‘Medicaid is not a free lunch’: What the Irish Government needs to do to save €1bn of budget deficit

The Irish Government has revealed it will need to cut its budget deficit by €1.1bn in the next two years to avoid a €1 billion shortfall in its general expenditure.

The Minister for Health and Social Protection Leo Varadkar said the shortfall was due to the loss of revenue from the National Health Service in Ireland and the increase in healthcare spending.

In total, it is expected to be €2.9bn in 2018-19, down from €3.2bn in 2017-18.

Mr Varadkars comments come after the Irish Budget deficit widened to €1,000bn in May 2018 from €824bn in June 2018.

The deficit has increased in the last three years, rising from €1billion in 2014-15 to €3billion in 2020-21, according to the latest official figures from the Department of Finance.

This year, it has risen again to €2bn.

It is estimated that over the course of this financial year, the Government will have to spend €1trillion on healthcare, up from €900million this year.

It has also raised the amount of the public sector payroll tax from 7.5 per cent to 10 per cent in order to cover the shortfall.

There will also be a further increase in the amount the State pays into the Social Security system.

However, Mr Varadar said that the Government would still be able to afford its healthcare spending by cutting back on services such as GP visits, dentistry, and general medical care.

“I am not saying that we should eliminate all services.

We will be able and willing to make that sacrifice if we are required to do so.

The challenge will be balancing the needs of the people and the needs for healthcare and pensions,” he said.

What are the key points of the Irish budget?

The Government has pledged to reduce its deficit by at least €1-billion in the coming financial year.

This will be achieved by:  reducing the number of people on benefits from 6.6 million to 5.5 million,  reducing costs from €9.2 billion to €7.9 billion,  raising the tax on high-cost products from 9.3 per cent, and  introducing a tax on the purchase of insurance and other health services by the private sector.

The Irish Budget has been a target for the Government since it was announced in May, and Mr Varodkar has said he is committed to reducing the deficit. 

 “We have made significant progress over the last two years.

The Irish Budget is a good result of concerted effort.

We are delivering what was promised,” he told RTÉ Radio this morning. 

The Budget has a €8bn surplus, and there is currently no increase in any of the Government’s spending plans, apart from the introduction of a tax of 10 per percent on health insurance and a levy on high earners, which will take effect on July 1. 

What the Irish Times says: “The budget deficit is down from over €1tn in 2014, to €8.3bn in 2020.

While the Irish population has grown by 12.6 per cent since 2009, the number on the State payroll has risen by 5.3 percent, while the number for the public payroll has fallen by 2.3 percentage points. “

This means the Government has had to cut the number and scale of its services, cut costs, and cut taxes to keep pace with the increased demand for healthcare. 

While the Irish population has grown by 12.6 per cent since 2009, the number on the State payroll has risen by 5.3 percent, while the number for the public payroll has fallen by 2.3 percentage points. 

Healthcare costs have increased by 4.3percent, which is the highest in the European Union.”