Sunday, June 14, 2009

The worst of the cuts

It's 3 days since the last budget proposal is out. So far, most of the public anger has concentrated on the cuts in the retirement benefits (70% for working retirees, 10% for the rest). But there are far worse things in the proposal.

The budget for healthcare services (hospitals, doctors, etc.) is being cut by 42 million lats. If we look at the previous version of the budget, there were 336 mln lats for healthcare. About half of that has been spent in the first half-year - which means that there is about 168 mln left for the second half year. The amount that is being cut is 25% of the entire budget!

I don't know how our healthcare system will survive that. In many other parts of public sector (for example, education or public administration), the main costs are salaries and 25% cut means 25% (or slightly more) off from salaries. Healthcare has many non-salary costs: medical equipment (and, even if hospitals don't buy new equipment, they still have to pay off loans for the equipment bought in the "fat years" of 2005-2007), medicines, etc. Does one stop giving drugs to patients? Or does one cut salaries of doctors and nurses by 40-50-60% to achieve a 25% cut in total costs?

Healthcare Ministry official proposes higher payments from the patients themselves:

For example, if the medical investigation costs 50 lats (70 euros), the
patient pays half, the government pays half.

This also looks like a non-starter, since many people don't have 25 lats. If someone is earning the minimum salary, it takes them almost a week to earn 25 lats and there are so many other costs! Same about retirees (the average retirement benefit in Latvia is about 170 lats/month). And unemployed. And many other categories of people.

There was a previous increase in the patient co-payments in March and hospitals reported that many people started coming in only when their disease has progressed to an unbearable condition. What's next?

8 comments:

Anonymous said...

Let's be clear. This is the last gasp of a cowardly government. Hiding behind the cover of an IMF rescue plan does not justify destroying the social infrastructure for future generations. The only parallel for these social cuts I can see is Chile under the military dictator Pinochet in the 1970s and 1980s. Here again the IMF was the guilty party. So unless Zatlers plans to fly protesters by helicopter and drop them into the Baltic sea, we are waiting for default.

My prediction for default is december, when pensioners are freezing to death and fuel costs rise again.

Baltic Ring said...

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Thanks for your time

Sedrikas

Baltic Ring said...

Hello,

We have just launched a website called "Baltic Ring".
The purpose is to list the best of the websites and blogs who's topic is one of the Baltic States.
We would be pleased to count you as one of our first members.
You can read few lines about project here : http://balticring.jimdo.com

Thanks for your time

Sedrikas

Edward Hugh said...

Hi,

Come into Facebook, use Latvian Abroad and an id, and your blog email. Join my friends.

Edward

bathmate mateus said...

Moderate posting.Need to be more informative.Good try....


Bathmate

Steve said...

I am sad at what is happening to the Latvian economy.
I have helped a number of people from Latvia, who are settling in the Uk, go bankrupt and leave their Latvian debt behind. if this is of interest or you know where I can post to spread the word please let me know.
Steve Thatcher
www.helpwithdebtuk.com

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