French lawmakers approve healthcare overhaul

France's lower house of parliament approved a controversial health care reform plan yesterday, a first step towards implementing changes intended to cut costs and save the system from bankruptcy.

The opposition Socialists voted against the reform, but the conservative government has a strong majority in the National Assembly, enabling the text to pass at its first reading. The government hopes to pass the measure in early August.

The reform is aimed at raising five billion euros a year in new taxes and seeks annual cost savings of another 10 billion euros through measures such as a one euro flat fee for visits to doctors and a rise in the welfare levy payable by pensioners.

The conservative government of Prime Minister Jean-Pierre Raffarin says the reform is key to reining in France's gaping public deficit and safeguarding the costly health care system, founded in 1945 and renowned for its high quality care.

"It is fair because it is based on three principles: the balanced sharing of efforts, individual responsibility, fairness," Health Minister Philippe Douste-Blazy said at the National Assembly.

Trade unions fear the reform will punish the poor more than the rich and push health care costs on to future generations, but their calls for protests have failed to win much public support.

In a letter to Douste-Blazy and other officials, Mr Raffarin thanked everyone involved in conducting the health care reforms.

"I think, together, we have created a new reform model without social shocks, which will be very useful in our future activities, notably (for reforms) in research and education," Mr Raffarin said in the letter that will appear in the Wednesday edition of business daily Les Echos.

The state system is running at an annual deficit of around €11 billion a year. If nothing were done about, the deficit could triple by 2010 as the French population ages.

The health care deficit will in 2004 account for nearly a fifth of France's overall public sector deficit, which is set to bust the European Union limit of three percent of gross domestic product (GDP) for the third year running.

The government has pledged to meet the EU target next year.

But a report by the French state health body earlier this month said the government plan to wipe out the health care deficit may not be enough.

An internal Finance Ministry document leaked in June also saw the reforms falling short of Douste-Blazy's goal of the health care system breaking even in 2007 and forecast a deficit of €7 billion at best by then.