April 9, 2012 / 6:00 PM / 7 years ago

UPDATE 1-Debt-laden Spain eyes charging rich for healthcare

* Mulls charging high earners for treatment

* Health service 15 billion euros in debt

* Health spending below OECD average

* Econ minister says “sun will come out” in 2013

By Nigel Davies

MADRID, April 9 (Reuters) - Spain is considering charging the rich for healthcare as it reforms its highly regarded and deeply indebted public health system, Economy Minister Luis de Guindos said on Monday, as the country struggles to show it can rein in its spending.

De Guindos has stressed debt-laden Spain’s commitment to reform in a string of interviews with international media in the last week, as the euro zone’s fourth-largest economy tries to persuade the markets it can avoid a bailout the 17-nation bloc may not even be able to afford.

Next on the agenda is reform of the healthcare system, which is 15 billion euros ($20 billion) in debt.

Prime Minister Mariano Rajoy’s office estimated 10 billion euros could be saved from spending on healthcare and education. That compares with 27 billion euros in cuts unveiled in the 2012 budget last week to comply with a target to cut the deficit to 5.3 percent of gross domestic product from 8.5 percent in 2011.

“We need to cut out unnecessary costs, rationalise areas that are not working well, because if we don’t, we won’t guarantee the sustainability of the system,” de Guindos said in an interview with radio station SER.

Spain’s 17 autonomous regions control their healthcare and education budgets, and having overspent in 2011, reforms in these two areas are seen as key in improving the country’s fiscal position.

Public health spending was $3,067 per capita in 2009, below an average of $3,361 per capita in the OECD club of wealthy nations, based on the latest available data.

While most well-off Spaniards have health insurance, they often move over to the public health care system for serious problems such as cancer or high-risk pregnancies.

“We need to open the debate in the central government and among the regions on whether the health service should be free for someone earning 100,000 euros,” de Guindos said.

Spaniards have largely accepted tough measures needed to get the country’s finances in shape, but any cuts to the prized healthcare and education systems are likely to trigger more protests. Reforms so far have focused on banking and labour markets.

Spain’s borrowing costs jumped last week to their highest since December on concerns that Madrid, which far overshot its budget deficit target last year and has won EU agreement for a softer target this year, will sink deeper into debt as recession looms.

SUN TO COME OUT IN 2013

The health reforms should pass smoothly into law due to the ruling People’s Party’s absolute majority in parliament, though the opposition Socialists have said the planned cuts crossed ‘red lines’.

The PP also governs in 11 of Spain’s autonomous regions, which may limit any backlash.

The International Monetary Fund said on April 5 that Spain must keep up its reform efforts and ensure that the regions meet their deficit targets.

Local media reports suggest the government hopes to cut education spending by increasing the number of students in classrooms, cutting the number of teachers and raising fees for university education.

De Guindos also repeated the government’s line that the economy would grow next year, although it expects GDP to contract by 1.7 percent this year.

“This year is going to be very tough but the sun will come out next year from an economic perspective. Of that I have no doubt,” he said.

He said Spain’s economic situation would be helped by tougher controls this year over the regions’ finances.

“Everyone has a commitment this year,” he said referring to the central government and regions’ attempts to cut a public deficit to 5.3 percent this year from 8.5 percent in 2011.

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