New Political Legacies and the Politics of Health and Pension Re-reforms in Chile

Abstract

Chile was a pioneer in introducing market competition into its largely public-dominated health and pension systems. Numerous countries followed Chile’s lead in privatizing pension provision; US President George W. Bush looked to Chile’s pension reform as a model for the United States to follow. Chile’s health reforms were also pioneering in that it was the first Latin American country to introduce private health providers and insurers into a largely public health care system, inspiring similar market-based reforms across the Latin American region. Yet, despite international and regional leadership in health and pension reforms, Chileans themselves have been less than satisfied with the new market-based systems. This discontent has manifested in recent “re-reforms” of both health and pension policies in Chile during the 2000s. The democratically elected center-left governments of Ricardo Lagos and Michele Bachelet attempted to pass reforms in which the state would increase its oversight over these social policy areas and would compensate to a greater degree for market failures.

The views expressed here are those of the authors and not those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. The authors thank Daniel Béland and Brian Gran for their helpful comments on this chapter. Christina Ewig thanks the Fulbright New Century Scholars program for their generous financial support of this research and the University of Wisconsin-Milwaukee which granted her leave from her regular teaching duties to direct their study abroad program in Santiago during the Spring of 2005. She also extends thanks to the many informants in Chile for their generosity of time and insights during the course of this research.