Under the pressure of health care reform in the 1990s, interactions among the state, sickness funds, and providers in Germany are said to have entered a new era. We examine this new era by assessing both long-term developments connected to German statutory health insurance (SHI) and related short-term developments of the 1990s. Highly institutionalized rules and practices provide little opportunity for abandoning the historical path of two primary factors: the self-governance of SHI and a strong tradition of a semisovereign state. Some opportunities exist for introducing new ideas, rearranging priorities, softening rules, and adding new complex rules and procedures in a fairly fragmented policy-making system, perhaps even because of fragmentation. Yet reforms that depart from the status quo are severely limited by strong legal and administrative traditions and established rules of the game. These restrictions tend to reinforce state intervention, prevent the emergence of consistent and coherent visions of future health policy, and stifl e policy innovation and implementation. In sum, reform measures tend to remain well within the priorities established within state and corporatist governance structures.

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