Social Protection under Authoritarianism: Politics and Policy of Social Health Insurance in China Xian Huang Submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the Graduate School of Arts and Science Columbia University 2014 © 2014 Xian Huang All rights reserved ABSTRACT Social Protection under Authoritarianism: Politics and Policy of Social Health Insurance in China Xian Huang Does authoritarian regime provide social protection to its people? What is the purpose of social welfare provision in an authoritarian regime? How is social welfare policy designed and enforced in the authoritarian and multilevel governance setting? Who gets what, when and how from the social welfare provision in an authoritarian regime? My dissertation investigates these questions through a detailed study of Chinese social health insurance from 1998 to 2010. I argue and empirically show that the Chinese social health insurance system is characterized by a nationwide stratification pattern as well as systematic regional differences in generosity and coverage of welfare benefits. I argue that the distribution of Chinese social welfare benefits is a strategic choice of the central leadership who intends to maintain particularly privileged provisions for the elites whom are considered important for social stability while pursuing broad and modest social welfare provisions for the masses. Provisions of the welfare benefits are put in practice, however, through an interaction between the central leaders who care most about regime stability and the local leaders who confront distinct constraints in local circumstances such as fiscal stringency and social risk. The dynamics of central-local interactions stands at the core of the politics of social welfare provision, and helps explain the remarkable subnational variation in social welfare under China’s authoritarian yet decentralized system. This dissertation attempts to contribute to the studies of authoritarianism, decentralization and social welfare in the following aspects. First, in specifying the rationale, conditions and policy results of the interaction between Chinese central and local leaders in social welfare provision, the dissertation sheds light on how political leaders in an authoritarian regime with multilevel governance structure respond to social needs. The analysis of subnational politicians’ incentive structure and policy choices in social welfare provision, which are missing in most extant studies of authoritarianism and social welfare, demonstrates an “indirect accountability” built into the Chinese social welfare provision. This “indirect accountability”, evidenced by local leaders’ proactive accommodation of social and local needs through social policies, may partially account for the puzzling resilience and flexibility of Chinese authoritarian regime. Second, the dissertation demonstrates that social welfare expansion, in some cases, is not a result of democracy but of resilient authoritarianism. Social welfare is one tool employed by authoritarian leaders to maintain regime stability. The political motivation for social welfare provision is different in non-democracies—it is more directly from top-down pressure of maintaining order rather than from bottom-up demands as in democracies—but this does not mean that non- democracies provide less social welfare than democracies do. Furthermore, the dissertation highlights the multidimensionality of social welfare policy and the trade-offs that politicians face in distributing welfare benefits. It suggests that politicians, no matter in democracies or non- democracies, face similar policy trade-offs (e.g. coverage versus generosity) in social welfare provision and that they make policy choices on the different dimensions of social welfare – coverage, generosity and stratification– according to the specific institutional and socioeconomic constraints they encounter. It is the combination of these different choices that constitute the variation of social welfare provision observed cross countries and within countries. Table of Contents List of Figures……………………………………….…………………………………………....iii List of Tables ……………………………………………………………………………………..v List of Abbreviations……………………………………………………………………………..vi 1 Social Health Insurance in Contemporary China: An Overview .......................................................... 1 1.1 Building Blocks of the Arguments .................................................................................................. 6 1.2 Research Design and Data ............................................................................................................ 22 1.3 Organization of the Dissertation ................................................................................................... 27 2 The Politics of Social Welfare Provision in China ............................................................................. 31 2.1 Introduction ................................................................................................................................. 31 2.2 The Center’s Interests and Strategies in Social Welfare Provision ............................................. 36 2.3 The Localities’ Interests and Strategies in Social Welfare Provision ......................................... 45 2.4 The Politics of Social Health Insurance Reform in China .......................................................... 50 2.5 Summary of Hypotheses ............................................................................................................. 57 Figures & Tables ..................................................................................................................................... 61 3 Expansion of Chinese Social Health Insurance: Who Gets What, When and How? .......................... 65 3.1 Introduction ................................................................................................................................... 65 3.2 Received Wisdoms: Political Economy of Social Welfare Expansion ......................................... 68 3.3 Pathway to “Universal” Social Health Insurance in China ........................................................... 71 3.4 Distribution of the Expanded Social Health Insurance Benefits in China .................................... 75 3.5 The Paradox: Welfare Expansion and Social Stratification .......................................................... 88 3.6 Conclusion .................................................................................................................................... 89 Figures & Tables ..................................................................................................................................... 92 4 Four Worlds of Welfare in China: Understanding Subnational Variation in Chinese Social Health Insurance ................................................................................................................................................... 110 4.1 Introduction ............................................................................................................................... 110 i 4.2 The Political Economy of Chinese Social Welfare: Received Wisdom ................................... 112 4.3 Social Welfare Provision in Authoritarian China: Theory and Hypotheses ............................. 115 4.4 Subnational Variation in Chinese Social Health Insurance: Empirical Analysis ...................... 121 4.5 Conclusion ................................................................................................................................ 132 Figures & Tables ................................................................................................................................... 135 5 Social Protection in Asia: Coverage, Generosity and Stratification ................................................. 145 5.1 Introduction ............................................................................................................................... 145 5.2 Social Protection in Asia ........................................................................................................... 146 5.3 Democracy, Globalization and Social Welfare ......................................................................... 151 5.4 Empirical Analysis .................................................................................................................... 160 5.5 Concluding Remarks ................................................................................................................. 171 Figures & Tables ................................................................................................................................... 175 6 Conclusion ........................................................................................................................................ 188 6.1 Summary of the Arguments and Findings ................................................................................ 188 6.2 Individuals’ Preferences for Redistribution in China ................................................................ 193 6.3 Public Opinion and Regime Stability in China ......................................................................... 199 Figures & Tables ................................................................................................................................... 206 References ................................................................................................................................................