Greek Health Costs Spiral due to 'Polypharmacy' and Unemployment

Greek Health Minister Andreas Lykourentzos says public health expenditure will overshoot a target set by Greece's creditors, casting doubt on the efficacy of a highly unpopular austerity policy and sending a derailed budget further off-course.

The National Healthcare Services Provider (EOPYY) will spend  about 6.5bn euro this year, 1.4bn-1.5bn euro more than it will raise, Lykourentzos told a session of the parliamentary social affairs committee yesterday.

He said EOPYY's main liabilities were the construction and farming industries. Greece formed EOPYY last February under the terms of its bailout loans, in order to consolidate 13 health and pension funds. One of these, the Social Insurance Foundation (IKA), has seen a 40% collapse in contributions as a result of low demand in new real estate, Lykourentzos said. Another, the farmers' pension fund, has been chronically insolvent.

Lykourentzos also warned that non-hospital, prescription-based pharmaceutical expenditure would exceed a limit of 2.8bn euro set for this year.

Greece has managed to reduce its total pharmaceutical expenditure from 6.3bn euro in 2009 to 4.5bn euro last year thanks to an austerity programme mandated by its so-called troika of creditors, consisting of the European Commission, the European Central Bank and the International Monetary Fund. But it now appears that it will not stay on track to reach a target of 3.65bn euro this year (see table below).

Greek Pharmaceutical Expenditure 2009-2012 (in millions of euro)

	2009	2010	2011	2012*
Social Sec. Fnds	5,100	4,513	3,664	2,900
Hospitals	1,251	1,083	831	750
Total	6,351	5,596	4,495	3,650

 *Forecast in April 2012
Sources: Health Ministry, Labour Ministry

Lykourentzos stressed that a new online platform through which doctors must now file prescriptions is helping to reduce waste and fraud. And plans are underway to consolidate 133 hospitals under EOPYY's purview to 85 in administrative terms. 

But he did not hide his frustration at the sheer weight of demand for medicine. "Let me tell you that last July we had 4,717,000 prescriptions," he told the committee. "Last Friday alone, because pharmacists had declared a strike, we had 600,000 prescriptions. We need to understand that we cannot have polypharmacy, we cannot have over-prescription," he said.

Social welfare costs have risen and contributions have collapsed in recent years due to unemployment. Nine hundred jobs are lost every day, the National Centre for Social Research (EKKE) revealed to Kathimerini newspaper today. Statistical unemployment stands at 23 percent, and is forecast to reach over 24 percent by the end of the year, but underemployment and payroll arrears are not expressed in that figure.

In a survey of the Greek economy released today, the Labour Institute of Greece's largest labour union, the General Confederation of Greek Labour (INE-GSEE), predicts that unemployment will reach between 26-29 percent by the end of next year. It estimates that Greeks have already lost 16.2 billion euro in salary and pension cuts during the crisis, amounting to eight percent of GDP.

Greece is currently in its fourth year of recession, and has lost an estimated one-fifth of its economy since 2008.