CAMPAIGN ISSUE: HEALTH CARE REFORM - EVERYONE

UNCLAS SECTION 01 OF 02 BRATISLAVA 000438

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: PGOV ECON SOCI PINR LO
SUBJECT: CAMPAIGN ISSUE: HEALTH CARE REFORM - EVERYONE
HATES IT

REF: A. A) BRATISLAVA 00302


B. B) BRATISLAVA 00323


1. Summary. Health care reform is widely perceived by
Slovaks as the Dzurinda government's biggest achilles heel.
Privatization has not yet brought about a noticeable
improvement in services, investment in health services
remains low, and new private insurance schemes are
increasingly unpopular with both doctors and patients.
Several opposition parties have identified health care as a
primary campaign issue, especially front-running Smer, which
would like to abolish most of the health care reforms that
the GOS has carried out in the past few years. Other
political parties have taken more moderate positions, but all
have separated themselves from SDKU in order to gain public
support. SDKU, for its part, has sent out signs that it too
might alter course in the next four years. End Summary.

What Went Wrong
--------------


2. Health care reform is one of the major reasons why a
government so widely praised by outside observers has such a
low approval rating. Opposition is widespread: in a May 2006
poll, 3 percent of all Slovaks approved of GOS health care
reforms, 22 percent viewed reforms as a good idea that needs
further adjustment, and 72 percent viewed them negatively.
Even when the poll is broken down by party lines, the
majority of voters in every party disapprove of the GOS
health care reforms. (Tax, pension, and other reforms are
viewed more positively). Doctors, nurses, and health care
workers have been especially critical, staging a series of
brief strikes throughout the year in a labor dispute that
resulted in the government quietly acquiescing to most of
their 25% wage increase demand (see reftel A). Polls suggest
that the general public tended to support or at least
tolerate the strikes, despite the interruption of health care
services.


3. The GOS authorized health care reforms in 2003 that aimed
to replace the state-run health care system with a
market-oriented system that would increase transparency of
payments for services, consolidate the number of hospitals,
and attract investment to transform the remaining hospitals
into modern world-class facilities. To this effect, small
user fees for services (USD 0.70 per visit, USD 1.65 per
prescription) were established, private insurers were allowed
into the market, and privatization of hospitals is being
phased in over 2005-2006. Some of these reforms have born
fruit. Private and public insurance companies have forced
doctors to be much more responsible with services and fees
charged (especially prescription drugs),public procurement
practices have improved, closing of inefficient hospitals has
started, and many redundant employees have been laid off.


4. While hospital management is more efficient, voters do
not see how this will improve services or lower costs -- or,
as one analyst asked, "efficiency for whom?" User fees are
miniscule and largely symbolic, but have become a political
football since services remain essentially unchanged.
Private insurance has come to be dominated by the investment
group Penta, which now owns essentially all private health
insurance in Slovakia and about 25% of the overall health
insurance market. Private insurance has improved
accountability of health services, but it has also introduced
increased paperwork that frustrates both doctors and
patients, leaving the impression of a system that is actually
more bureaucratic than its predecessor. Finally,
privatization of hospitals has been a messy, drawn-out
affair, in which facilities are converted into joint-stock or
limited liability companies and then sold, often to finance
companies and real estate developers such as J&T Associates
and Penta. Emboff conversations with the J&T developer who
operates a Bratislava-area hospital left a clear impression
that the company's main interest will be to repackage
hospital assets for re-sale; only one of the four hospitals
owned by J&T will attract significant new investment. In
time, further investment, modernization, and improved
services should come, but for now the basic picture in the
eyes of most voters is a new system where connected interests
prevail over those of the average family.

Taking Advantage
--------------


5. SDKU's rivals have been quick to take notice. Smer has
been most visible, with Robert Fico criticizing the
government's health care priorities as evidence of "putting a
right-wing agenda ahead of people." Meanwhile, Smer 'shadow
Minister of Health' Pavol Paska and its think tank ASA have
coordinated with doctors' associatons to establish a health
care platform that is unusually detailed for Smer. Paska is

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a close confidante of Fico, and his involvement on the issue
is an indication that the Ministry of Health is one of Smer's
top priorities if it becomes part of the next ruling
coalition. Smer's basic platform is as follows: eliminate
user fees for health services, re-establish public health
insurance for all, use EU funds to increase the percentage of
GDP dedicated to health care from 5.1 percent to 7.0 percent,
with funds used to rehabilitate hospitals, among other
priorities. (Slovakia spends the lowest percentage of GDP on
health care in the European Union.) This program would
constitute a rollback but not a complete reversal of GOS
health care reforms -- private health insurance would still
be available and Smer officials have admitted off the record
that around 20 percent of Slovakia's under-utilized hospitals
would still have to be shut down.



6. Other parties hold policy positions somewhere between Smer
and SDKU, with promises of reduced fees and increased public
investment in health care, but muted language on
privatization of insurance and hospitals. After all, most if
not all parties receive money from developers such as Penta
and J&T Associates. KDH, a former ruling coalition member,
has called for reducing user fees to USD 0.17, and for a
parliamentary vote on whether to re-establish full state-run
health insurance for all. Parties as distinct as the
Hungarian SMK party and the nationalist SNS party have called
for raising health care expenditures to at least 7.0 percent
of GDP and providing free medications for all. Vladimir
Meciar's HZDS has called for free medications for the young
and the old, but supports the other basic reforms. Zuzana
Martinakova of Slobodne Forum recently criticized the
government for "providing tax breaks to Kia instead of
vitamins for our children," even though, ironically, her
party's health care platform most closely resembles that of
SDKU.


7. SDKU essentially supports its health care reform, of
course, but Prime Minister Dzurinda has defended health care
reform less vigorously than his other reforms, and has said
on the campaign trail that the reform needs fixing. SDKU has
taken this stance largely because Minister of Health Rudolf
Zajac comes from the ANO party, a former coalition partner
that was expelled last year. The potential consequences of
this distancing were seen in the recent debate over
legislation protecting the intellectual property rights of
pharmaceutical manufacturers vis-a-vis generic producers.
When President Ivan Gasparovic vetoed the IPR protection
legislation passed in parliament, Minister Zajac strongly
opposed this action but the Prime Minister's office signaled
that it would not use any of its political capital to
overturn the veto (see reftel B). The veto was overturned in
the end with SDKU votes, but without SDKU leadership.

Outlook
--------------

8. Health care will continue to be an issue on which every
political party has a free pass to criticize the government
and propose new policy initiatives that mark a significant
philosophical departure from current reforms. In that sense,
health care is very different than tax reform and almost
every other political-economic issue in this campaign. In
turn, after the election, health care will be one of the few
issues where a new ruling coalition will feel that it has a
mandate to significantly alter the direction of public policy
in Slovakia. Smer clearly feels that health care is a winner
for them, though its weak advocacy campaign on the issue begs
the question of whether the party can capitalize on voter
discontent.
VALLEE