucratic and focused on cost reduction. A more collaborative approach, involving healthcare professionals and based on scientifically validated recommendations and guidelines (such as those from the HAS), is essential.
Raising patient awareness of the appropriateness of care is also a key element. Information campaigns, such as the "Choosing Wisely" initiative, can encourage dialogue between patients and healthcare professionals to avoid the use of low-value care. The Role of Stakeholders and Public Policies in Controlling Spending: Controlling healthcare spending is a shared responsibility among many stakeholders: Public authorities: They define the regulatory and budgetary framework, set the national health insurance expenditure target (ONDAM), and implement health policies aimed at improving the efficiency of the system. Health insurance: It plays a central role in financing and regulating spending by implementing medically-led cost-containment measures and negotiating with healthcare professionals. Healthcare professionals: Their involvement is crucial to ensuring the appropriateness of prescriptions and procedures. Professional societies have an important role to play in developing and disseminating best practice recommendations.
Public policies must promote an integrated approach to controlling spending, combining budgetary control measures, incentives for efficiency, and actions aimed at improving the appropriateness of care. The development of innovative financing models, such as episode-based payments or performance-based payments (PBP), could help align the interests of different stakeholders and promote more efficient patient care. Interoperability of health information systems is also a major challenge for improving care coordination, avoiding redundant tests, and facilitating patient follow-up. The development of the Shared Medical Record (DMP) and secure messaging between healthcare professionals is essential in this area. Future prospects and challenges for the financial sustainability of the French healthcare system: Controlling healthcare spending in France is a long-term challenge that requires continuous and coordinated action from all stakeholders. Faced with demographic changes, technological advances, and growing patient expectations, it is imperative to rethink funding models, improve the efficiency of healthcare organization, and promote the appropriateness of procedures.
Projections for public health spending show an upward trend as a percentage of GDP by 2060. The financial sustainability of the French healthcare system will depend on the ability to reverse this trend through effective cost-control measures.
The challenges are numerous:
- Overcome resistance to change and encourage healthcare professionals to adopt appropriateness-based approaches.
- Develop reliable and relevant indicators of quality and appropriateness.
- Implement financing methods that incentivize quality and efficiency without compromising access to care.
- Improve coordination among the various levels and sectors of the healthcare system.
- Strengthen prevention efforts to reduce the use of curative care in the long term.
- Involve patients more in decisions regarding their health and raise their awareness of the importance of appropriate care.
The sustainability of the French healthcare system, with its principles of solidarity and universal access to care, inevitably depends on strict control of its spending, while ensuring that the quality and safety of care are maintained. Analyses by the OECD and the Court of Auditors, as well as discussions on the appropriateness of care, offer valuable insights for addressing this major challenge.
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