Health Insurance Reforms in Asia by Sabrina Luk (review)

Rising medical expenditure has called into question the feasibility of heavily subsidized healthcare in welfare states. The rapid growth of ageing populations and the epidemiological transition towards non-communicable diseases imply that welfare states will likely be plunged into deeper fiscal trouble in the future. Solutions for sustainable financing are simple: to increase revenues and/or to decrease costs. What is less simple is the extent to which welfare states are able to implement these solutions. After all, it is not always politically palatable to reform public health insurance.

Sabrina Luk’s Health Insurance Reforms in Asia explains exactly how and why healthcare financing reforms are plausible in some settings and less so in others. The analytical lens of the book is a “refined” theory of historical institutionalism. The original version predicts policy inertia, assuming that policy legacies and political institutions predominantly determine the current form of healthcare financing. The “refined” theory modifies it by introducing to the framework the interplay among three elements within the existing set of political institutions. The three elements are: (1) “environmental triggers” (events that occur exogenously and have the potential to threaten the existence of institutions in their current form); (2) “institutional entrepreneurs” (policy actors who act as a bridge between institutions and people, and attempt to alter existing rules to meet their interests); and (3) “ideas” (a set of values that provide moral justification for any reform initiated by institutional entrepreneurs). In welfare states, the degree to which reforms are successful is a complex function of these elements and their interactions with political institutions, which are inevitably a product of history.

Using the case-study approach, the book convincingly argues that the refined theory of historical institutionalism can explain divergence in the path of health insurance reforms in Shanghai, Singapore and Hong Kong. Since the 1980s, Shanghai and Singapore have been able to transform free healthcare systems into contribution-based systems. While introducing reforms, their governments capitalized on strong political institutions (with the centralization of power), charismatic leaders and public dissatisfaction towards the quality of healthcare. On the other hand, Hong Kong has less successfully attempted to implement reforms since the 1990s — people believe that healthcare is a basic human right to be provided mainly by the government and leaders have been unable to convince the public otherwise.

However, the book has some shortcomings. First, while it explicitly states that political institutions are the foremost determinants of reform success, the relative strengths of the three elements or policy parameters (environmental triggers, institutional entrepreneurs and ideas) have not been discussed. The book deliberately avoids quantifying the relative weight of these parameters (possibly due to a lack of empirical evidence) but, in so doing, leaves the reader wondering how the theory may be applied in a different context.

The three case studies do not help in this regard either. In addition to strong political institutions, Shanghai and Singapore had environmental triggers, institutional entrepreneurs and ideological shifts that were in favour of reforms. On the contrary, Hong Kong suffered from weak political institutions as well as the absence of impactful environmental triggers, institutional entrepreneurs and ideas. As a result, it was unable to make meaningful changes to its healthcare financing system. The inclusion of more case studies with varying combinations of the three policy parameters would enhance the applicability of the refined theory of historical institutionalism.

The theory’s second weakness is its lack of predictive power. This is best illustrated with the case of Hong Kong. The book does not elaborate on what is required of Hong Kong, given its current political institutions, for the eventual acceptance of drastic reforms by the public. There is also the unaddressed question of what constitutes strong environmental triggers. Again, in the Hong Kong example, one reform proposal was rejected during economic prosperity, but another was resented amidst a crisis. The question is not immaterial because it underpins the importance of appropriate timing for introducing reform, in turn, increasing the chances of its successful acceptance and implementation.

Finally...