The Fiscal Crisis of National Health Insurance in the Republic of Korea: In Search of a New Paradigm

In 2001, National Health Insurance (NHI) in Korea, the social insurance system for health care with universal population coverage, experienced a serious fiscal crisis as its accumulated surplus was depleted. This fiscal crisis is attributed to its chronic imbalance: health care expenditure has increased more rapidly than have insurance contributions. The recent failure in implementing pharmaceutical reform was a further blow to the deteriorating fiscal status of the NHI. Although the NHI has since recovered from the immediate fiscal crisis, this has mainly been because of a temporary increase in government subsidy into the NHI. The strong influence of the medical profession in health policy‐making remains a major barrier to the introduction of policy changes, such as a reform of the payment system to strengthen the fiscal foundations of the NHI. Korea also has to restructure its national health insurance in an era of very rapid population ageing. A new paradigm is called for in the governance of the NHI: to empower groups of consumers and payers in the policy and major decision‐making process of the NHI. The fiscal crisis in Korean national health insurance sheds light on the vulnerability of the social health insurance system to financial instability, the crucial role of provider payment schemes in health cost containment, the importance of governance in health policy, and the unintended burdens of health care reform on health care financing systems.     

积极财政政策的理论来源及政策走向

凯恩斯的需求管理经济学理论是我国积极财政政策的理论来源,但不能把我国积极的财政政策简单等同于西方短期反周期调节的扩张性财政政策。继续实施积极财政政策要在政策的力度、作用方向、运作方式和政策手段上进行适当调整,为逐步退出做准备。     

Fiscal and monetary policy rules revisited

Why have automatic procedures designed to limit or eliminate the discretion of policy-makers become popular in recent years? The first part of the paper addresses fiscal policy rules by analyzing their political appeal as restrainers, symbols, partisan weapons, and ideological statements. The second part of the paper considers monetary policy rules and their rationales, and critiques them. We argue that fiscal and monetary policy rules may not be as efficacious as their supporters claim, and they raise new problems stemming from their biases, rigidity, and antidemocratic implications.     

Empirical Analysis of Fiscal Soundness and Public Social Expenditure: A Lesson for the Future Direction of the Korean Welfare State

The aim of this paper is to investigate the relations between fiscal soundness and public social expenditure in advanced welfare states so as to reconsider the conventional wisdom that welfare expenditure aggravates national finances. Through this, I propose the clues of building the sustainable Korean welfare state. I focus on the interdependent relationship between fiscal soundness and public social expenditure based on fiscal sociology. Considering this interaction, I form two sets of simultaneous equations models and employ a special statistical method, three‐stage least squares (3SLS). The results regarding the causal relationship between fiscal soundness and public social spending indicate that, if public welfare spending is increased, fiscal health is damaged. However, as many comparative social policy researchers have pointed out, outcomes of welfare states differ from country to country according to the composition of public welfare spending. Specifically, some welfare states with priority given to social services such as vocational training or childcare services have maintained the stability of public finance. By extension, we can say that public social expenditures have a positive influence on fiscal soundness based on the composition of social expenditures. Finally, it is possible to create financially sustainable welfare states.     

Fiscal harmonization in view of the Euro adoption: Economic implications for Poland

In this paper, we investigate the ex ante effects of fiscal policy harmonization that might be necessary for the adoption of the common currency on economic growth in Poland using a neoclassical dynamic two-sector general equilibrium model. We study two fiscal policy scenarios. In the first one, we adjust all taxes to German and EU-27 levels, respectively, while in the second one, we change only consumption taxes to German and EU-27 levels. We find that in the first scenario, the current Polish taxes yield the highest rate of growth due to lower capital taxation. However, in the second scenario, German and EU-27 taxes yield the highest rate of growth due to the lower consumption tax on capital-intensive good. From a policy perspective, our results suggest that fiscal policy with lower taxes on capital and capital-intensive goods can generate a higher rate of growth in the long-run. In the case of fiscal harmonization, our findings propose adopting only German or EU-27 consumption tax structure into the Polish tax system.     

Fiscal deficits under financial pressure and insolvency: Evidence for Italy,Greece and Spain

This article attempts to re-evaluate the sustainability of the fiscal deficit as well as the long-run macroeconomic relationship between government spending and revenues for three South-European economies under financial market pressure and insolvency; Italy, Greece and Spain. The empirical analysis uses annual data from 1970 to 2010 and employs various cointegration techniques to account for possible linear and nonlinear effects in fiscal policy actions. The evidence for all three countries suggests that, allowing for structural break, (i) the fiscal deficits are weakly sustainable in the long-run, (ii) the spend-and-tax hypothesis is supported and (iii) the budgetary adjustment process is asymmetric in Italy and Spain.     

Exploring Neglected Dimensions of Social Policy: The SDW, Fiscal Welfare and the Exemplar of Local Taxation in England

Titmuss's Social Division of Welfare (SDW) thesis is a vitally important but much neglected element of social policy analysis. This article seeks to explore the SDW, with a particular focus on fiscal welfare. Fiscal welfare has been described as forming a hidden welfare state, and while taxation is one of the main ways in which governments affect the lives of citizens, studies of welfare pay remarkably little attention to its impact. Fiscal welfare is examined by using, as an exemplar, local taxation in England, a subject that itself is neglected within social policy. Local taxation in England is of interest because it illustrates the impact of a system of taxation on different groups of citizens, and how this can operate to the benefit of rich over poor citizens. This is because the current system is highly regressive, meaning that those on low and middle incomes spend proportionately more of their income paying the tax than do those on high incomes. What is of further interest is how within the debate about reform of local taxation, concern with regressivity becomes obscured and ceases to be the focus of attention. We are thus provided with an example of how fiscal welfare remains a hidden issue. The article concludes by arguing that social policy analysis needs to move beyond the narrow confines of social welfare and develop a broader understanding of welfare, based on the SDW.     

Output-volatility reducing effects of automatic stabilizers: Policy implications for EMU member states

In this paper, we empirically explore the output-volatility reducing impact of automatic stabilizers and look in detail at their policy implications for selected EMU member states comprising Austria, Finland, France, Germany, Ireland, Italy, the Netherlands, Portugal, and Spain for the period 1995–2017. Overall, the results suggest that automatic stabilizers deliver a statistically significant, but fairly weak, counter-effect on output volatility in the short run. More specifically, output-volatility responses to automatic stabilizers by a reduction between −0.012 and −0.097 percentage points depending on the proxy measure used for automatic stabilizers. However, the automatic stabilizing impact from taxes and government spending is statistically insignificant in the long run. The results point to two main policy implications: i) automatic stabilizers are an important fiscal mechanism just for the short-run output stabilization, but their output-volatility offsetting role and power are largely subject to proxy measures used for automatic stabilizers; ii) no matter what proxy measures are used, automatic stabilizers largely produce a weak stabilizing performance in dampening short-term output volatility. So, from a macroeconomic policy standpoint, it can be safely claimed that automatic stabilizers can just be an integral part of discretionary fiscal policy rather than being an alternative to it.     

Social Policy in Greece: Rhetoric versus Reform

This paper reviews the major social policy developments in Greece during the 1980s and 1990s, focusing on social security, health and employment policies. It argues that the concept of social policy and the practice of politics have been distorted in this country. Social policy reflects the legacy of a heavily politicized and centralized policy‐making system, an impoverished administrative infrastructure and poorly developed social services. Its emergence is characterized by the pursuit of late and ineffective policies. It lacks continuity, planning and coordination, being oriented towards short‐term political expediency. It is largely insurance‐based, reproducing huge inequalities and institutional arrangements which are behind the times. It provides mainly cash benefits, low‐quality but rather expensive health services and marginal social welfare protection. Moreover, the lack of a minimum income safety net confirms the country's weak culture of universalism and social citizenship. By implication, complex policy and interlocking interest linkages have tarnished the “system” with a reputation for strong resistance to progressive change. At the same time, sources of change such as globalization, demographic developments, new household and family/gender patterns, unstable economic growth, fiscal imperatives, programme maturation, as well as persisting unemployment, changing labour markets and rising health care costs, have produced mounting pressures for welfare reform.     

Poverty alleviation,coverage and fiscal sustainability: Investigating the effect of a new social pension in Hong Kong

This article synthesises the characteristics of social pensions across Asia and evaluates the effect of a new social pension in the Hong Kong SAR, the Old Age Living Allowance (OALA), on poverty alleviation, coverage rates and fiscal sustainability. We found that the effectiveness of the OALA in reducing old‐age poverty was limited, although it has led to an increase of retirement pension coverage by 6%. The OALA is projected to face substantial cost increases in the medium and longer term. Increasing the level of OALA benefits would be a direct means to enhance its poverty alleviation effect but may potentially be hampered by concerns about the fiscal sustainability of such changes. More obfuscated alternatives for Hong Kong policy makers to affect old‐age poverty alleviation include adjusting the indexing rules of benefit level payments and the eligibility criteria to reduce the stigma attached to the current policy choices.     

The sustainability of China’s Urban Employees’ Pension Programme: A case of getting old before getting rich?

This article examines the sustainability of China’s Urban Employees’ Pension Programme – the main component in China’s overall old‐age support system. It looks at the sustainability of the programme generally and, in particular, at case studies of two areas (Tianjin municipality and Guangxi province) to highlight both the extent of regional variations and the common challenges facing Chinese policy‐makers. It discusses a number of key issues that should assist policy‐makers to address the challenge of population ageing. It concludes that the challenge facing China is no more severe than that already faced by other countries in Europe and Asia. Moreover, the ageing of the population is not uniform across the regions of China. Consequently, those areas where the demographic shift is more advanced will provide some opportunity for policy experimentation. Given the experience to date of slow progress on various aspects of pension policy reform, the article suggests that it seems unlikely that paradigmatic change will be significant. Nonetheless, the study suggests a range of parametric policy measures that China should consider. The challenge facing China’s policy‐makers is to ensure that China gets old and rich at the same time.     

The impact of fiscal shocks on real GDP and income inequality: What do Australian data say?

This paper examines the impact of three fiscal policy shocks on per capita real GDP and income inequality in Australia during the period 1965–2014. A small structural vector autoregressive (SVAR) model is constructed for an open economy for contemporaneous identification and estimation purposes. Based on the evidence of one cointegrating vector among the variables, a structural vector error correction (SVEC) model is specified for the long run. Direct taxation, indirect taxation receipts and government spending are identified as permanent fiscal policy shocks. The convergent use of two different models (SVAR & SVEC) strengthens the credibility of the results. The results have three key policy implications. First, a reduction in direct taxation receipts increases per capita real GDP without increasing income inequality. Second, a reduction in government expenditure significantly increases income inequality. Third, the adverse effect of indirect taxation receipts on income inequality is greater than the redistributive effect of government expenditure, which questions the widely held fiscal policy strategy of using indirect taxation to finance redistributive expenditure.     

Geographies of Local Government Stress after the Great Recession

Local governments in the USA are facing increased levels of fiscal stress after the Great Recession. We conducted a national survey in 2012 to assess differences in sources of stress and service delivery responses (privatization, inter‐municipal co‐operation, and public delivery) across places. Our discriminant analysis on 1,889 US cities and counties contributes to the literature on state rescaling. We differentiate three types of stress: fiscal, housing market decline and demographic. Fiscal stress and demographic stress are linked and highest in metro core and rural places, while housing market decline is associated with population density and revenue diversification. Diverse revenue sources can ameliorate some of the fiscal challenges brought on by housing market decline. Regarding service delivery, we find privatization and co‐operation are higher in suburbs. State aid dependence is highest in rural and metro core areas with greater need, but decrease in state aid is highest in the South and West, where fiscal stress is also highest. Decentralization has exacerbated spatial inequality in the wake of the Great Recession challenging the efficiency claims of fiscal federalism. More redistributive state policies are needed.     

Financial Crisis and Sustainability of US Fiscal Deficit: Indicators or Tests?

Whether or not budgetary policies are sustainable and can be conducted without creating the potential for government bankruptcy is a central question for macroeconomic analysis. In this paper, we show that indicators and tests to assess government solvency should not be used alternatively. We lay out a simple and intuitive procedure to integrate simultaneously the results from the two approaches to fiscal sustainability. Indicators are forward looking, for they are based on published forecasts, thus reacting to a set of current and expected future conditions in fiscal-policy making. Tests, by contrast, are backward looking, for they are based on a sample of past data. In the event of conflicting results, indicators may signal the occurrence of a structural change in policy, which may reverse the predictions of tests. Whether the results from indicators or from tests should be given priority in the assessment of the sustainability of public debt will thus depend on the structural stability of the historical data generating process of the primary surplus. Only in the absence of a structural break in the stance of fiscal policy, the potential warning predictions of fiscal indicators should be interpreted as merely reflecting transitory factors to be eventually reversed. An application to U.S. post-World War II historical data, from 1948 to 2016, and forecasts, from 2017 to 2027, demonstrates the empirical relevance of the proposed comprehensive approach and helps add new insights to the evaluation of the U.S. fiscal position. In particular, our results suggest that the potentially unsustainable course of U.S. fiscal policy from 2008 onwards, advocated by the use of fiscal indicators, reflects systematic—not cyclical—factors. The main policy implication is that deficit increases in the U.S. from 2008 onwards cannot be regarded as a transitory phenomenon and hence do entail an urgent need for a structural change in the future stance of budgetary policy.     

Revisiting History: The Creation of Provinces and the Politics of Social Policy in a Democratic South Africa

The pre‐democracy negotiations between the African National Congress (ANC) and the National Party (NP) established nine provincial forms of government to replace the four provinces of the apartheid era. The nine provinces contrasted with the historical goal of the ANC to create a ‘democratic, non‐racial and unitary South Africa’. The NP wanted nine new provinces to prevent centralized state power under an ANC government and saw possibilities for winning electoral power in the Western Cape. The ANC conceded following political pressure from the Inkatha Freedom Party, which threatened civil war, and a policy shift after examining the German federal governance system. The article analyzes the history, politics, process and outcomes of the establishment of the nine provinces for social policy delivery in South Africa. It explores the contention that the nine provinces re‐fragmented service delivery (although not on a statutory racial basis) and created a system of fiscal decentralization with serious implications for social policy: weakening bureaucratic capacity, institutional capability and political accountability. The provincial governance mechanisms and fiscal institutions created a particular ‘path dependency’ which, 18 years after democratic, rule still impacts negatively on service delivery and more equitable policy outcomes. This is in part due to the undermining of provincial governance mechanisms and fiscal institutions by a significant minority of corrupt and incompetent provincial civil servants. The corruption of these provincial governance mechanisms and fiscal institutions erodes the egalitarian values aimed at creating a non‐racial, non‐sexist, democratic and unitary South Africa which historically underpinned the policy agenda of the ANC. It also has weakened social citizenship on a geographical and ultimately racial basis given the continuing co‐incidence of race and place in a democratic South Africa.     

生态补偿与横向财政转移支付的理论与对策研究

过去的分税制改革确立的财政转移支付制度不能适应人口、资源、环境的协调发展,探讨适应限制类和禁止类主体功能区建设所需的基于生态补偿的横向财政转移支付制度设计,认为应该根据这两类区域进行生态保护建设的直接成本和放弃发展经济的机会成本,以及受益区域的支付意愿来共同确定横向财政转移支付的规模,最后提出了改革现有以纵向为主的财政转移支付体系,逐渐完善以生态补偿为主的横向财政转移支付制度的政策建议。     

Pension policy design changes in EU countries since the mid‐1990s

Recent decades have been characterised by significant pension reforms. This article reviews this process, focusing on five policy design issues that have concerned policymakers: optimising poverty alleviation effectiveness; redefining the state's role in smoothing incomes over the life‐course; balancing contributions to benefits; adjusting the system to respond to demographic, economic and social changes; and ensuring that reforms will be long‐lasting. While the role of state pensions is diminishing, there is a growing realisation of the need to ensure that they remain adequate, reigniting interest in minimum pensions and contribution credits. The expanding role of private pensions has led governments to intervene more in their operation. Policymakers have shown interest in automatic adjustment mechanisms to bring about required economic changes. However, there is greater understanding that for these to happen, the state has to engage more with its citizens.     

财政收入垂直分配关系及其均衡增长效应(英文)

不断扩大的地区间差异困扰着中国发展,并成为社会稳定的重要隐患。为了缓解地区间差距可能引发的各种矛盾,中国政府在1994年分税体制改革之后确立了具有集权倾向的财政收入垂直分配关系。通过财政资金的大规模双向流动,这种财政收入垂直分配关系促进了财政资金的跨区域配置和财政能力的地区间均等。但作为分权体制的重要制度安排,其在均衡地区间经济增长方面的作用却很有限,主要表现为大规模收入集中对经济发达地区的增长抑制。财政收入垂直分配关系的这些影响与地方财政非税收入依赖程度以及中央专项补助水平存在明显交互作用,前者显著弱化了财政收入过度集中的不利增长效应,后者却显著弱化了中央补助的增长激励。     

Homelessness Prevention Policy: A Case Study

Although serious and long‐term commitment to homelessness prevention is evident in some countries in the form of primary prevention measures, it is not clear whether a strong shift has already been made from secondary to primary prevention. It is argued here that after almost two decades of literature regarding the ‘prevention turn’ in homelessness policy, one may speak of primary prevention in the prevention stage, and add secondary and tertiary prevention to each of the other three stages of homelessness policy – early, emergency, and long‐term intervention strategies. Yet, there must be an attempt at primary prevention, which is more difficult to maintain, mainly for financial reasons. Political will is one key to success in doing this. Homelessness prevention policies are explained in this article using the case study of Israel's policies in 1948–2010. The findings indicate that Israel dealt with a high risk of homelessness in the 1950s and again in the 1990s through primary homelessness prevention by intervening in the housing market and providing cash assistance. Subsequently, after an overall homelessness policy was first published in Israel in 1996, prevention almost disappeared. However, it seems that, since then, prevention still manifests itself in the form of secondary prevention measures, such as public assistance benefits and housing subsidies. Tertiary prevention also seems to exist, addressing the more entrenched nature of homelessness by means of permanent supportive housing. This article shows that where there is a will there may be a way for prevention.     

Implicit debt in public‐sector pension plans: An international comparison

Most countries have separate pension plans for public‐sector employees. The future fiscal burden of these plans can be substantial as the government usually is the largest employer, pension promises in the public sector tend to be relatively generous, and future payments have to be paid out directly from government revenues (pay‐as‐you‐go) or by funded plans (pension funds) which tend to be underfunded. The valuation and disclosure of these promises in some countries lacks transparency, which may hide potentially huge fiscal liabilities to be passed on to future generations of workers. In order to arrive at a fair comparison between countries regarding the fiscal burden of their public‐sector pension plans, this article recommends that unfunded pension liabilities should be measured and reported according to a standard approach for reasons of fiscal transparency and better policy‐making. From a sample of Member countries of the Organisation for Economic Co‐operation and Development, the size of the net unfunded liabilities as of the end of 2008 is estimated in fair value terms. This fiscal burden can also be interpreted as the implicit pension debt in fair value terms.