The Micro-Foundation and Macro-Manifestation of the Eco-Welfare State: The Case of Public Healthcare and Environmental Taxation in 22 OECD Countries (1985-2010)

One way to rethink the welfare state is to look into how industrialized nations’ efforts to insure themselves against labor market risks are related with their activities to insure against environmental hazards. A strand of the emerging literature on the environmental state examines its linkage with the welfare state (Ian Gough 2016). This article presents one of the first efforts to examine the micro-foundation of such eco-welfare state and its macro-level manifestation, by looking at how national healthcare systems shapes individual’s environmental policy preference, which in turn underpins the strictness of environmental regulation in a country. Drawing on theoretical insights from the Varieties of Capitalism literature, especially its notion of institutional complementarity, this article argues that environmental protection and public healthcare, being functional equivalents, substitute each other in terms of reducing the financial burden of healthcare for citizens. This means while publicly funded healthcare system directly reduces the private costs of healthcare, environmental protection can achieve the same result, indirectly, by reducing citizens’ exposure to disease-causing environmental hazards and lowering the possibility of them falling ill in the first place. This argument generates two testable hypotheses: (1) At the micro-level, compared with their counterparts under private healthcare systems, individuals living in countries with public healthcare systems have less incentive to support environmental protection through the imposition of environmental taxation; and (2) At the macro-level, given that their citizens are less supportive of environmental taxation, countries having public healthcare systems tend to impose a lower level of environmental taxes, compared with countries with more privately oriented healthcare systems. The two hypotheses are supported by multi-level analysis of ISSP2006 and time-series-cross-section analysis of 22 OECD countries across 1985-2010. The findings of this article suggest the eco-welfare state may be conceptualized as the institutional complementarity between different types of healthcare system and environmental governance regime.