Farewell to welfare myths

FAREWELL TO WELFARE
MYTHS

"Under capitalism, man exploits man.
Under communism, it's just the opposite"

(Galbraith, 2001)

Introduction

The discussion below aims to show that healthcare
provision and health outcomes are more strongly related to
political tradition than to the political system advocated by a
country"s ruling party. The two countries chosen to exemplify
this are New Zealand (NZ) and Spain, two democratic countries
with different government systems and political structure but
with something in common: both have a tradition of universal
welfare provision. The definition of tradition will be followed
by a comparison and critique of the two main modern-age political
systems, capitalism and socialism, and of the political parties
that advocate one and the other, namely, the neo-liberals for the
former and social-democrats for the latter. How neo-liberalism
and social-democracy influence the macroeconomic factors that
affect healthcare provision will also be evaluated. The origins
of universal welfare as the basis of today"s healthcare systems
in Europe is the grounds on which tradition prevails over ruling
party ideology when it comes to healthcare or, as it is known in
Europe, social security provision. The discussion will conclude
with an analysis of the type (public vs. private) and amount of
funds NZ and Spain dedicate to healthcare and their relation with
health indicators and outcomes in their current socio-political
contexts.

Discussion

Merriam-Webster"s dictionary (2008) defines "tradition"
as the "continuity in social attitudes, beliefs, behaviours,
customs and institutions from one generation to another without
written instruction". When it comes to politics, two systems more
than traditions, are identified: Capitalism and socialism, and as
already mentioned, the former is advocated by neo-liberal parties
and the latter by social-democratic parties.

Socialism places society and equality above individuals
and their freedom to choose. The collective abstract is more
important than real people, which justifies any action on behalf
of equality (Kornai, 2000). Socialism promises prosperity,
equality, security, and redistribution of resources in order to
promote better health outcomes (Navarro, Muntaner, Borell,
Quiroga & Rodriguez-Sanz, 2006), freeing people from poverty,
exploitation and discrimination (Cheyne, O"Brien & Belgrave,
2008). On the other pole of the spectrum, capitalism places the
individual, private property and market economy on top of its
priorities. Capitalism promises prosperity, choice, innovation
and excellence (Perry, 1995), with freedom to do virtually
anything to obtain benefits for investment.

Social-democrats advocate socialist collectivism, a
centralized intervention and control of means of production and
services, from education and housing to healthcare (Cheyne et
al., 2008). In exchange, citizens are asked to sacrifice their
individual liberties in the name of the collective benefit.
Neo-liberals critique this view claiming that such an
all-providing government decides what is good, bad, allowed and
forbidden, keeping individuals in a vote-guaranteeing permanent
state of dependency and immaturity (Kornai, 2000).

Neoliberals refer to individuals as consumers and
advocate capitalist individualism or "laisser faire", with a
decentralized, minimally interfering state (Cheyne et al., 2008).
Social-democrats see this as the hegemony of the privileged
market-influencing classes which builds up and perpetuates
poverty and transgenerational social exclusion.

But healthcare provision depends on the good health of a
country"s macroeconomic factors in order to subsist. Neoliberals
see the free market as a spontaneous, voluntary social order
which "works locally and globally through incentives, market
prices, hard work, efficiency, profit-and-loss accounting, and
well-established property rights that promote prosperity" (Perry,
1995). On the other hand, social-democrats" state interventionism
in the calculations of prices means that no shortage-and-surplus
or profit-and-loss tests can be done, there is no accounting
system and no real economic calculations can be done.
Neo-liberals claim that social-democracy is a system that
conflicts with natural conditional responses, ignoring
motivation, incentives, or expectations of reward-for-effort,
resulting in stagnation of the economy leading to the "tragedy of
the commons" on a national scale (Hardin, 1968).

With the aim to adopt the best of each political system,
the Third Way option emerged in the 90"s (Jordan, 2010). It was
developed by US President Bill Clinton and Australia Prime
Minister Paul Keating to make the liberal left electable while
providing a happy medium between social policies and the
prevailing globalized market economy to ensure funding for good
service provision, like the much debated universal
welfare.

It was Otto von Bismarck, the conservative Prussian
Minister of the Presidency, who between 1883 and 1889 designed
and implemented what he called "practical Christianity", a social
insurance programme which became the model for all the European
countries and the basis of the modern welfare state (Taylor,
1969). Bismarck introduced state-provided old age pensions,
accident insurance, medical care and unemployment insurance. His
paternalistic programme was opposed by the Social-Democratic
party but it was approved with the votes of his fellow
conservative Lutherans, the Catholics, the entire German industry
and the working classes. His plan reduced the outflow of
immigrants to America, where wages were higher but welfare did
not exist (Taylor, 1969). Additionally, Bismarck instituted the
"Anti-Socialist Laws" to prevent the corruption of his programme
as a consequence of the expansion of Marxism.

With considerable differences, both NZ and Spain have
universal welfare systems. Such differences may stem from each
country"s government structure and political systems. With
reference to government structure, NZ has a centralised
unicameral parliamentary system of government (NZ Government,
2011), whereas Spain is a constitutional monarchy with a federal
bicameral (Congress and Senate) parliamentary government (Spanish
Government, 2011). The NZ parliament delegates some power to the
country"s 12 regional councils with regard only to tax rate
settings, environmental management, transportation planning and
civil defence but not health care services or provision (NZ
Government, 2011). In Spain, the parliament delegates complete
power to the 17 Autonomous Communities (the former Regions) with
regard to everything (including healthcare management and
provision) but not tax rate settings and collection, and defence
(Spanish Government, 2011).

Looking at political system preferences now, the
neo-liberal National Party and social-democrat Labour Party have
dominated New Zealand political life since 1935 (NZ History,
2008). The Labour Party ruled for 26 years, from 1935 to 1949 and
then in 1957-60, 1972-75, 1984-90, whereas the National Party
ruled for 53 years, from 1949 to 1972, 1975-84 and from 1990-2011
(NZ History, 2011). This means that NZ citizens clearly prefer
their politics, economics and healthcare to be run by
neo-liberals, but Spain is not quite so clear about it. Although
the neo-liberal Popular Party (PP) is also the most voted party,
it can only rule when it gets an absolute majority overruling the
multiple possibilities for left-wing coalitions. The neo-liberal
Union de Centro Democratico (UCD, now extinct) and PP ruled for
15 years (Spanish Government, 2011), from 1975-82 and from
1996-2004, whereas the social-democratic Partido Socialista
Obrero Español (PSOE) ruled for 21 years, from 1982-1996
and from 2004-2011.

A brief review will now be made of the health systems of
NZ and Spain. This analysis will help understand not just what
citizens have traditionally come to expect from their
governments, but also how health outcomes have evolved over the
years based on the provision of funds for healthcare.

The centralised NZ governmental tradition leads to a
more rapid and efficient control and distribution of funds with
regard to the healthcare provision. However, this ability to
adapt to the ever-changing economical, political and
environmental conditions may lead to certain instability in the
provision of services (Blank & Burau, 2007). Public
healthcare services in NZ are financed through a combination of
taxes and patients" co-payments for general practitioner"s fees,
prescriptions, dressings, orthopaedic material, and any
non-standard complementary procedure or test required (Ministry
of Health [MOH], 2011). Only citizens and emergency attention
qualify for eligibility to benefit from the NZ healthcare system.
Secondary, tertiary and maternity care are also free for NZ
citizens. GPs act as gatekeepers for secondary care (Blank &
Burau, 2007). With 17 Autonomous Communities, the decentralised
Spanish healthcare system finds it very difficult to adapt to
change and it has led to relevant inequalities in the amount,
type and quality of services received by patients.

In Spain, like in all European Union countries, social
insurance for healthcare operates under the principles of
solidarity, subsidisation and corporatisation (Spanish
Government, 2011). The employer pays for the workers" social
security (from 20% to 35% of the gross annual pay for that
position depending on the salary perceived), and also for
professional development, non-competence, full-dedication, union
fees, transportation and displacement, and productivity
incentives (Ministry of Health, Social Politics and Equality
[MHSPE], 2011). Salaries are all pre-established within a range
depending on the professional category.

Further considerable differences with the NZ welfare
system include the fact that in Spain, out of each pay check,
each worker is deducted a certain percentage to cover for
additional full pays in July (for the summer holidays) and
December (for Christmas), unemployment, accident compensation,
contingencies, and retirement (MHSPE, 2011). There is a salary
cap under which workers are exempt from paying income taxes to
the state. The central government allocates a proportional
percentage of funds to each federal MOH. National health policy
implementation and decision-making become almost impossible in
this decentralised setting compared with the centralised system
in NZ.

But regardless of logistic issues and of whatever colour
the national or regional government happens to be, all Spanish
citizens receive free medical and specialist attention. Unlike in
NZ, co-payment applies exclusively to prescriptions, with the
exception of retired or permanently-disabled citizens who do not
have to pay for them (MHSPE, 2011). Any individual going through
the emergency door or maternity unit will get free medical and
surgical attention if the diagnosis requires it. Spanish citizens
have been getting this healthcare provision since 1946. It"s
become a tradition to expect and receive this kind of health
service.

The differences between the NZ and Spanish health
systems are notable, but are health outcomes (see Table 2) in
these two countries very different if at all, and, can those
differences be based on funds made available for healthcare
provision (see Table 1)?

Table 1

Health Expenditure in 2003 and 2009 as Percentage of
GDP in New Zealand and in Spain

Source: Organisation for Economic Cooperation and
Development (OECD) (2011)

Table 2

Key Health and Developmental
Indicators

Sources: Infant mortality and life
expectancy statistics from OECD (2011).

Inequality-adjusted statistics from United
Nations Human Development

Report (UNHDR)(2010).

Table 1 shows that over the 6-year period chosen, and
despite the fact that NZ had a neo-liberal and Spain a
social-democrat government, both countries dedicated
ever-increasing funds to healthcare. NZ destined an average of
9.1% of its GDP to health expenditure, most of which, around 80%,
came from public funds. Private contribution was only 20%.
Similarly, Spain contributed with 8.9% of its GDP to health
expenses, 73% of which was funded publicly and 21% came from
private insurances. Given that Spain has 10 times the population
of NZ and in view of the previously described health services the
citizens of each country get, NZ contributes proportionally more
and gets less. But is this reflected in the OECD and
UNHDI?

Table 2 depicts three key UN health indicators: Infant
mortality, life expectancy and HDI. Infant mortality is
particularly relevant as it assesses a society"s health system
and quality of life (Benoit et al., 2005). The infant mortality
and life expectancy health figures indicate that Spain has better
health outcomes for investment, However NZ ranks 3rd whereas
Spain ranks 20th in the 169-country inequality-adjusted UNHDI.
This is because health is only one of over 400 indicators of
health and development in the HDI database, and indicates that
factors leading to a country"s overall good health depend on
other macro-level issues like those depicted in the Ottawa Chart
for Health Promotion and the Sundsvall Conference (WHO, 1986,
1991) among others, rather than just (the needed) funds for
public healthcare, otherwise extremely rich longstanding
socialist countries like Venezuela (rank 75) or communist China
(rank 89) would rank way on top of neo-liberal USA (rank 4) in
the inequality-adjusted HDI (UN HDR, 2011).

Conclusion

The analysis of the socio-political context of NZ and
Spain shows that even though the two countries allocate a similar
proportion of their GDP for funds to maintain their universal
welfare status, Spain has better health outcomes than NZ.
However, NZ is much higher in the HDI rank. This comes to show
that despite differences in the ideological orientation of the
party in office, the management of macroeconomic factors that
take into account social policies in the context of a globalized
market economy is the key for the stability and growth of a
country"s GDP so that more funds can be directed to healthcare.
Although social-democrats keep claiming ownership of anything
social in politics, their relationship with universal welfare in
Europe has been their opposition to its creation and
implementation. It is the social acquisitions that have passed
from one to another generation, like the tradition of health
provision in the context of universal welfare, that play a
determinant role in what citizens expect politicians, be they
neo-liberals or social-democrats, to provide to them when it
comes to healthcare in NZ and Spain.

References

Benoit, C., Wrede, S., Bourgeault, I., Sandall, J., De
Vries, R., & van Teijlingen, E. (2005). Understanding the
social organization of maternity care systems: Midwifery as a
touchstone. Sociology of Health and Illness, 27,
722-733.

Blank, R., & Burau, V. (2004). Comparative Health
Policy (pp. 29-58). Basingstoke and New York: Palgrave
McMillan.

Cheyne, C., O"Brien, M., & Belgrave, M. (2008).
Social Policy Theory. The Classics. In Social Policy in
Aotearoa/New Zealand (4th Ed., pp. 66-92).

Galbraith, J.K. (2001). The Essential Galbraith. New
York, NY: Houghton Mifflin.

Hardin, G. (1968). The Tragedy of the Commons.
Science 162, (3859), 1243–1248.
doi:10.1126/science.162.3859.1243

Jordan, B. (2010). Why The Third Way Failed:
Economics, Morality and The Origins of the "Big Society"
(pp. 3-28). Bristol: The Policy Press University of
Bristol.

Kornai, J. (2000, Winter). What the change of system
from socialism to capitalism does and does not mean. Journal
of Economic Perspectives 14, (1), 27-42.

Ministry of Health (2000). The New Zealand Health
Strategy. Wellington: Author.

Ministry of Health, Social Politics and
Equality (MHSPE)(2010). National Health System. Madrid: Author.
Retrieved August 2, 2011 from
http://www.msps.es/en/organizacion/sns/libroSNS.htm

Navarro, V., Muntaner, C., Borrell, C., Benach, J.,
Quiroga, A., & Rodriguez-Sanz, M. (2006). Politics and health
outcomes. The Lancet, 368, 1033-1037.

New Zealand Government (2011). Central
Government. Wellington: Author. Retrieved August 6, 2011 from
http://newzealand.govt.nz/browse/
government-local-central-regional /central
-government/

New Zealand History (2008). Retrieved August 2, 2011
from http://www.nzhistory.net.nz

Organisation for Economic Cooperation and Development
(OECD) (2011). Statistics. Retrieved August, 4, 2011 from
http://www.oecd-ilibrary.org/statistics.

Perry, M.J. (1995, June). Why socialism failed.
Foundation for Economic Education (45), 6. Retrieved
August 3, 2011 from http://www.thefreemanonline.org
/featured/why-socialism-failed/

Spanish Government (2011). La Moncloa.
Madrid: Author. Retrieved August 10, 2011 from
http://www.lamoncloa.gob.es/IDIOMAS/9/España/
Instituciones/index

Taylor, A. J. P. (1969). Bismarck: the Man and the
Statesman. New York, NY: Alfred A. Knopf.

Tradition. (2008). In Merriam-Webster dictionary (11th
ed.). Retrieved August

1, 2011, from http://www.merriam-webster.com/

United Nations Human Development Report (UNHDR).
Inequality-Adjusted Health Development Indicators. Retrieved
August 5, 2011 from
http://hdr.undp.org/en/statistics/ihdi/

World Health Organization (WHO) (1986).
Ottawa Charter for Health Promotion. Ottawa: Author.

World Health Organization (WHO) (1991).
Sundvall Statement on Supportive Environments for Health.
Sundsvall: Author.

Autor:

V M Westerberg