Billy Kelleher (Cork North Central, Fianna Fail)
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Question 347: To ask the Minister for Health and Children, following recent warnings from the International Monetary Fund that health costs are dragging the economy down and that savings of €1 billion may be required this year alone, the way he intends to make the necessary savings. [8639/11]

James Reilly (Dublin North, Fine Gael)
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Between 2010 and 2011, over €2 billion in savings have been identified within the Health Sector. The 2010 Budget provided for over €600 million in pay savings, and €400 million in non-pay savings. The pay savings took account of the Government decisions on public service pay reductions, including general pay reductions, higher reductions for those on higher pay on foot of the Report of the Review Body on Higher Remuneration, further reductions in the fees payable to certain health professionals and savings associated with the moratorium on recruitment and promotion. Non-pay savings included, inter alia, reductions in drug costs and procurement economies.

A further €1 billion in savings was provided for in 2011 comprising inter alia, additional savings on Demand Led Schemes, the continued implementation of the moratorium on recruitment and promotions in accordance with the Employment Control Framework for the health services, procurement and other pay savings as part of the Croke Park Agreement and reduced pay costs associated with the HSE exit schemes. In addition, agencies funded by both the HSE and the Department of Health & Children were required to find efficiency savings within their organisations, and the allocations for all agencies were reduced accordingly in both years.

The cash reduction in both years was less than the overall savings required of €2 billion given the need to provide for increased superannuation costs, an increase in the number of medical cards and extra funding to support a number of key policy priorities such as Fair Deal, the cancer programme, implementation of the recommendations of the Ryan Report and additional costs associated with the Clinical Indemnity Scheme. However, notwithstanding these increased funding requirements, since 2008, there has been an overall cash reduction in current spending on health of €1.46 billion or 9%. These saving have been achieved in a manner which has not led to any reduction in the total volume of services planned under successive HSE National Service Plans.

As the Deputy will be aware, the Government has announced that a comprehensive review of expenditure is being undertaken wherein each Department will prepare a comprehensive expenditure report to identify expenditure programme savings, scope for savings arising from efficiency and other reforms and proposals for the further rationalisation of agencies and any associated reductions in staff. These reviews will inform the 2012 Estimates and the identification of further savings which can assist in meeting public expenditure targets.