For the past few decades, many countries have been working towards providing "healthcare for all", including equity in access to healthcare and healthcare financing.
Thailand has declared equitable healthcare to be an integral part of its development strategy over many decades.
One flagship welfare programme was the 30-baht healthcare scheme implemented by the Thai Rak Thai Party in 2002. The 30-baht universal health coverage policy was often described by Thaksin Shinawatra with the slogan "30 baht treats all diseases".
Many political parties' policies have pushed Thailand towards a bigger welfare state, and the Move Forward Party (MFP) wants to enlarge that safety net following its victory in the national election earlier this year.
What is a welfare state?
A welfare state is committed to providing comprehensive and universal welfare for its citizens, mainly funded by tax revenue, to reduce disparities in accessing social services such as healthcare, education, pensions and unemployment benefits.
There are three types of welfare state regimes: liberal, conservative and social democratic.
The liberal welfare state relies heavily on the market for the provision of social benefits and services, with the state providing modest and restricted support only to those who cannot support themselves in the market. If people want better or more welfare, they need to buy it from insurance companies. This system is used in the US, UK and Thailand.
The conservative welfare state is distinguished by its "status-differentiating" welfare programmes in which benefits are often earnings-related and administered through the employer. This system is used in Germany, Italy and France.
A group of elderly people in Bangkok's Phra Nakhon district. The government has approved a budget of 87.5 billion baht, covering 11.03 million elderly people, for the old age allowance (OAA) programme. (Photo: Wichan Charoenkiatpakul)
The social democratic welfare state is characterised by universal and comparatively generous benefits, with the government as the absolute guarantor of social rights. This system is based on equal opportunity, regardless of employment, and is prevalent in Nordic countries that rely on high taxation.
The Nordic countries, which are considered to be pioneers of the welfare state, comprise the nations Denmark, Finland, Iceland, Norway and Sweden, as well as the autonomous territories of the Faroe Islands and Greenland, and the autonomous region of Aland.
The welfare that this region provides includes: a maternal grant; paid maternity leave to either parent for up to eight months; child support until the age of three, with free vaccination and basic health check-ups until the age of 16; free education up to the age of 16 with government subsidies for accommodation, transport and school supplies; scholarships up to university level; unemployment insurance; and an adequate retirement pension.
These benefits mean higher levels of taxation, which is reflected in high tax-to-GDP ratios. In 2021, Finland (20.6%) and Norway (26.2%) raised a high amount of tax revenue as a percentage of GDP from individual taxes, almost exclusively through personal income taxes and social security contributions. This compares with 14.3% of GDP from individual taxes in Thailand.
How is Thailand positioned as a welfare state?
The welfare provided by the Thai government is quite restricted because of a limited budget.
The welfare budget provided by the state in fiscal 2022 amounted to 848 billion baht, divided into civil servant welfare of 478 billion baht, representing 15.42% of the budget, and general public welfare of 370 billion, some 11.96%.
The cabinet approved a budget of 200 billion baht for the government's universal healthcare coverage programme in fiscal 2023.
Commonly known as the "Gold Card" programme, the scheme covers 47.7 million citizens who are not protected by contributions to the Social Security scheme in the private sector, nor the Civil Service Medical Benefit Scheme in the public sector.
The government approved a budget of 87.5 billion baht for the old age allowance (OAA), expected to cover 11.0 million elderly people.
The benefit level of the OAA is between 600 and 1,000 baht per month for people aged 60-69, which falls well below national and international poverty lines and is one of the lowest social pension benefits in the world, according to the World Bank.
Moreover, other social assistance programmes, such as the State Welfare Card, have lower benefit levels than the OAA.
As Thailand's demographics trend older, government spending will increase on pensions and medical expenses. The number of elderly people and the fiscal cost of caring for them is expected to increase until 2050, with the old age premium and the civil servant pension to increase from 1.8% of GDP in 2019 to 3.5% in 2050. Medical expenses are projected to increase from 2.8% of GDP to 3.5% over the same period.
How will the welfare be financed?
Over the past 20 years, in every general election for the House of Representatives each political party has presented welfare policies that require significant budget expenditure.
The feasibility of such policies is often questioned, and the campaign pledges made by the MFP, which is set to lead the proposed coalition government, are no different.
The party's policies cover five areas: raising the daily minimum wage to 450 baht, with a cap of 40 working hours per week and overtime pay for extra hours; free sanitary pads, lunch and transport for students; a 1,200-baht monthly child support grant, with maternity leave of up to 180 days; increasing the monthly OAA for the elderly to 3,000 baht; and housing loan subsidies of up to 2,500 baht per month for 30 years.
MFP deputy leader Sirikanya Tansakul estimates these policies will cost around 500 billion baht, an increase from the current budget of 90 billion.
The MFP told the Election Commission the budget for its welfare policies will be financed through reform of tax and revenue collection.
The party expects tax reform will increase government revenue by 650 billion baht per year.
The government's fiscal burden increased rapidly during the pandemic. In response to the crisis, the government issued two emergency loan decrees, enabling it to borrow 1.5 trillion baht to mitigate the economic impact of the pandemic.
As a result, public debt increased by 20 percentage points of GDP. At the end of September 2019, public debt was 41.1% of GDP, compared with 61.6% in April this year, leading the government to increase the public debt ceiling to 70% of GDP, from 60%.
Such a fiscal burden increases pressure on welfare budget allocation. If the debt escalates, some analysts believe it may affect the fiscal stability of the government, as well as the overall economic stability of the country.
Over the longer term, meeting higher projected spending needs while maintaining a sustainable public debt position will require an increase in public revenue.
Even though the government has taken steps to improve the efficiency of public spending, the fiscal deficit will exceed 8% of GDP with no tax reform, while the public debt will rise to unsustainable levels in the longer term, according to a recent World Bank report.
On the other hand, progressive tax reforms could collectively increase revenues by 3-4% of GDP, and public debt may drop below the current level.
Thailand's revenue level compared with its tax collection indicates there is still room to increase revenue by 5.6% of GDP, according to the report.
The World Bank recommended the Thai government raise the OAA to 2,000 baht per month for needy elderly, representing 86% of the international poverty line of 2,329 baht per month, or US$5.50 per day.
In addition, the benefits for the state welfare card should be increased from 200 baht (for cardholders with an annual income of less than 30,000 baht) and 300 baht (for an annual income of 30,000-100,000 baht) to 699 baht per month (which represents 30% of the international poverty line), alongside redefining eligibility criteria for wider coverage, said the bank.
