1. Historical background

In France health care system is an essential part of social security system, it means that the development of health insurance is inalienable from the development of social security system.

1.1 Social security system development

French social security system as known today was founded after the end of the Second World War in the middle of the 20^th century. Before this the idea of social security was associated with mutual benefit organizations, which played a crucial role in the development of the system.

They appeared in the beginning of the19^th century and gained strength extremely fast. In 1900 these organizations had 2.5 million members. In 40 years the number grew by 400%. In 1940 there were already 10 million members. Obviously, there was a need for health care system in the country, but health insurance was still not legalized.

The initial stage of the creation of French social security system was the introduction of the Act of Social Insurance in 1930. The new system provided protection for a part of population with low and middle income in different areas, such as illness, maternity, disability, old age and death. This is now considered as the first stage of French health care system formation. However, the Second World War delayed the launch of the whole Social security system in France. (Sandier, Paris, Polton, 2004. p.7)

Only in October 1945 it came into being. As already mentioned, it did not cover the whole population of the country. The initial target group was the working class. The government decided to extend health coverage for everybody by the end of 1940-es. But the implementation came gradually and slowly. Only in 1961 health insurance became available for people engaged in working in agricultural sphere, and in 1966 for self-employed non-agricultural workers. Further improvements were applied in 1974. Those who could not be placed into any category that had been already covered had to pay a contribution in order to obtain insurance. (Green, Irvine, 2001, p. 30)

By the end of the 20^th century health coverage in France became available for every citizen. Simultaneously with the extension of the health care system the principle of solidarity was developing, all changes were aimed at making coverage universal. France was the first country in Europe to provide the whole population with basic health services. Solidarity principle became vital for public hospitals and health programs also. As a result, the efficiency of the French system grew significantly.

For the first four decades of the HC system existence the network of health insurance funds with electoral boards of directors and the state managed it. But afterwards two major changes took place. Firstly, the four-branches separation was created: health insurance, pensions, family benefits, and insurance for work-related accidents and occupational illnesses. Secondly, the way of choosing the board of directors was changed from elections to the appointment by trade unions.

Since that time the biggest National Insurance Fund for Employed Workers (CNAMTS) stood out from other ones. By the end of the century it gained a lot of power and influence. As a result the roles of the state and the funds became mixed, the question how to clarify them became a serious problem. A special agreement on targets and management between government and CNAMTS created in 1996 was a solution for the first time. However, the roles remained unclear and further attempts of clarifying took place four years later in 2000. The Social Security Funding Act was brought in; according to it, hospital care sector was put under states responsibility, while CNAMTS came in charge of fee regulations and setting expenditure targets.