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Spain: How about making rich pay for health care?

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DANIEL WOOLLS | April 9, 2012 12:36 PM EST | AP

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MADRID — Spain should consider making richer people pay for their universal health coverage, the country's economy minister said Monday in another reflection of a government scraping and clawing for new sources of revenue. The ruling party quickly disavowed him, saying the official was only expressing a personal opinion.

The center-right government is desperate for ways to save money or increase revenue as it struggles to achieve deficit-reduction goals. International investors are showing wariness of its ability to do so, shying from buying Spanish debt and pushing up Spain's borrowing costs perilously.

This is heightening fears that with sick public finances and other woes like banks overexposed to real estate, Spain could be the next candidate for a bailout, after Greece, Ireland and Portugal.

Economy Minister Luis de Guindos said in a radio interview the co-payment system, such as that which exists in the United States, is no panacea for Spain's financial problems. But he said Spain should mull the idea of making people who earn more than (EURO)100,000 ($130,000) a year pay for state-administered health care that is financed with taxpayer money.

Few people earn that much in Spain, where the average salary is about (EURO)20,000 a year, and many make even less. The unemployment rate stands at about 23 percent and is projected to rise, the economy is shrinking and the government is warning things will get worse before they start to turn around.

Health care is actually administered by Spain's 17 semi-autonomous regions, rather than the central government.

The debt-ridden Catalonia region has already introduced a small co-payment for prescription medication under the universal health care system.

De Guindos said these regions – whose overspending is responsible for much of Spain's budget deficit of 8.5 percent of GDP last year – owe medical suppliers (EURO)15 billion and making the rich pay for health care, in addition to what they already pay via income tax, would help heal a sick system.

"We have to see if, under the current circumstances, we can maintain a system which generates a structural deficit," de Guindos told Cadena Ser.

As they endure a crisis prompted largely by the implosion of a real estate bubble in 2008, Spaniards have already seen their retirement age raised by two years to 67, civil servant wages frozen, income, property and sales taxes raised, and labor market laws changed to make their jobs and wages less secure.

Just hours after the economy minister spoke, a spokesman for the ruling Popular Party, Carlos Floriano, said they were "personal observations" and the government favors keeping health care free.

Late Monday, Prime Minister Mariano Rajoy's office said a drive for more efficient spending on education and health care would achieve (EURO)10 billion in savings. Because those areas are actually the responsibility of regional governments, it was not exactly clear how the central government could guarantee this money would be saved.