The logic of social policy expansion in a neoliberal context: health insurance reform in Korea after the 1997 economic crisis

In the aftermath of the economic crisis of the late 1990s, the Korean government reformed health insurance system to enhance social equity and solidarity. This article identifies the institutional features and political dynamics involved in completing the reform. The Korean case suggests a model of counter-movement that differs from the historical experiences of both democratic corporatist and liberal welfare states. Two institutional conditions within the politics of crisis contributed to the reform. A legacy of limited state welfare was critical in providing the impetus for reforming health insurance system. More importantly, the crisis maximized the state’s coordination capacity by mobilizing a coherent bureaucracy under the presidential authority, and by limiting interest politics. The Korean experience has important implications for the study of economic crisis and social policy response. The way in which a crisis provides new contexts for welfare and policy making institutions, rather than the institutions themselves, should be the main focus in analyzing policy responses. The focus on the political dynamics of an economic crisis helps us acknowledge the limit of ideological forces of a crisis in facilitating a particular policy response.