Welfare State Woes

What do Mitch McConnell and Prayut Chan-o-cha have in common? Not much at first glance. One is the Republican Senate Majority Leader of the United States, a masterful tactician who many in Washington fear. The other is the prime minister of Thailand, who came to power by means of a coup and is now preparing the country for a transition back to democracy. But an issue they share is that of healthcare in their respective countries.

This will be a short post; I’m still working on ‘The Story of Thai Democracy’ and I am no expert on healthcare policy, so I will not labour to comment in detail on the specifics of what the Senate Republicans and the Thai government are attempting to do. The gist, however, is as follows. What McConnell is trying to accomplish is as follows: the Republicans have long desired the repeal of the Affordable Care Act, also known as Obamacare. Conservatives oppose Obamcare for a myriad of reasons, such as how it intrudes into the affairs of private citizens and the rising premiums. Repealing, of course, is easy, but coming up with a replacement is not. The House of Representatives chose to pass the American Health Care Act, which retains some key structures from Obamacare but repeals enough so that an estimated 23 million Americans will lose their medical insurance. The Senate has modified it into the Better Care Reconciliation Act, but the number of Americans left uninsured will be roughly the same.

The Thai government, on the other hand, has proposed an amendment to the existing Universal Coverage Scheme (UCS), which was initiated by prime minister Thaksin Shinawatra in 2002. Prior to the implementation of this policy, around 30% of Thais were uninsured, but the UCS covers approximately 98% of all Thais. Known informally as the “30 Baht for All Healthcare” scheme, the programme has become enormously popular. It has also come under heavy criticism, however. In the Bangkok Post, Wichit Chantanusornsiri writes:

The state budget for the UC scheme has more than trebled over the last 15 years. In 2003 it stood at 55.3 billion baht. It has since risen to 165 billion baht for fiscal 2017. The burden of huge numbers of patients receiving low-cost treatment from the healthcare system means that  many hospitals: 1. still offer substandard medical services, while 2. others face or have faced serious liquidity problems due to their increasing expenditures as required by the scheme. Prime Minister Prayut Chan-o-cha recently approved a 5-billion-baht emergency budget to rescue five hospitals facing low liquidity. However, many others are still struggling.

The main issue is that the costs are expected to rise significantly as Thai society ages. Wichit continues writing:

As Thai society ages, healthcare support for the elderly will also become more of a financial burden…In 2016, those aged 60 and older still only accounted for 14% of the population. By 2025, this bracket is tipped to make up one quarter of the population.

Prayut has made clear that he has no plan to cancel the UCS. That, after all, is politically impossible; far too many rely on it now. The government is, however, proposing an amendment that would centralise the regulation of the scheme, which could have a variety of effects such as changing the medication that hospitals are required to hold for users of the scheme. It has still provoked opposition, with activists taking the streets to protest.

The issue that the two countries are facing makes clear that becoming a welfare state is largely a one-way road; any rollback is politically extremely difficult due to the outrage it occurs. So what is the solution? Again, without being an expert in healthcare policy it is difficult for me to say. The solution appears more simple for the United States: there is no real reason to roll back Obamacare. Critics such as Senator Bernie Sanders have argued that the ACHA and the BCRA are not healthcare acts at all, but rather tax cuts masquerading as healthcare plans. Forcing over twenty million Americans to lose healthcare so that a few of the richest 1% can pay less in taxes isn’t ethical. What remains unclear is whether public opposition can stop the passage of Obamacare’s repeal.

With Thailand, however, an issue may be that it transformed itself into a welfare state too soon. As Wichit writes, “the Thai economy must be upgraded to help it escape the so-called middle-income trap…Unless an answer is found in time, the fiscal burden of all these combined welfare schemes will shape up as a ticking time bomb just waiting to sabotage the nation’s future”. Government spending on healthcare isn’t necessarily a bad thing; any good Keynesian economist would tell you that increased spending would lead to increased growth, and healthcare spending also acts as a form of an automatic fiscal stabiliser. But it also threatens to pose a threat to the government’s finances, while private healthcare is simply too expensive for the average citizen to afford. It will be interesting to see how this gets resolved.