Reflections on the Human Condition - Api-fellowships.org

188 SESSION III
RE-NEGOTIATING THE SOCIAL CONTRACT: HEALTH SYSTEMS IN
TRANSITION IN EAST AND SOUTHEAST ASIA
Chan Chee Khoon
THE WELFARIST STATE UNDER DURESS
Through years of struggle and historical lessons, the
capitalist state has emerged as an important stabilizer in
class society by legitimating contested class dominance,
moderating the excesses of class exploitation and
unbearable inequality, maintaining aggregate demand
through public sector spending, and generally doing the
necessary for the continuance of orderly, if not maximal,
capital accumulation.
In its elaborated forms, such as the Western European
social-democratic compromise (welfarist Keynesianism),
the state had come to figure prominently in many areas
of social reproduction, in many instances involving
itself directly in the organization and provision of social
services such as in healthcare and education. More
generally, it also plays an essential role in coping with
uncertainty, whether arising from social, natural, or
created environments.
Entering the 21 st century, it is clear that this social
accommodation has come under increasing strain.
Worldwide, the terms of this accommodation are being
re-defined at the expense of the dominated classes; and
re-imposed amidst mounting resistance.
Beginning in the late 1970s, anti-statist views became
pervasive among influential development financing
institutions such as the World Bank and the International
Monetary Fund (IMF). Neo-liberal analysts settled
upon dirigiste developmentalist states as leading culprits
for the economic travails and chronic indebtedness
of many 3 rd World countries, prescribing “structural
adjustment” and “downsizing” of “inefficient, wasteful
and corrupt” state institutions, to make way for a more
efficient allocation of economic resources by a free
market. 1
Meanwhile, in the industrialized countries of the North,
Keynesian economics and the welfarist state similarly came
under attack for its inability to deal with persistent
“stagflation”. Indeed, supply-side economists regarded
high taxes and the prevailing balance between capital
and labor (“labor market rigidity” and a “misguided”
social contract entailing a “full employment squeeze on
profits”) as key obstacles which discouraged investment
and caused economic stagnation.
Ref lections on the Human Condition: Change, Conflict and Modernity
The Work of the 2004/2005 API Fellows
In both cases, the retrenchment of the state (at any rate,
a curtailment of its welfarist and regulatory functions)
to allow for an expanded, minimally regulated market
swiftly became the ruling orthodoxy in the international
financial institutions (IFIs) and beyond (the neo-liberal
“Washington Consensus”). These policies were in due
course extended to the healthcare sector as well, 2 a social
service which had been provided on a non-commercial,
publicly funded (or publicly subsidized) basis to many
communities in developed and developing countries.
AN EFFICIENT MARKET IN HEALTHCARE?
The argument in favor of privatization rests on the
efficiency of the market to allocate. Remarkably, this
persists despite repeated market failures and the fact
that important pre-requisites for efficient markets are
often not met for the microeconomics of health care:
• the health care consumer is often disadvantaged
relative to the healthcare provider (information
asymmetry) 3
• there is often no alternative provider in less densely
populated rural areas
• low patient volume (in small or medium-sized
facilities) can lead to degraded skills of medical
specialists and poorer patient outcomes (medical
equivalent of economies of scale) 4
• wasteful or inappropriate use of resources
(over-treatment and under-treatment) 5
• reduced access for poor patients (more an issue of
equity) 6
Beyond theoretical considerations, the peer reviewed
literature also reports many instances where profitdriven
healthcare empirically fall short in comparison
to not-for-profit healthcare, across a range of outcome
measures. 7
We may thus reasonably state that while public sector
healthcare may not always outperform the private sector, the
reverse is demonstrably false, and to continue dismantling
the public healthcare sector out of an obsessive faith that
market-based solutions will invariably deliver higher
efficiency and lower unit costs is clearly unwarranted.