Costa Rica’s Balancing Act: Social Welfare Programs and Neoliberal Policies

By Zavi Engles

In 1948, Costa Rica abolished its standing military in favor of diverting funds to create and sustain a universal health care system for all of its citizens. Throughout its history, the country has managed to cultivate a collective system of health care that all citizens contribute to and benefit from. Having recently spent six weeks in Costa Rica for an intensive public health program, I became familiar with the universal health care system and also witnessed some of the changes that indicate a possible shift in priority in governmental policy.

For a variety of reasons dating back to the pre-colonial era (such as experiencing less brutal Spanish exploitation than its neighbors), Costa Rica has maintained impressive political and social stability, as well as health indices on par with more developed countries, such as the United States and Canada. Such successes are even more remarkable when one considers Costa Rica’s location in an area infamously plagued by political corruption, often-violent regime change, devastating wealth gaps, and rampant extortionist and paternalistic interferences by the United States. Though Costa Rica’s stable situation arose from a complex set of circumstances, such stability is in large part attributable to a governmental commitment to satisfy essential needs, including health care.

In 2004, after a contentious and very public period of debate, Costa Rica became the last country to sign onto the Central American Free Trade Agreement (CAFTA), surrendering its economy to the benefits as well as the risks of free market capitalism. Further, in 2009, Costa Rica was again the last country to sign onto CAFTA-DR, an extension of CAFTA that will abolish tariffs on 80 percent of US exported goods. Such a change in economic policy implies that Costa Rica’s popular and longstanding support for social programs may be waning in favor of neoliberal practices that, when implemented in other countries, have been shown to widen the wealth gap and, in turn, make the poor even poorer while the rich get richer. As a result, especially in light of the enduring international economic downturn, Costa Rica is beginning to resemble its neighbors, in regards to the worsening internal economy, increasing dependence on foreign benefactors, and growing sensitivity to fluctuations in the global economy.

Though not directly impacted by CAFTA, Costa Rica’s universal health care system has been suffering in recent years, particularly from financial woes and worker strikes. Private health care providers (which have always been an option for Costa Rican citizens) have been gaining more influence in their calls for the privatization of the health care system. In addition, Costa Rica’s current president, Laura Chinchilla, is a fiscal conservative who has been continuing the country’s pro-free trade policies. It is true that Costa Rica has never been solely a welfare state and in the past has accepted structural adjustment programs (SAPs) and other neoliberal policy interventions. However, the government has always kept its longstanding commitment to social welfare programs even in times of economic recession. With increasing pressure to adopt neoliberal policies from both internal and external sources, this commitment threatens to erode.

However, it is possible that Costa Rica may eventually find a balance between its new neoliberal economic policies and its longstanding social programs. The health care system is referred to by all as the Caja, the Spanish word for a box with special funds that are collectively spent and contributed. The use of this affectionate term clearly shows the system’s continuing relevance and popularity in Costa Rican society. Further, President Chinchilla and the new director of the Caja, Ileana Balmaceda, have recently been working closely together, especially on improvement of the Caja’s services. Though it may seem paradoxical to offer universal public health care in an increasingly capitalist, neoliberal society, perhaps Costa Rica will eventually forge a balance between the two, thereby maintaining its commitment to the health and wellbeing of all of its people. 

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