EurWORK European Observatory of Working Life

Finland: Major reform to healthcare and social services underway

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The Finnish government is preparing a major reform to health, social services and regional government which will make regional governments a new level of public administration. Healthcare and social services and public employment services will be transferred from local governments to regional governments.

Background

Social and healthcare services in Finland are the responsibility of local governments, but there has long been concern about the accessibility, fairness, efficiency and sustainability of the services. Due to the country’s ageing population, there is increased pressure to reform. However, successive governments have so far failed to accomplish significant changes to the organisation of the services.

The centre-right government of Prime Minister Juha Sipilä, in power since May 2015, has made healthcare, social services and regional government reform (sote-ja maakuntauudistus) as one of its main policy objectives. The reform will introduce regional governments as a new level of public administration, and social and healthcare duties are to be transferred from local governments to regional governments. The reform, planned to be implemented in January 2020, aims to reduce public spending by €3 billion by 2029. Initial proposals for the reform were rejected by Parliament as unconstitutional, but the government is preparing to resubmit legislative proposals to Parliament in March 2018.

Proposed contents of the reform

In the healthcare and social services part of the reform, perhaps the most significant element is the freedom of choice principle. According to this, the individual chooses their preferred provider of health and social services but pays the same fees regardless of the service provider chosen. This contrasts with the situation today, where private service providers, although subsidised, are significantly more expensive than public ones. Public services, meanwhile, are often under-resourced and heavily congested.

In connection with the freedom of choice, until summer 2017, the government had been promoting the idea that public social and healthcare services should be obliged to be corporatised, but this obligation has seemingly been dropped. A final key component of the reform is digitalisation, whereby a new ‘service ecosystem’ will integrate the information systems of various players and thus improve the accessibility of services.

The regional government part of the reform has fewer practical implications for citizens, and has therefore received less attention in public debate. However, two things are noteworthy about the proposed model. First, unlike local governments, regional governments will not have the power to raise taxes, and their financing will mostly come from central government. The independence of the regional governments is therefore limited, which some experts and stakeholders have warned might weaken democracy at the subcentral level. Second, the reform will entail the dismantling of the Centres for Economic Development, Transport and Environment (ELY Centres) and the current structure for public employment services (TE Offices). Instead, public employment and entrepreneurial services would be organised by regional governments and offered mainly by private players and corporatised public players.

Debate, criticism and controversy

Since its initiation, the reform has faced numerous complications. In the early stages of its preparation in autumn 2015, Prime Minister Sipilä threatened to resign because of the intra-government political stalemate regarding the number of regions to be created. Social and healthcare experts and the junior government partner, the centre-right National Coalition Party (Kokoomus), widely advocated a model of five regions. However, Sipilä’s Centre Party wanted 18 regions, as the party’s support base is in the countryside and is opposed to centralisation tendencies. The government finally ended up with 18 regions but, as a compromise, Kokoomus was promised a new law guaranteeing a patient’s freedom to choose their service provider.

In spring 2016, the government announced that the freedom of choice would necessitate the corporatisation of public social and healthcare services. While in the legislative proposal it is stated that the corporatisation obligation is a national political choice, in public, government representatives argued that EU competition law and the cross-border healthcare directive required corporatisation. The claim was contested by experts and analysts, who accused the reform of being heavily influenced by the private health business lobby.

Legislative proposals for the reform were submitted to Parliament in spring 2017. However, the freedom of choice element and the corporatisation obligation were rejected by the parliamentary Constitutional Law Committee, which found the proposed model unable to guarantee equal access for all citizens to social and healthcare services. The claim regarding EU legislation requirements was also dismissed. A new proposal, with the corporatisation obligation eliminated, is expected to be presented in March 2018.

Another concern, also raised by the Constitutional Law Committee, is the tight schedule of the reform. Legislative preparations for the reform have been criticised as hurried and careless, and problematic passages have been addressed with minimal changes. Furthermore, doubts have been expressed about the estimated cost savings of the reform; as the exact contents of the reform remain unknown, the Ministry of Finance has not been able to make exact calculations. As of July 2017, implementation of the reform has been postponed from January 2019 to January 2020, while the first regional government elections are to take place in October 2018.

The social partners are included and have shown themselves to be active in the preparations through various working groups and committees. Trade unions have been somewhat sceptical of the proposed model and underlined the importance of including social and healthcare staff in planning the reform. Blue-collar unions, in particular, have opposed the corporatisation obligation as it would reduce democratic control over the services. Meanwhile, employer organisations strongly support the freedom of choice as well as corporatisation, and were disappointed by the decision of the Constitutional Law Committee. However, social partners on both sides have been united on the need to preserve the current model of occupational healthcare.

Commentary

The reform is one of the Sipilä Government’s top priorities, and virtually all political parties and stakeholders agree that reform is necessary to secure the sustainability of social and healthcare services. It seems clear that the reform will be carried out in some form, and that it will have immense impacts on social and healthcare services and public employment services, as well as on the vast number of staff within such services. However, many questions, especially on the freedom of choice, will remain unanswered at least until 2018, and it is likely that the transition from the old to the new system will take several years.

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