Spain to Save 7 Billion Euros by Cutting Health Spending

Spanish Health Minister Ana Mato said the tax-funded health-care system will cut spending by 7 billion euros ($9.2 billion) amid efforts to rein in the euro area’s fourth-largest budget gap and curb borrowing costs.

The measures include using more generic drugs, reducing purchase prices and centralizing buying, Mato told reporters in Madrid today following a meeting with the 17 regional governments.

Patients will also be charged more for drugs. Middle-income earners will pay 50 percent, up from 40 percent, and pensioners, who receive free medication now, will pay 10 percent. Free prescriptions will be limited to those without jobs and benefits and retired people on the lowest pensions.

To convince investors Spain won’t be the fourth euro member to need a bailout, Prime Minister Mariano Rajoy is implementing the deepest spending cuts in more than three decades to shrink the nation’s budget shortfall by 3.2 percentage points of gross domestic product this year amid a recession.

Health and education account for about 60 percent of regions’ expenditure and the regions were responsible for most of Spain’s overspending last year.

The regions, confronted with a slump in tax receipts since a housing bubble popped in 2008, have accumulated unpaid bills to health suppliers that amounted to 12 billion euros of drugs and health-care equipment in February, according to the pharmaceutical lobby Farmaindustria.

Rajoy’s People’s Party government, in power since December, has presented measures to help regions and town halls pay suppliers, in exchange for their submitting plans to reorder their finances.

To contact the reporters on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net; Angeline Benoit in Madrid at abenoit4@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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