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Illan Nam, Colgate University, Feb 2011Draft in progress, please do not quote or citeeffect on welfare spending in LDCs. Rudra’s results affirmed that governments’commitments to welfare spending depend on strong labor-market institutions. 24Notwithstanding these insights, the literature’s exploration of globalization’seffects leaves several important lacunae that merit further investigation. One area thatcompels further inquiry is whether deepened integration yielded comparable effects upondifferent segments of workers. Along with greater trade and capital openness, employersin advanced as well as developing countries increasingly embraced flexible or atypicalhiring practices during the 1990s, as they turned to temporary and part-time contracts aswell as sub-contracting that permitted them to shed workers more easily and to minimizethe costs of paying employees welfare benefits. 25These developments are thought tohave produced new fissures in the labor market between workers with secureemployment (insiders) and those who face more precarious terms of employment(outsiders) (Rueda). These different groups of labor market participants are viewed tocomprise distinct voter constituencies with disparate policy preferences and interests.Yet, it is not clear that the boundary between the preferences of these groups is asimpermeable outside of the OECD. Given that employment protection legislation in themiddle-income developing countries is weaker than it is in OECD countries, it seemsplausible that the boundary between formal and informal sector workers might be lesshardened in East Asia and Latin America. This raises the question of whether, in thesecountries that manifest weaker EPL for formal sector workers, the pressures ofglobalization generated more possibilities for informal and formal sector workers to24 Nita Rudra, “Globalization and the Decline of the Welfare State in Less-Developed Countries”International Organization 56:2 (2002)25 OECD, Employment Outlook, several years, Kevin Gray, Korean Workers and Neoliberal Globalization(London: Routledge, 2008), Kirsten Sehnbruch, The Chilean Labor Market (New York: Palgrave, 2006)18
Illan Nam, Colgate University, Feb 2011Draft in progress, please do not quote or citerecognize a common ground of shared interests, yielding greater scope for alliances andcoalitions to be formed across segments within the labor force.Second, the globalization literature tends to focus on levels of social spending asthe measure of interest. In privileging the importance of expenditures, the literature risksoverlooking other equally, if not more important aspects of welfare policy such as theextent of redistribution and risk pooling that perhaps more incisively captures howglobalization shapes the political dynamic behind the welfare policy debate. Toparaphrase Esping-Anderson, to assume that all spending counts equally may be quitemisleading. For instance, a country’s welfare spending may be high because it allocatesgenerous benefits to a privileged group such as civil servants. Conversely, the costsincurred by a universal program that offers benefits to all citizens depend on thegenerosity of these benefits. If a universal program extends low levels of benefits, theoverall costs of the program may not be higher than that of a corporatist or liberal regime.Consequently, focusing on spending levels or changes in spending levels may notbe as illuminating as identifying how these monies have been spent. As a case in point,total health spending in South Korea, Thailand, and Chile, for instance, is roughly equalat around 6% of GDP. Notwithstanding this, the programs are established uponcontrasting objectives that are underscored by different rules regarding the eligibility ofparticipation and benefits for groups of citizens. This choice of program type has at leastas much, if not more, to do with how groups contest the allocation of financing,redistribution of income, and pooling of risk than merely spending. Voters and interestgroups weigh not only the costs of the program, which often remain variable andindeterminate during much of the policy discussion, but also what they stand to lose or19
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