US embassy cable - 04ANKARA6490

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 006490 
 
SIPDIS 
 
DRL PLEASE PASS TO DOL ILAB 
 
ISTANBUL PASS TO ADANA 
 
E.O. 12958: DECL: 11/19/2014 
TAGS: PGOV, PHUM, ELAB, SOCI, TU 
SUBJECT: LABOR UNION OPPOSITION TO TURKISH GOVERNMENT PLANS 
TO CONSOLIDATE GOVERNMENT MEDICAL FACILITIES IN MINISTRY OF 
HEALTH 
 
(U) Classified by Political Counselor John Kunstadter; e.o. 
12958, reasons 1.4 (b) and (d). 
 
1.  (C) Summary:  International financial institutions 
recommend the transfer of Ministry of Labor and Social 
Security hospitals to the Ministry of Health.  With public 
sector health care costs rising faster than inflation, the 
idea is to assure more efficient and cost-effective delivery 
of health care to insured workers and their families. 
Although explained by AK Party Parliamentarians as an attempt 
to streamline government expenditures in preparation for EU 
membership, labor union critics allege the measure is a first 
attempt toward ultimately privatizing health care with an 
Islamist cast, perhaps restricting the availability of health 
care rather than expanding it.  End summary. 
 
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IFIs Recommend Transferring Hospitals to Ministry of Health 
--------------------------------------------- -------------- 
 
2. (U) IFI experts from the World Bank and International 
Monetary Fund have recommended that the GOT transfer the 
Social Security Institution (SSK) state-run medical 
facilities from Ministry of Labor and Social Security (MOLSS) 
to Ministry of Health (MOH) to achieve cost-efficiencies in 
delivering government-provided health services.  GOT included 
this reform in a package of laws on local administration 
reform which President Sezer returned to Parliament for 
further discussion. 
 
3. (U) On the face of it, the proposal seeks to achieve 
budget savings and deliver health services efficiently and 
cost-effectively.  In recent years public sector health care 
costs have risen faster than the rate of inflation, and the 
GOT can ill afford to allow this trend to continue.  However, 
notably both left- and right-leaning labor union contacts 
criticize this measure as the first step toward 
decentralization of government services, eventual 
privatization of health care and possibly paving the way for 
what the unions assert would be inferior quality medical 
facilities.  In general, our interlocutors fear that medical 
services will deteriorate under privatization, leaving a void 
that they claim could easily be filled by Islamist-oriented 
organizations, thus -- in their view -- tilting Turkish 
society toward a more Islamic-oriented system. 
 
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Cost of Hospitals Burdens Treasury 
---------------------------------- 
 
4. (C) Dr. Mahfuz Guler, Bingol AKP MP and Chairman of the 
Parliamentary Committee for Health, Family and Social 
Affairs, explained the proposal to shift hospitals from the 
MOLSS to the MOH as part of an overall program in the GOT's 
Emergency Action Plan to put all health organizations, which 
currently serve 30 to 35 million people in 148 SSK hospitals, 
under one umbrella.  Guler stated that until 1992, hospitals 
were not state funded; since then the cost of supporting 
these hospitals has doubled, putting a major burden on the 
Treasury.  He noted the number of health care recipients had 
doubled in the last 20 years without a concomitant increase 
in investments to support the cost of health care. 
 
5. (C) Guler said individuals in the gray market (allegedly 
five million unregistered workers who are paid below scale) 
receive no health care coverage through the MOLSS because 
premiums are not paid on their behalf by either the employers 
or the workers themselves.  However, poor people are able to 
receive health care through a "Green Card" program similar to 
Medicaid in the U.S.  Guler asserted the MOH could easily 
handle the health care requirements for all SSK members.  He 
noted a pilot project, begun with seven towns in the first 
year, had expanded to 15 by the second year to participate in 
this program.  He expected all 148 MOLSS hospitals to be 
transferred to local administration within two years. 
(Comment:  We note that Guler perceives the "State" and the 
"Treasury" to be two separate funding sources, but was unable 
to distinguish between their revenue sources.  End comment.) 
 
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Privatizing Hospitals 
--------------------- 
 
6. (C) In a separate meeting with us Ministry of Labor and 
Social Security Director General Cengiz Delibas described the 
proposed hospital transfer as a straight-forward attempt to 
bring the administration of all state-operated hospitals 
under one authority and to separate the administration of 
health benefits from retirement benefits.  Although not 
expressed in any official GOT document, and only inferred in 
passing in a paper on SSK reform, the ultimate goal is to 
turn over to local control and eventually privatize state-run 
hospitals, Delibas conceded. 
 
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Labor Unions Oppose Privatization 
--------------------------------- 
 
7.  (C) Close Embassy contact Hak Is Labor Union President 
Salim Uslu, as well as other union contacts, accuse the MOLSS 
of unnecessarily shifting hospital facilities to the MOH and 
ultimately attempting to privatize state hospitals, a move 
which is expected to make the cost of health care more 
expensive for union members.  Uslu, who portrays himself as 
close to PM Erdogan, alleges the "bureaucrats" misled the 
prime minister in citing a 22 quadrillion Turkish lira 
(approx. USD 1.5 billion) health care financing deficit for 
the first nine months of 2004.  Uslu also cites "corruption" 
by pharmaceutical companies using a two-tier pricing system 
as contributing to cost overruns, possibly with reference to 
accusations that Roche has overcharged for medicines.  Uslu 
does not see any practical benefit to be derived from 
transferring MOLSS-operated hospitals to the MOH and believes 
the central government could do a better job of managing 
hospitals and health care.  He suggests it would be more 
efficient to consolidate various small non-MOLSS hospitals. 
 
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Turks Are "Problem Solvers" 
--------------------------- 
 
8. (C) Yildirim Koc, special advisor to the President of 
Yol-Is (Highway Workers Union), affiliated with the more 
left-leaning Turk-Is Union, and another longtime Embassy 
contact, insisted to us that the U.S. and the EU want to 
dismember Turkey and carve it into several smaller states. 
Koc asserts the health care financial problems are related to 
MOLSS corruption and mismanagement and are being camouflaged 
under the pretext of making health care services more 
cost-effective by transferring them to the MOH.  Koc 
describes this transition as going "from a republican system 
to a federal system" and cites what he calls failures to 
deliver good health care under privatized systems in Algeria, 
Egypt and the Palestinian Territories as examples of a vacuum 
in services that will set the stage for Islamists to take 
over and improve inferior quality state medical care in 
Turkey, as well. 
 
9. (C) In a continuation of his contradictory reasoning, Koc 
calls Turks "problem solvers" who assume that someone (i.e., 
in this case Islamists) will turn up to resolve a difficulty 
rather than thinking through a solution for themselves.  He 
suggests that after Turkish EU accession, problems related to 
financing good health care delivery will loom large and need 
to be resolved, either by Turks themselves or perhaps with EU 
assistance.  He cautions that at this point the Islamists 
will have positioned themselves to be influential throughout 
the local provinces. 
 
10. (C) Comment: The health care reform is a case study of 
the difficulty of pushing through IFI-inspired reforms in the 
face of persistent statism and fear of market forces, both on 
the right and left of the political spectrum.  The GOT 
appears to be taking IFI advice seriously, in an apparently 
sensible attempt to rein in skyrocketing health care costs. 
Nevertheless, labor union contacts across the board are 
accusing ruling AKP leaders of pursuing a hidden agenda to 
regionalize and, eventually, privatize health services in 
order to create an opportunity for Islamic organizations to 
take over basic health services and establish an influence at 
the local level throughout the country.  The health care 
reform may be eliciting more labor union paranoia than other 
reforms because it raises the specter of multiple labor union 
bogeymen:  privatization, foreign influence, decentralization 
and the Islamist "hidden agenda" of the AK Party government. 
End comment. 
EDELMAN