Federalism and the "New Politics" of Hospital Financing (Essay‪)‬

1 Federalism and Health Care Reforms In comparative welfare state literature there is consensus that federalism hinders welfare state expansion (Obinger et al. 2005: 3). There is empirical evidence that social policy spending is lower in federal states than in unitary states (e.g. Castles 1999; Huber et al. 1993) and that welfare state development was delayed by federalism (Kittel et al. 2000). Newer research focusing on institutional aspects of federal welfare states to explain the relationship between federalism and low welfare spending draws a more sophisticated picture. Federalism was a major barrier in the phase of welfare state consolidation in federal nation-states where democracy was established at an early stage, but not in federal nation-states where welfare state consolidation preceded democratic consolidation. In the latter, social policy evolved at the national level from the beginning, whereas in the former, social policy was initially the concern of the constituent states, and the bottom-up evolution of the welfare state was hindered by political structures that produced veto points and limits on the possible course of action (Leibfried et al. 2005: 318ff). Given this important role of federalism in the early days of the welfare state, the question arises whether the "silver age" is equally influenced by federalism. In the literature there is no consensus as to whether federal institutions boost or impede welfare state transformation. The veto player theory would suggest that fragmented interests block reforms and so preserve the status quo. Comparative research findings support this thesis but "as in the era of the 'old polities', much depends on context, including country-specific institutional settings, policy structures and actor constellations." (Leibfried et al. 2005: 332)