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Illan Nam, Colgate University, Feb 2011Draft in progress, please do not quote or citeparticipation in welfare provisioning, and engaged in considerable cost-cutting, whichresulted in a general decline and neglect of welfare programs during the 1980s. With thereturn to democracy in the 1990s and the evident failure of market-oriented reforms toameliorate the problems of poverty and inequality in the region, Latin Americanpolicymakers began to cast greater attention upon social policy. During the 1990s, socialexpenditures increased in Latin America, evident in higher per capita spending and theintroduction of new instruments and programs to tackle the problems of poverty and lackof access for lower-income groups. 2However, the most heralded of the new initiatives,which include social emergency or social investment funds, emergency employmentschemes, and direct (conditional) transfers and subsidies, adhere to the principle oftargeting social policy towards the poorest and most vulnerable groups. Policymakershave been challenged in moving beyond these kinds of programs towards more universaland redistributive ones. While advocates contend that targeted policies “make the bestuse of scarce resources for poverty alleviation,” 3 critics accuse such policies ofperpetuating a two-tier system that relegated the poor to inferior benefits and reinforced“inequalities between poor people and the rest of society.” 4At the same time that social spending and program retrenchment were takingplace in Latin America, a debate about the need for greater state responsibility for socialwelfare gained traction in East Asia in the late 1980s-early 1990s. Since their transitionsto democracy in the late 1980s, Korea and Taiwan have passed new legislation expandingLago, “Social Welfare Reform in the Context of Economic-Political Liberalization in the Latin AmericanCases,” World Development 25:4 (1997); M. Victoria Murillo, “Political Bias in Policy Convergence:Privatization Choices in Latin America,” World Politics (54:4) 20022 Social Panorama of Latin America, 1990-2001, (Santiago: CEPAL, 2001)3 Karl Ove Moene and Michael Wallerstein, “Targeting and political support for welfare spending,”Economics of Governance (2001).4 Shaping the Future of Social Protection: Access, Financing, and Solidarity (Santiago: CEPAL, 2006).2
Illan Nam, Colgate University, Feb 2011Draft in progress, please do not quote or citeprovisions for social assistance, medical insurance, and pension programs. As a result,both countries now have national pension systems as well as single-payer national healthinsurance programs. 5These programs are cast broadly along the lines of traditionalsocial insurance programs based on collective pooling of risk, with responsibilitiesdistributed among state, capital, and labor. 6Reflecting this, levels of social spendinghave risen steadily in many developing democracies in Asia, especially in the former“East Asian tigers” of South Korea and Taiwan as well as, to a lesser degree, in Thailand.While the industrialization thesis may account for some of these states’ increasedspending, what is more to the point is that the increased spending took on quite differentforms among countries in East Asia, suggesting that there was more at stake than merelyan increase in social spending.That states governing a sizeable portion of the world’s population haveimplemented programs representing a markedly distinct paradigm of welfare/pensionprograms casts doubt upon naysayers’ prophesies of globalization’s inevitable “race tothe bottom.” The puzzle that emerges from a comparison of welfare state developmentsin Latin America and East Asia is that in some countries in the latter region, over therelatively brief course of 15 years, a limited and segmented welfare system that cateredlargely to formal sector workers, was minimally financed by the state, and was heavilydependent on private responsibility – on the part of households and companies – has beentransformed into a national system that provides universal coverage and benefits to allcitizens. This has been accompanied by a shift in attitude among citizens as well as in the5 Kwon Huck Ju, “Transforming the Developmental State in East Asia,” Development and Change (36:3)2005, Joseph Wong, Healthy Democracies, Soonman Kwon, “Economic Crisis and Social Policy Reformin Korea,” International Journal of Social Welfare (10:2) 20026 Robert Holzmann, “Pension Systems in East Asia and the Pacific: Challenges and Opportunities,” SocialProtection Unit [World Bank] June 2000.3
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