Divergent Trajectories: Healthcare Insurance Reforms in East Asia ...

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Illan Nam, Colgate University, Feb 2011Draft in progress, please do not quote or citeThe Chilean health system was a dual public/private system; those individualswho could afford private insurance or who worked for companies that purchased privateinsurance received healthcare at private clinics. The rest of the population was treated atfacilities in the public health sector, which generally was burdened by overcrowding,long waiting lines, and inferior infrastructure. Although the question of dismantling thisparallel private-public system was never seriously entertained, the health reformproposed in 2000 (“Plan AUGE”) forded meaningful milestones towards connecting thetwo systems by guaranteeing all Chileans timely treatment for 57 “priority diseases” atany facility, public or private. 7An important component of the reform called for apooled fund that would enhance the system’s financial solidarity by redistributing moneyfrom the private to the public system, but the government ultimately abandoned thisproposal. Thus, while the more targeted component of the reform was implemented, theproposal to increase financial solidarity between the private and public systems was not.An examination of these sets of reforms illustrates that the three cases varied intheir efforts to achieve greater coverage and equity of benefits. If we map theseoutcomes onto a 2-dimensional graph, with the vertical axis representing solidarity andthe horizontal axis representing universality of coverage, we find that South Koreamoved from low coverage to high coverage and from low to high levels of risk-pooling.Thailand, too, expanded coverage but fell short of integrating higher-income formalsector workers into its 30-baht card program. Finally, Chile’s AUGE program achievedgreater access for lower-income workers although its healthcare program alreadydelivered, in principle at least, universal coverage. Risk-pooling, on the other hand,7 The list of “priority diseases” was set to be increased incrementally over time.10
Illan Nam, Colgate University, Feb 2011Draft in progress, please do not quote or citeremains fragmented, with lower-income and less healthy workers pooled into the publicsector and higher-income workers opting for the private insurance market.[Insert Graph]At the same time that the three cases manifest considerable variation with respectto outcomes, they also permit controlling for important alternative explanatory variablessuch as the strength of labor organizations, political partisanship, state capacity, and tradeand capital openness. For one, as Table 1 (on p. 21) depicts, labor organizations arecomparably weak across all three countries. Compared to other Latin American and EastAsian countries, Korea, Thailand, and Chile have lower-than-average union density rates.In part, this reflects the legacy of the authoritarian regimes’ severe repression of workingclass organizations during the 1970s-80s. For the East Asian states, keeping labor costslow was instrumental to the success of the developmental economic models, while, inChile, dismantling labor organizations was a fundamental part of forging a neoliberalpolitical economy. Although labor organizations gained some ground post-transition,their organizational strength still remained comparably anemic – Chile reported uniondensity of 16% in the late 1990s, South Korea reported a figure of 11.6%, whileThailand’s was lowest at 5%. 8Moreover, labor organizations are decentralized, andcollective bargaining in all three countries takes place primarily at the enterprise unionlevel. 9Although central trade confederations do exist in Chile as well as in Korea, strongrivalries between two main confederations in Korea have hindered labor solidarity.8 Labor Statistics (Seoul: Korea Labor Institute Press 2007).9 Frank Volker, “The Labor Movement in Democratic Chile, 1990-2000,” Working Paper #298 (2002).11
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