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The Effect of Spain’s Budget Cuts on Spanish Healthcare

Posted Sep 28 2012 12:00am

The Spanish deficet is at 8% of GDP.  Large provinces such as Catalunia, Andalucia, Valencia and Castilla y Leon are seeking bailouts.  Banks need almost 60 billion euros in bailouts. Spain has an overall unemployment rate of 21.5%, but its youth unemployment rate is 45%!  Prime Minister Mariano Rajoy said 16.5 billion euros (about $21.5 billion) would be cut from the budget next year to meet Spain’s deficit reduction target.

To stem the tide of red ink, Spain is imposing austerity measures.  Rajoy proposed few details but said that much civil service recruitment would be frozen and that public sector wages would be frozen. He also proposed a drastic reduction in the number of state companies, quangos and other entities.

Although it seems that healthcare spending may be largely spared the ax in this latest round of cuts, budget trimming has already occurred.

Illegal immigrants, who previously had full access to Spain’s healthcare system, will now be without services.   A new law that allows free medical treatment for illegal immigrants only in emergency cases and for children and pregnant women .  Spanish physicians have protested vigorously.

Additionally, the price the Spanish government pays for pharmaceuticals have already been slashed.  The Economist’s ViewsWire reports :

Spain’s pharma industry is ‘on the verge of collapse’ thanks to the impact of government austerity measures, according to the president of industry association Farmaindustria. Speaking to Spanish radio station COPE, Humberto Arnés complained that cuts to the public pharmaceuticals budget were undermining investor confidence in the industry and were threatening the viability of companies. The bad news is that things are likely to get worse before they get better.

The latest blow to the industry came on December 28th 2011, when the incoming government of Mariano Rajoy revealed the latest pharma prices under the new reference pricing system introduced in 2010. Farmindustria, whose members account for over 90% of prescription drug sales in the country, reckons the new prices will cost the industry another €650m (US$830m) during 2012.

To add insult to injury, Andalucia is experiencing torrential flooding .

When it rains it pours…


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