Delegation, deregulation, and business power: a comparative analysis of health insurance in Belgium and France

Abstract

Business power is thought to increase over time when private actors are involved in the provision of public goods and services. This paper argues that this is partially true—and that in certain circumstances, state actors can even swiftly regain control of sectors previously ceded to private interests. When the latter fulfill some public functions on behalf or as delegates of the state, policymakers face ever greater pressures to sustain a relationship flawed by principal-agent problems—allowing business actors to derive appreciable political benefits. However, these conditions do not hold true after deregulation—when state actors retreat from a sector and attempt to direct the newly created market through licensing, norms, and standard setting. We demonstrate that deregulation sets the stage for a more competitive environment, making it harder for private interests to cooperate. This, in turn, can allow policymakers to enhance regulatory capacities and seize opportunities to highlight the shortcomings of private provision. After establishing this argument theoretically, we illustrate its implications through the comparative historical analysis of the health insurance sector in two European countries—Belgium and France. Despite their initial similarities, they experience contrasting developments regarding the welfare state’s dependency on private insurers for the provision of crucial collective goods.