ABSTRACT
Introduction The French healthcare system has traditionally been considered inflationary, due to its open-ended financing structure and the large degree of freedom of its participants. Indeed, healthcare expenditure has increased at a rapid rate over the past 20 years (7.8% per year in real terms), representing 9.5% of GDP in 2000, compared to 8.6% in 1990 and 7.8% in 1981.1 For the early 1980s, this rapid rate of growth can be explained by the extension of public insurance cover, a high rate of investment (both in capital and labour), population ageing and price increases. Two main instruments were used to balance the budget: increases in social insurance contributions and inpatients' cost sharing, particularly for drugs. Contrary to what was happening in most European healthcare systems in the early 1980s, little effort was made to manage the supply side, apart from the setting up of an information system on physicians' activity.2 The demand side cost containment measures did not succeed in altering the incentives towards over spending built into the system and expenditure continued its steady rise.
