Currently, there is an open debate in the literature on the impact of political regimes on the implementation of what are termed social welfare policies from a historical perspective. In general, studies available consider democracy a positive influence on the application of welfare policies, although it has not been a decisive force. Historical analysis shows how dictatorships may have incentives to make concessions in the area of social policy, in order to win over the masses and legitimise their power. Nevertheless, even in these cases, redistributive measures in a dictatorial system are usually less effective than under democracy due to the greater capacity of elites to oppose and limit redistribution.
Within this context, our research focuses on how the Franco dictatorship – established in 1939 after a coup d´état in 1936 and a subsequent three-year civil war – used the introduction of compulsory sickness insurance (Seguro Obligatorio de Enfermedad; SOE) in 1942 as a basic tool of its propaganda and its political legitimation in two ways. First, it took advantage of the situation that public healthcare coverage was one of the schemes most demanded by the population, and was the only one of the four basic social risks that had not been legislated for in Spain prior to the Spanish Civil War. Second, the dictatorship excluded the existing public hospital system from the SOE and created its own hospital infrastructure. This was a grandiose plan which served as propaganda and provided a profitable line of business to construction company owners close to the regime. However, the scheme lacked an adequate state funding model that limited provisions and coverage. Also, a large part of the costs was transferred to workers in a context of low wages.
The limitations of the public healthcare system initially led to collaboration with the private sector; a trend that can be clearly seen in the hospital sphere, where the construction of large public hospitals (known as Residencias Sanitarias) was much slower than envisaged. Three factors lay behind this slowness. First, the extent of the dictatorship’s real interest in providing state-sponsored health insurance with sound and sufficient funding. Second, the funding limitations of a regressive tax system which prevented the allocation of public resources from this source to build hospital infrastructure. Third, the obsession of the Falange – the only legal political party during Franco’s dictatorship – with monopolising social policies excluded the country’s existing public hospital infrastructure from the SOE, as its administration was assigned to a Ministry belonging to another of the regime’s political “families”. Consequently, the National Healthcare Facilities Plan, a key element of the SOE, was funded by employers’ and workers’ contributions, and required the participation of private entities (insurance companies, private mutuals, large companies, clinics and hospitals, etc.) to provide (limited) services by means of collaboration agreements (see table below). Cooperation was especially focused on surgical operations and diagnostic tests, whereas general hospital care in Spain was not covered by public health insurance until the late 1960s.
Legal changes and healthcare provision
At the beginning of the 1960s, two legislative changes were intended to coordinate the existing hospital network at a time when the number of affiliated, provisions and coverage of the SOE were progressing slowly. However, the results of both a Social Security law (Ley de Bases de la Seguridad Social, passed in 1963, implemented in 1967) and a law on hospital coordination (passed in 1962, regulation came into force in 1972) were disappointing. The former did not establish universal membership and coverage of sickness insurance and it also failed in its initial aim to change the source of funding of the insurance, based on employers’ and workers’ contributions. This made serious funding problems inevitable in a country where wages remained much lower than in democratic Western European countries. On top of this, the Spanish state showed little interest in a greater financial commitment to the public health system under a regressive tax system of nineteenth-century origin. The social security law of 1963 also perpetuated the compatibility of public management of the Social Security with a system of mutual insurance based on not-for-profit bodies, targeting the liberal professions, civil servants and military personnel. Overall, the Basic Law on Social Security consolidated a watered-down and heterogeneous system – depending on social class and profession – of Social Security management intended to “harmonise” public and private interests, which led to fat profits for the private sector.
The second important legislative change of the 1960s was a law on hospital coordination, which was passed in 1962 and came into force in 1972. This law failed in its primary objective of coordinating the existing network of public hospitals in Spain in order to make them available for the SOE. This was due to the fact that the struggles between different ministries dependent on different political “families” to control social policies continued throughout the dictatorship. Nonetheless, the growth of the network of Residencias Sanitarias around the country, and improved resources in terms of personnel and clinical and surgical material, enabled a growing number of patients to be treated under the umbrella of the insurance, as shown in the table below.
Healthcare transformation in the last decades of the dictatorship
The increase of the healthcare and hospital coverage of the SOE in the late 1960s required an immediate transformation of Social Security hospitals, which had to stop acting merely as surgical centres and become general hospitals. The response to the new demands came about with the building of large healthcare complexes known as Ciudades Sanitarias – comprising a large central hospital and annexes for specialised services – and new public hospital complexes that were better equipped in both technological and therapeutic terms. This transformation took place along with economic growth and increasing urbanisation during a stage known as “developmentalist” (desarrollista).
The greater capacity and better resources of the public hospital network assigned to the SOE reduced the market niche of the private sector. As a response to the new situation, companies in the private sector were obliged to increase their size through mergers and acquisitions to enhance their capacity to renew human and technological resources within a framework of growing competition with a public health service providing increasing public insurance coverage and provisions. In this respect, it should not be overlooked that, in 1975 when Franco died, almost 62% of the Spanish population was covered by the SOE. By the end of the dictatorship, competition between public and private hospitals had increased, despite the serious financial problems of public healthcare, the shadow of corruption over its main management body, the lack of coordination of public hospitals and the failure to achieve universal coverage.
Professor in Economic History (University of Seville)
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Associate Professor in Economic History (University of A Coruña)
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