Abstract
In the aftermath of the economic crisis of the late 1990s, the Korean government reformed health insurance system to enhance social equity and solidarity. This article identifies the institutional features and political dynamics involved in completing the reform. The Korean case suggests a model of counter-movement that differs from the historical experiences of both democratic corporatist and liberal welfare states. Two institutional conditions within the politics of crisis contributed to the reform. A legacy of limited state welfare was critical in providing the impetus for reforming health insurance system. More importantly, the crisis maximized the state’s coordination capacity by mobilizing a coherent bureaucracy under the presidential authority, and by limiting interest politics. The Korean experience has important implications for the study of economic crisis and social policy response. The way in which a crisis provides new contexts for welfare and policy making institutions, rather than the institutions themselves, should be the main focus in analyzing policy responses. The focus on the political dynamics of an economic crisis helps us acknowledge the limit of ideological forces of a crisis in facilitating a particular policy response.
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Notes
He argued that this fantasy had been legitimated because it was associated with the concept of freedom. While private ownership and free enterprise were deemed the essentials of freedom, regulation and control were depreciated as a refutation of freedom. Polanyi criticized this fantasy for making people abandon justice and welfare, which regulation and control can create.
While explaining why socialism did not take root in the United States, Lipset argued that the United States differed from other European nations in its strong antagonism against a central state. The founding fathers of the United States designed a constitution explicitly avoids strong government (Lipset 1996).
National health insurance had a significant political implication. It was first introduced in 1977 under the pressure of competing against North Korea on its social security system. North Korea had a universal and free health care system that was used for demonstrating the superiority of its system, while the health system was the weakest point of the welfare system in South Korea. National health insurance was expanded to the rural population in 1988 and the urban self-employed and regional residents in 1989 to complete the nationally universal insurance system.
East Asia’s lower inequality has been attributed to various factors: the regimes could avoid interest group pressures that demanded particular privileges (Campos and Root 1996); a high proportion of public investment cultivated balanced development between cities and rural areas; the universal education system with people’s enthusiasm for education contributed to the upward mobility of society.
A group of civic activists and health related professionals established an organization called the “Health Coalition.” One of the two nation-wide union associations, the KCTU (Korean Conference of Trade Unions) joined the coalition, which was crucial in politicizing the health insurance issue during the economic crisis later.
“Corporatism” refers to a system where representatives of major interest groups (called corporations) regularly structure their expectations about each others’ behavior and settle any problem and conflict through negotiation and joint agreement (Schmitter 1974).
Only the Federation of Korean Trade Unions (FKTU) was officially recognized by the government. The Korean Conference of Trade Unions (KCTU) formed in 1995 was an illegal rival national confederation composed of more radical and progressive trade unions espousing broad social and political agendas.
A total of 171 financial institutions including five banks were closed down or suspended by 1999. Later, the IMF showed satisfaction with Korea’s observance of “international standards and codes,” especially in the financial sector, stating in its report that “this sector has undergone significant consolidation: banks have become more profit oriented, cutting costs, streamlining their operations, shedding staff, and consolidating branches…. Foreign participation in the banking sector has tripled since 1996” (IMF 2003).
This claim was powerful in cancelling the integration efforts back in 1989; President Roh Tae-Woo vetoed the already passed integration bill for this very reason.
Evans argued that the internal cohesion is made possible by the norm of rule-following that guides bureaucratic actions with clearly specified rules, preventing individualistic and predatory practices. Chibber (2002) argued that this bureaucratic culture is not enough but should be complemented by the appropriate power relations within the state functionaries. An appropriate allocation of power among state policy agencies empowered nodal agency to discipline other agencies, preventing state fragmentation.
Evans suggested that neoliberal globalization may create a set of conditions that induce “counter-hegemonic globalization,” partly because the threat to social security must enhance the potential for counter-movement for greater social protection (Evans 2008, p. 273).
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Kwon, OJ. The logic of social policy expansion in a neoliberal context: health insurance reform in Korea after the 1997 economic crisis. Theor Soc 40, 645–667 (2011). https://doi.org/10.1007/s11186-011-9155-3
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DOI: https://doi.org/10.1007/s11186-011-9155-3