Industry Sector Weekly by Lloyds

This week’s announcement by the German government to raise health premiums and cut spending comes after moves in late June to curb rising pharmaceutical prices Fiscal austerity hits healthcare

This week’s announcement by the German government to raise health premiums and cut spending comes after moves in late June to curb rising pharmaceutical prices, making the healthcare sector one of the key areas of focus for the country’s targeted €80bn of public spending savings. Premiums are set to rise to 15.5% from 14.9%, with contributions from employers making up 7.3% and employees 8.2%. The increased premium, planned to take effect from 2011, should reduce government spending by €6bn, helping to plug the €11bn deficit forecast for the health budget. Also an additional €3.6bn in annual spending cuts will impact hospitals, health insurers and pharma companies.