Unhealthy austerity hits Europe

Posted by Gary Finnegan on 15/02/12
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The reality of budget cutbacks is hitting frontline health services across Europe as governments close wards and patients beg for medicines

At the turn of the year, the Czech Republic sent a platoon of army doctors to help neighbouring Slovakia keep its hospitals open after a mass walk-out of 1,600 medical staff.

A state of emergency was declared as the government scrambled to find a way of solving a chronic medical manpower crisis prompted by an exodus of young doctors. Medical graduates are shunning the €430-a-month contract on offer in the pared-down Slovak health service, in favour of jobs in Germany paying starting salaries of €1,890 per month.

Welcome to Austerity Europe. This is barely the tip of the iceberg. Doctors in Romania and Hungary are threatening to copy the action of their Slovak colleagues in protest against yet another round of pay cuts introduced in an effort to rein in budget deficits.

Patients took to the streets in Romania this month to protest against the government’s new Health Bill which will institute a fresh round of cuts. Violent scuffles followed, with some protesters hurling Molotov cocktails at riot police. Observers say it is the worst public order disruption since the Romanian people turfed out Nicoale Ceauşescu in 1989.

Plus ça change

In Bulgaria, just 4% of the 2012 budget has been earmarked for health – a small slice of a shrinking pie. Staff have seen salaries fall and workloads rise. They’ve never heard of Croke Park in Sofia.

Lithuania too made swingeing cuts to its public sector, slashing spending by 30% early in the crisis. The result was hardship across education and health services, although the Lithuanians are slowly finding their feet again having also devalued their currency.

The picture is less positive in Hungary. The IMF was invited into Budapest in 2008, but relations have been strained since the 2010 election returned a populist party which blames foreign creditors for their home-grown woes. Hungary is currently trying to negotiate an additional bailout programme with the IMF and EU but promising its people that it will not accept further austerity as a precondition for cheap money. Good luck with that.

Non-eurozone countries have taken plenty of pain but are not in the glare of the media spotlight because, frankly, it doesn’t affect the rest of us that much. Some Europeans are more equal than others, it seems.

Indeed, surveys in several former Eastern bloc states show the grinding poverty of EU membership is not going down well – there is now rising nostalgia for the grinding poverty of the communist era. Plus ça change, plus c’est la même chose.

Austeritis maximus

Economists are divided on whether austerity is the solution to the crisis. To some, cutbacks are the tough medicine Europeans must swallow if they are to live within their means. To others, austerity is poison and Europe has been administered a lethal dose.

For the Greeks, where austerity has been taken to the extreme, the choices are stark: continue to slash health, education and welfare spending while staying in the euro. Or leave the euro and continue to slash health education and welfare spending. (Sound familiar?)

Greece takes plenty of flak for its lacklustre efforts to collect taxes and failure to take on vested interests but the evidence of its health services austerity push is plain.

The drug supply chain has collapsed, leaving patients pleading with doctors and pharmacists to source routine medicines like aspirin and beta-blockers. The Panhellenic Associaiton of Pharmacists says half of the country’s 12,000 pharmacies are reporting shortages in frequently-used medicines.

Crisis hits medicines supply

The reasons for the medicines crisis are complex but boil down to the government not having the cash to pay its bills. Earlier this year several large drug companies accepted deeply discounted government bonds in lieu of payment owed by public hospitals.

Why? They had waited two years for payment and wanted to cut their losses. Some have now left the country altogether while others insist on cash-on-delivery rather than issuing invoices for which they know they will not be paid.

Meanwhile, the government has not been reimbursing pharmacists who dispense medicines on drug payments schemes. Around €330 billion is owed to retail pharmacists since April of last year, causing a chronic cash-flow crisis.

As a result, supplies are running dangerously low, because wholesalers are no longer willing to provide medicines to retailers on credit, for fear of being left with more bad debts.

The government has also introduced price controls for medicines, meaning they will not pay more than a unilaterally agreed fee per dose. Naturally, the price they set is significantly down on last year, which was down on the year before. Some wholesalers have responded by taking their stock and exporting it to markets which are still functioning.

At the end of the broken supply chain are patients. Where drugs are available, pharmacists are typically asking for cash payment, advising patients to seek reimbursement from the state insurance companies – a task previously undertaken by pharmacists. Many of those who cannot pay up front must go without.

Unseen victims

Meanwhile, as bad as things are across Europe, spare a thought for the truly forgotten victims of European austerity: developing countries.

With all this talk of ratings agencies and sovereign bonds, it would be easy to think that governments were the only people seeking to sell IOUs on the international credit markets.

They are not. The International Finance Facility for Immunisation raises money to invest in vaccines for the world’s poorest countries. Because it is dependent on countries like France as a guarantor of its funds, it too has felt the wrath of a ratings agency downgrade.

This makes it more expensive for it to borrow money which in turn translates as fewer children getting vaccinated in polio-ridden Pakistani slums. That might sound remote to us but the 2010 polio outbreak in Eastern Europe was traced back to Indian villages. Infectious diseases mastered globalisation long before we did.

It’s a similar story for independent aid organisations in need of cash to rebuild housing in Haiti or fund clean-water projects in Uganda.

Add to that the fact that most ‘rich’ countries seeking to balance their budgets have cut foreign aid spending, and debates on whether Irish children’s allowance should be cut by €10 a month become embarrassing.

There is no simple way to fix all of this. What was can hope for is a better appreciation of the hierarchy of priorities. Should Greece be closing hospitals while buying fighter jets? Should Irish civil servants taking early retirement with gold-plated pensions be protected while children wait more than a year for surgery? Will foreign aid budgets suffer so Europe can afford to prop up out-dated industries?

The era of austerity has taken us to an age of tough choices.

2 Responses to Unhealthy austerity hits Europe »»

  1. Comment by OldStone50 | 2012/02/17 at 09:01:23

    Another blog piece that might help understanding of the problem faced by the EU – and Earth – can be found here:

    http://ourfiniteworld.com/2012/02/15/human-population-overshoot-what-went-wrong/#more-15362


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  1. [...] in Athens say grinding austerity has led to the closure of clinics, increases in infectious diseases, rising drug use, and a chronic shortage of medicines, risking [...]

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