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Viewing cable 06BERLIN1893, HEALTH "REFORM" SPARKS COALITION CLASH

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Reference ID Created Released Classification Origin
06BERLIN1893 2006-07-06 14:51 2011-08-24 01:00 UNCLASSIFIED Embassy Berlin
VZCZCXRO0738
RR RUEHAST
DE RUEHRL #1893 1871451
ZNR UUUUU ZZH
R 061451Z JUL 06
FM AMEMBASSY BERLIN
TO RUEHC/SECSTATE WASHDC 4082
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNFRG/FRG COLLECTIVE
UNCLAS BERLIN 001893 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV GM
SUBJECT: HEALTH "REFORM" SPARKS COALITION CLASH 
 
REF: (A) BERLIN 1822 (B) BERLIN 846 
 
1. (U) After weeks of internal haggling, in the early morning 
hours of July 3 Chancellor Merkel announced a compromise 
agreement on health care reform, designated a top priority in 
last fall's Coalition Agreement.  The reform had been 
intended to cut medical costs.  However, the announced 
agreement has drawn widespread criticism for its failure to 
achieve this goal.  The Coalition had first sought to shift 
health care financing from payrolls to tax revenue.  However, 
after a rebellion from CDU/CSU state leaders against the 
necessary new taxes, the coalition decided instead to raise 
employee payroll contributions and gradually introduce 
tax-based financing of health care for children from 2008. 
There were no structural reforms that would reduce 
sky-rocketing expenditures and red tape in the system. 
 
2. (U) Critical responses, ranging from the disappointed to 
the outraged, were quick to follow.  Federal President 
Koehler commented that, "laws that are rashly stitched 
together often create more problems than they solve."  From 
the SPD, Chancellor Merkel has faced charges of weakness and 
ineffective party management.  SPD Bundestag Caucus leader 
Struck: "Apparently she had to give in to the pressure from 
the Ministers-President.  That must not happen so often 
again.  Really, that shouldn't happen at all."  Much 
editorial comment tends to agree, seeing Merkel weakened and 
more dependent on the demands of regional party leaders. 
However, the SPD itself has not emerged unscathed.  Within 
the party, leftists have reportedly been very critical -- to 
the extent that Struck in one paper is quoted as warning 
leftist leader Andrea Nahles against giving any "foolish 
interviews."  CDU/CSU leaders have attacked it for presuming 
that "reform" meant higher taxes and that the CDU/CSU had 
ever agreed to such an approach. 
 
3. (U) How long the political strife will last is unclear -- 
although hopes that the minimalist outcome would be obscured 
by World Cup success disappeared when Germany lost in the 
semi-finals on July 4.  One CDU contact was bitter at the 
public and media, whose expectations that somehow a Grand 
Coalition would mean grand achievements were never realistic. 
 (He described the outcome as basically leaving current 
structures untouched so that after the next election the 
winner could move to introduce their desired reforms.) 
However, the Chancellor's agenda will move quickly on, first 
to the President's visit and then to an "Integration Summit," 
so the public and media will not have much time to linger 
over the health care story. 
TIMKEN JR