The origins and implementation of the national health insurance programs in Korea, 1961--1979

This study examines the health politics of the Korean National Health Insurance Act in 1963 and in 1977. The 1963 NHI Act was the first voluntary health insurance act in Korea and resulted in only a few pilot programs. The 1977 NHI Act was the first successful compulsory health insurance program for large firms with more than 500 employees and their dependents. The study expands the welfare state theory by reflecting the historical institutional contexts of Korea. Most of the welfare state studies have been conducted using advanced societies that have had social democratic traditions and/or labor movements. Korea’s National Health Insurance Act of 1963 and 1977 were initiated by a strong state government with limited participation from interest groups of business and medical professions and labor.;This study has four key findings. (1) The administrative capacity of the state was the major factor that drove the successful implementation of Korea’s 1977 National Health Insurance Act. The state established an advanced bureaucratic system with well-disciplined bureaucrats. The source of the state capacity was not from financial resources, but from an effective administration that was based on state autonomy and centralized power of President Park. (2) Interest groups did not have a strong resistance against NHI policies. The state and business maintained a symbiotic relationship under Park’s regime. The state provided special financial resources for large businesses, which were the central players in the development of the Korean economy in the 1960s and the 1970s. Businesses took advantage of the NHI policy to enhance the labor disputes which were increasingly militant in the mid-1970s. Medical professions were involved in the policy making process and vocalized to protect their financial status. The state exercised repressive labor policies to keep wages low and to prevent collective action by labor. (3) Korean culture supported the strong state and gave the responsibility to the individuals and businesses with welfare concerns. In particular, Confucianism emphasized the familism that shifted responsibilities to individual families. (4) The state actively engaged in implementing social policies where it faced legitimacy crisis in the 1960s and the 1970s due to political turmoil. The state showed interest in national health insurance prior to the 1963 election of president and congress, but its financial expenditure had been declined from 1963 (6.0 %) to 1970 (2.8 %) and did not show substantial interests in welfare policies until the 1970s. In the 1970s, the political crisis from changing the Constitution twice to prolong the presidency, the militant labor disputes especially in large industries, and the growing income gap triggered the state to seriously implement social policies.;This research contributes to the study of the welfare state especially for the case studies of underdeveloped countries with authoritarian governmental structures. Korea did not have the rich experience of industrialization, class mobilization, or political movement as other advanced counties did; however, different institutional contexts and institutionalization processes allowed for the Korean state to successfully implement national health insurance programs in 1977, albeit for a selective population. This study suggests that understanding the dynamics of policy processes between institutional structures and agencies is essential for understanding welfare polices.