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THE RISE AND FALL OF WELFARE HEALTH LEGISLATION IN 20TH CENTURY CHILE: A CASE STUDY IN POLITICAL ECONOMY OF LAW JAIME LLAMBIAS WOLFF A DISSERTATION SUBMITTED TO THE FACULTY OF GRADUATE STUDIES IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY GRADUATE PROGRAM IN LAW YORK UNIVERSITY CANADA DECEMBER 2013 @ Jaime Llambías-Wolff, 2013 ABSTRACT This dissertation analyzes the economic and political dynamics of health legislation in Chile throughout the 20th century. Law is understood as a process, in which legislation is the consequence of the political interaction between different stakeholders within a specific socio- economic and political reality. Law thus performs as a function of its political dynamics. This case study discusses lawmaking in its multifaceted character fulfilling different roles, understanding health legislation in Chile as the expression of how society articulates and represents different interests and how health reforms are determined by the influence and capabilities of interest groups. The legal framework is situated within a broader national social, economic and political context, mediated by international influences and the strategic role assumed by the state. Empirically, the dissertation analyzes how economic and political variables have shaped different legal transformations in a country that has experienced significant, paradigmatic changes in health law, moving from a basically charitable system, inherited from the Spanish colonial power, to a strong and profoundly European welfare system—the second oldest national health service in the world—to a radical neo/liberal market model introduced in the late 1970s, and finally, towards a mixed public- private system, still present. ii DEDICATION To my wife Judith Meunier, who supported me with patience in this “lovely foolish” return to Law after 4 decades, which permitted me to appreciate and enjoy legal research much more and allowed me to close the circle after my graduation from the University of Chile’s School of Law, when I was 22 and trying to understand. Jaime LLambías-Wolff iii ACKNOWLEDGMENTS First, I wish to express my gratitude to my supervisor, Professor Liora Salter, for listening to my story about my early involvement with law when I was an undergraduate law student in Chile and for all her helpful advice during seminars and during my legal research. It was back in 1968 when, with many of my fellow Chilean law school comrades of our generation, I wanted “to be realistic and demand the impossible” in our long journey for important structural transformations. I wanted law to be an active profession, engaged in the pursuit of social and legal change. Only five years later, I was suddenly in Canada as a political refugee, and those aims and visions came to an abrupt end. Along with many others, I had to start all over. Law became merely a framed diploma on a basement apartment wall, thanks to family who saved it from being burned along with other books and dreams. Too many years later, already recycled in Sociology, Liora listened to “my story” and suggested: “You should go for another PhD, but this time in Law.” And here I am. Thank you, Liora! Next, I would like to thank my co-supervisor, Professor Ruth Buchanan. She probably does not know, but we do, that her study group energized students week after week. I re-discovered all the theoretical iv legal material I had long forgotten about or mostly never read, and I enjoyed my weekends reading and preparing for discussions. It was a revelation for me, as after dedicating 40 years to sociological thought, I had the opportunity to draw connections and approach legal research from an interdisciplinary perspective. She knows that I had to bring myself back on track more than once. The process was an effort, but at the same time, a real pleasure. Thank you, Ruth! I also would like to thank Professor Shin Imai, a member of my dissertation committee, who encouraged me to continue on this path of close involvement with social change. His personal understanding of Latin America, his fluent Spanish and his legal experience were an important support for me in this endeavour. Thank you, Shin! Finally, I would like to thank the staff of the Graduate Studies program at Osgoode Hall Law School for all their assistance and understanding as I dealt with the many procedures and requirements that permitted me to complete both my studies and my work. Jaime LLambías-Wolff v TABLE OF CONTENTS Abstract …………………………………………………………………….......... ii Dedication………………………………………………………………………… iii Acknowledgments………………………………………………….................... iv Table of Contents …………………............................................................... vi Presentation and Introduction ……………………………………………... 1 Chapter I THE LEGAL THEORETICAL FRAMEWORK AND HEALTH LEGISLATION Introduction ………………………………………………………………………. 11 1. The law and its identity ………………………………………………………. 14 A. The law: to be or not be ………………………………………………… 14 B. Law, legitimation and autonomy ………………………………………. 18 C. Law and its dual identity: status quo and change …………………... 22 2. The law and political dynamics …………………………………………….. 27 A. The political nature of the legal process and the law as praxis ….… 27 B. Conflict, consensus and hegemony ………………………………….. 31 3. Law and the welfare state …………………………………………………. 38 A. Law, development and the state ……………………………………… 38 B. The welfare state ……....................................................................... 41 VI Chapter II HEALTH LEGISLATION AND LEGAL CHANGES DURING THE WELFARE STATE MODEL Introduction …………………………………………………………………….. 49 1. The beginnings of the welfare state model: 1924-1938 ………………… 52 2. Towards the National Health Service (SNS): 1939-1952 ………………. 69 3. The welfare state during three different political administrations: ……… 95 A. The first decade of the National Health Service (SNS): 1952-1963 and the conservative government …………………….... 95 B. The centrist government of the Christian Democratic government (1964-1970) ……………………………….. 107 C. The socialist model of the Popular Unity government (1970-1973) ……………………………………………... 129 Chapter III LEGAL AND INSTITUTIONAL CHANGES IN THE ESTABLISHMENT OF A MARKET MODEL: 1973-1989 Introduction …………………………………………………………………..… 154 1. The principles, objectives and legal changes for a market model of health care ……………………………………………………….. 159 2. The political, economic and legal rationality of the market model …….. 171 A. Partial withdrawal of the state from the health sector …………….... 172 B. Creation of a market for the private sector ………………………….. 177 C. Growth of the structure and autonomy of the private health sector …………………………………………………………….. 191 VII Chapter IV THE RISE AND FALL OF THE WELFARE HEALTH LEGISLATION IN CHILE OVER DECADES: OVERALL ANALYSIS. Introduction …………………………………………………………………... 205 1.Health legislation and the role of the actors in Chile ………………….. 211 2. The development of the welfare state, health legislation and the political process …………………………………………………………… 216 3. Health legislation, development policies and international influence .. 227 4. Health legislation and the role of the state in Chile …………………… 233 5. The paradoxes of the law between legalisation and legitimitation and the Chilean case ……………………………………………………. 237 6. The fall of the welfare state in Chile ……………………………………. 245 Conclusion ………………………………………………………………….. 253 Bibliograph…………………………………………………………….......... 257 VIII THE RISE AND FALL OF WELFARE HEALTH LEGISLATION IN THE 20TH CENTURY CHILE: A CASE STUDY IN POLITICAL ECONOMY OF LAW PRESENTATION AND INTRODUCTION The dissertation examines how economic and political variables have shaped different legal transformations in a country that has experienced significant and paradigmatic changes in health legislation. I will provide accounts of health legislation and health reforms with respect to the various interests they uphold, seeing people not as autonomous individuals but as actors in specific social locations and relationships. I am interested in law as a process, as a movement that occurs in the context of the historical development of Chilean society, where the Rule of law, based on the liberal tradition, is tied to the modernizations of the 20th century. I will explore how the law and the legal system are embedded in the transformations of the health sphere and the different models of health care applied in Chile. In these chapters, law is understood as a system of rules; namely, legislation, decrees-laws and government regulations. My research also includes governmental policies, as these offer useful insight into the legislation under examination. For the purpose of this study, I do not consider any jurisprudence or court decisions. Health reform is defined as a process that introduces regulatory changes in the health field; it is a product of the interplay of interests. It is ultimately reflected in the resulting discourse, policy implementation and legislation. 2 I intend to apprehend law in “its transformational state through a focus on actors, norms, and processes”1 and analyze legislation as the result of the interaction between different stakeholders in the political, ideological and economic process of lawmaking. I will pay attention to how power is distributed and how conflicts are resolved. Through this case study, I study if and how lawmaking and the Rule of law can be multifaceted and fulfill different roles. The Rule of law,2 as an expression of politics in its broad sense, and lawmaking, as the outcome of

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