US embassy cable - 05DUBLIN1350

UNCLAS SECTION 01 OF 02 DUBLIN 001350 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: OVIP, OTRA, TBIO, SOCI, KSCA, PREL, EUN, EI 
SUBJECT: SCENE-SETTER FOR HHS DEPUTY SECRETARY ALEX M. AZAR 
 
REF: STATE 191854 
 
1.  Embassy Dublin warmly welcomes your upcoming visit to 
Ireland.  Senior Irish policy-makers, academic leaders, and 
industry standouts look forward to substantive exchanges with 
you on health sector issues.  The Embassy is planning a 
reception in your honor that will bring together officials 
and health practitioners who oversee Ireland's health system, 
as well as representatives of firms involved in research and 
development in health-related fields, particularly 
biopharmaceuticals.  The Embassy sees your visit as an 
opportunity to build upon the successful bilateral links 
established by HHS leadership in recent years, including the 
U.S.-Ireland R&D Partnership that was announced last January. 
 These links have made cooperation on health issues an 
important dimension of overall U.S.-Irish relations. 
 
The Economic Backdrop: Prosperity and Competitiveness 
--------------------------------------------- -------- 
 
2.  Your visit comes at a time of unprecedented economic 
prosperity and national confidence in Ireland.  Once the 
"sick man" of the European Union, Ireland emerged from the 
Celtic Tiger period of the 1990s as one of the richest EU 
Member States, largely on the strength of government policies 
espousing open trade and investment, low corporate tax rates, 
low government debt, and prudent use of EU support funds. 
Ireland boasts Europe's lowest unemployment rate (at 4.2 
percent) and is poised to lead Member States in economic 
growth (at 5 percent) for the second consecutive year. 
Perhaps the most visible sign of Ireland's success has been 
the recent influx of immigrants, which has reversed the 
country's decades-old image as a source of migrs. 
Plentiful work opportunities have drawn an estimated 100,000 
people to Ireland since May 2004, primarily from the EU's new 
Member States. 
 
3.  Notwithstanding this success, Irish policy-makers are 
concerned about Ireland's competitiveness, particularly with 
the emergence of India and China as alternative, lower-cost 
investment destinations.  Irish strategy has focused on 
moving out of simple manufacturing into innovative, 
higher-value goods and services.  This approach will require 
an education system that can produce graduates with skills in 
technology and physical sciences to support a knowledge-based 
economy.  Currently, however, the education system is not 
producing sufficient numbers of graduates in these fields to 
fill high-skill positions in foreign-invested firms. 
Moreover, universities face funding shortfalls (since they 
cannot charge tuition to Irish students), which has hampered 
efforts to restructure curricula and to build R&D facilities 
in line with the economy's needs.  You will have an 
opportunity to discuss these challenges at events involving 
academics at the Wyeth biopharmaceutical campus, Science 
Foundation Ireland, and Trinity College. 
 
A Political Snapshot: Looming Elections 
--------------------------------------- 
 
4.  Irish political parties have already begun public 
posturing for the general elections scheduled for May 2007. 
In the upcoming campaign, the governing Fianna Fail party, 
led by Prime Minister (Taoiseach) Bertie Ahern, will attempt 
to secure a third 5-year term in office by emphasizing 
Ireland's economic success.  Fianna Fail will also underscore 
its concern for public welfare issues, with social spending 
set to rise in the 2006 Government budget.  Opposition 
parties, led by Fine Gail and Labor, see the Government as 
vulnerable on social welfare and have begun to announce party 
platforms calling for more generous social benefits.  This 
approach flows from the public perception that the rising 
cost of living associated with economic growth has placed 
burdens on some segments of society, especially young working 
families. 
 
Health Care: A Hot-Button Social Welfare Issue 
--------------------------------------------- - 
 
5.  One social welfare issue that will figure significantly 
in the elections is health care, or, more specifically, the 
perception that the health sector has not kept pace with 
Ireland's rapid economic rise.  Ireland's "mixed" health care 
system features public and private hospitals and entitles 
persons over 70 or who fall within the poorest one-third of 
the population to free health services and medicine.  The 
system, however, has several high-profile deficiencies, 
 
DUBLIN 00001350  002 OF 002 
 
 
including the following: 
 
A) Waiting Times.  The length of time required for service, 
even for minor surgery, can stretch to years for poorer 
patients lacking health insurance.  Capacity problems, 
reflected in a shortage of hospital beds (3 per 1,000 
population, versus the EU average of 4.4) has contributed to 
this problem. 
 
B) Performance.  Ireland ranks among the lowest one-third of 
OECD countries for infant mortality, child immunizations, and 
life expectancy at birth for men and women.  Ireland also 
scores poorly for years of life lost due to female breast 
cancer and has the highest rate in the OECD for male and 
female mortality from heart attack. 
 
C) Inequity.  In Ireland, persons with private insurance 
(roughly 52 percent of the population) not only have speedier 
access to care, but they and their doctors have incentives to 
maximize treatments in subsidized public facilities.  For 
example, the small per diem charge (usually euro 55) that the 
privately insured pay for public hospital beds is below the 
economic cost of providing the bed.  Public hospitals often 
ring-fence up to 20 percent of beds for private use, even 
when uninsured patients on waiting lists have greater medical 
need. 
 
D) Inefficient spending.  After Government funding for the 
health system was cut in the 1980s, public health expenditure 
as a proportion of national income rocketed in the 1990s 
above the EU and OECD averages.  Health spending grew from 
euro 2 billion in 1990 to roughly euro 8 billion in 2002. 
The persistence of health system problems, however, has 
created the impression that increased funds have not been 
well spent, if not wasted. 
 
The Deputy Prime Minister (Tanaiste) and leader of the 
governing coalition Progressive Democrats party, Mary Harney, 
took over as Health Minister in 2004 with promises of reform 
to redress these deficiencies, but progress has not been 
evident. 
 
6.  In a recent discussion with the Embassy, Irish think-tank 
analysts partly attributed the health system's failures to 
administrative confusion.  In 2005, regional health boards 
were consolidated into the Health Service Executive (HSE), a 
unitary government body with responsibility for managing 
health care nationwide.  The Department of Health and 
Children, however, still has responsibility for overall 
health policy.  The challenge has been for the Health 
Department to implement policy reforms, even though the HSE, 
as the health system's manager, controls the government's 
euro 10 billion health care budget (roughly 20 percent of 
total government spending).  Deputy Prime Minister Harney and 
HSE CEO Brendan Drumm have differed publicly, for example, on 
ways to address hospital bed shortages.  Your separate 
meetings with Harney and Drumm should offer insights on these 
administrative challenges. 
 
The U.S.-Ireland R&D Partnership 
-------------------------------- 
 
7.  There will be great interest during your visit in the 
possibility of advancing the U.S.-Ireland R&D Partnership, 
which was announced in January 2005 to promote cooperation 
among the United States, the Republic of Ireland, and 
Northern Ireland in several medical/biotechnology fields. 
The Partnership has already yielded exchanges on diabetes, 
and there have been recent Irish proposals for a workshop on 
cystic fibrosis.  Many of those involved in the Partnership 
will attend the Embassy reception and the Science Foundation 
Ireland lunch, and they have expressed their hope that you 
will be able to announce the U.S. members of the Partnership 
Steering Group, i.e., the lead coordinating committee. 
Northern Ireland and Republic of Ireland participants believe 
that the Partnership can take a more structured, long-term 
approach to trilateral cooperation once the Steering Group is 
fully appointed. 
DALY