6.1. Analysis of recent reforms

Over the past 20 years, the expert, political and public criticisms of the Finnish health system have grown stronger. According to the analysis performed by a working group appointed by the MSAH in 2012, the main weaknesses of the system were: inequitable service structure; poor performance of primary health care; a fragmented system; lack of overall responsibility in care management processes; weak stewardship; inefficient cost containment; and incompatible and poorly used ICT applications (MSAH, 2011).

While there have been several attempts to implement a fundamental reform of the municipal health system, several factors, such as the lack of a clear vision, difficulties in forming political consensus, the weak position of the central Government, decentralized decision-making, and a number of vested interests in the health system, have delayed the envisaged reform. Proposals have been heavily influenced by party objectives and political power, which is divided between the Centre Party (with its main support base in small, mainly rural, municipalities) and the National Coalition Party, the Social Democrats and the Greens (with more support in large urban municipalities).

The reforms that have taken place in the past decade have largely been incremental and mainly focused on modifying existing features without fundamentally changing the structure of the health system (Box6.1). These included changes in the social insurance system to achieve incremental inflation of reimbursement rates, which currently cover only about one sixth of the costs for the use of private services. However, a more fundamental reform has been high on the political agenda, with three core aims: centralization of the organizational structure, containment of costs and integration of health and social care.

Box6.1

Centralization as a key aim in reforming health services and administration

After a deep economic recession of the early 1990s, municipalities displayed wide differences not only in terms of economic development, but also in terms of health and welfare services provision. Differences in access to GP services were particularly tangible, especially as health centres in rural areas struggle to recruit doctors. In response, soft policy measures were initially introduced. These included a national programme to develop health services in 2001, which was followed by a more assertive policy instrument, a law guaranteeing access to specific health services within defined maximum time limits (see Vuorenkoski (2008) for more details).

By the mid-2000s, the focus of concerns shifted from the health system to broader structural issues that posed challenges to municipalities. The Government at that time (comprising the Centre Party, the Social Democrats, and the Swedish People’s Party) focused specifically on demographic changes and resulting regional disparities. Rural areas were rapidly ageing while the working-age population was getting more concentrated in the region around the capital, Helsinki, and other growing cities. There were concerns about the increasing financial difficulties faced by many municipalities and the growing need for health and social services because of the ageing of the population in many areas.

Resulting from these concerns, two major reform attempts followed. In 2005, the Government set up the Project to Restructure Municipalities and Services (Vuorenkoski, 2008). The purpose of the planned public sector reform was to create a firm structural and financial basis within municipal services so that the organization and provision of services would also be secured in the future. The project concerned all services organized by municipalities, not only health care.

In 2007, the Parliament approved the Act on Restructuring Local Government and Services (169/2007), which defined the implementation of the Project to Restructure Municipalities and Services (Kokko et al., 2009). The act stated that organizational responsibility for primary health care and social services closely related to health services should be organized by entities covering at least 20 000 inhabitants (only a quarter of entities at a time). This, however, did not result in merger of small municipalities, but rather in a joint mechanism to provide health and social welfare services. At the same time, the funding still remained the responsibility of individual municipalities.

After the parliamentary elections in 2011, a broad majority Government was formed, comprising parties from the centre-right National Coalition Party, and five centre and left-wing parties (the Christian Democratic Party, the Swedish People’s Party, the Green Party, the Social Democratic Party and the Left Alliance). The new Government included the municipal and health and social care reforms among its main objectives and drew up a plan to strengthen municipalities to enable them to organize all health and social services, including basic specialized health care, for their residents.

While the major objectives for the planned reform remained the same as in the earlier reform attempts (i.e. balancing the service structure by strengthening services particularly in health care, integration of health and social services in terms of administration, budgeting and provision, and strengthening national stewardship), the means anticipated to achieve these objectives were different. The focus of the reform was changed from an attempt to boost collaboration between municipalities to a more or less radical reform and mergers of municipalities as a platform for establishing a new and more centralized structure for public services.

The new blueprint for health and social care reform was based on the establishment of five overarching regional units for organizing health and social services (thus reducing the number of authorities responsible for organizing health and social services from 170 to five). However, the funding system would have remained the same, without any major changes to municipal finances in terms of health and social services. The proposal was rejected by the Constitutional Law Committee due to conflicts with the Finnish Constitution regarding the autonomy of municipalities in terms of decision over their finances.

Due to the very decentralized organization of health and social care as well as most other public services, it has been challenging to implement any major reforms without implications for the role of the local governments. Such arrangements, together with the constitutionally very strong position of the municipalities, mean that finding a consensus on feasible policy solutions has proved very difficult. This has resulted in a series of failed reform attempts (Box6.2).

Box6.2

Patient choice

One of the means believed to promote patient empowerment and patient-centredness has been the introduction and further expansion of choice and competition policies. In 2009, the Act on Service Vouchers in Social and Health Care introduced the choice of provider in publicly financed health and social services (vouchers have been used in social services since 2004). The Act enabled municipalities to produce vouchers for patients, which could then be used to purchase a health care service from a selection of private providers. The value of a voucher is determined by municipality. Providers can set their prices; however, municipalities determine the maximum price providers can charge, or select providers through public tender. The overall aim of the Act was to provide patients with a choice between public and private providers. In addition, it aimed at improving private providers’ ability to deliver publicly funded services. Data on the use of vouchers are limited. However, it seems that vouchers have been used mostly in home care and home help services for older people, while their use in health care has been marginal (Sotkanet, 2019). Service vouchers were also piloted in preparation for the health and social care reform in 2017–2019. However, it is difficult to draw any general conclusions on the applicability of vouchers in the Finnish health and social care from the results of these pilots (Owalgroup, 2019).

The 2010 Health Care Act broadened patients’ ability to choose primary care provider and hospital in the municipal health care system. The Act enabled residents to change their primary care provider within or between municipal primary care authorities and to choose a hospital for treatment. Each municipal resident is registered with a primary care unit based on where they live, but the 2010 Act allowed to change primary health care unit once a year. Patients can choose between municipal health centres and private primary care provider contracted by the municipality. Still, in primary care choice remains fairly limited by the availability of providers and one change per person per year. Choices are not restricted geographically, i.e. patients can also choose a primary care unit outside of their municipality of residence. In hospital care the choice is also not restricted geographically, but the decision has to be made jointly with the referring doctor.

Public procurement and competition

In Finland, public procurement policies have been stricter than requirements set by EU regulations. The Public Procurement Act was revised in 2010 and again in 2016 to allow for more flexibility for social and health service contracts. As a result, procurements of up to €400 000 in value are now more flexible, but this threshold is still lower than that of EU regulations, and exceptions for NGOs do not apply.

Due to the complicated public procurement obligations, municipalities often struggled to ensure sufficient knowledge and expertise on the process itself, and on dealing with court cases and complaints. Therefore, they called for a change in the implementation of the procurement law and return to public provision of municipal services (Eronen et al., 2013).

Containment of pharmaceutical costs

Generic substitution in Finland was introduced in 2003. Since then, pharmacies are obliged to substitute a prescribed medicinal product that costs more than a defined maximum price (reference price) with a product with the same active substance that costs less than the limit (see section 2.4.4). In 2009 another cost-containment measure – reference pricing for pharmaceuticals – was introduced in health insurance reimbursements. E-prescription has been implemented in stages since 2012. By 2017, all health care providers had to join the e-prescription system and provide prescriptions electronically, except for emergency situations or technical issues. In 2013–2017, a series of measures were introduced to lower the public share of pharmaceutical expenditure (see below), together with piloting a clawback system (see section 2.4.4) and lowering of reference prices.

Several other measures have been implemented in recent years to contain medicine reimbursement costs for the NHI. However, these shifted the financial burden on households, by increasing the share of out-of-pocket payments. In 2013, basic reimbursement level was lowered from 42% to 35%, and was increased to 40% in 2016; the lower special reimbursement level was reduced from 72% to 65%. At the same time, the wholesale price of drugs not belonging to the generic substitution system was lowered by 5%. The ceiling for annual out-of-pocket spending on reimbursable medicines was lowered over several stages in recent years – from €720 in 2013 to €572 in 2018–2019. In 2016, the initial annual deductible of €50 was introduced into the reimbursement system. Alongside, the co-payment in the 100% reimbursement category was increased from €3 to €4.50 and the co-payment beyond the annual ceiling was increased from €1.50 to €2.50. In 2017, the reimbursement level of oral diabetes drugs was lowered from 100% to 65%, but insulin products stayed within the 100% category.

From January 2017, a prescription can be valid for a maximum of two years (previously one year).The prescribing physician can, however, decide that prescription is valid for a shorter time. Very expensive drugs (over €1000 per package) can be prescribed for a maximum treatment duration of one month at a time.

Increase in user fees for health services

Two major changes concerning user fees have taken place over the past decade. First, in 2008, the Law on User Fees in Health and Social Care was changed to allow an automatic biannual increase to reflect health and social care service price index. This led to a steep (17% on average) increase in user charges in 2008, and ongoing increases every two years. In 2015 and 2016, user fees were further increased by 9% and 28% respectively, in addition to the index increases. User fees for 2019 are shown in Table3.3.

Table3.3

Tackling efficiency

In 2013, the MSAH issued the Decree on Criteria for Acute Care and Specialty-specific Prerequisites for Emergency Services as a measure to improve quality and efficiency through centralizing services in larger units. The Decree defined, among other things, a minimum number of cases for providers of emergency services. In 2017, this was followed by the Decree on the Centralization of Specialist Services and an amendment of the Health Care Act regarding 24/7 on-call surgical services. These changes centralized full emergency services covering all specialties in only 12 hospitals (five university clinics and seven central hospitals) and set the requirements for the availability of key personnel, such as anaesthesiologists, radiologists and midwives. In addition, the Decree sets the minimum number of deliveries (1000), which is quite high: in 2018 this number was not reached in central hospitals of five hospital districts. Hospitals that do not reach the minimum volume requirements are not permitted to provide 24/7 on-call surgical services; therefore, they have to shift provision towards less demanding, typically conservative secondary level and rehabilitative services covering a limited number of specialties. In a fairly dispersed country such as Finland, this may have adverse access implications for people living far away from major centres.

Relaxing alcohol control

The New Alcohol Act (2017) was a step towards liberalizing the Finnish alcohol policy. The law increases the limit of volume of alcohol in beverages sold in retail stores to 5.5% (from 4.7% previously). The legislation also relaxed many other restrictions aimed at decreasing the availability of alcohol, such as allowing discount advertisements, liberalizing licensing, extending opening hours for restaurants, bars and small breweries. The law was criticized by public health experts due to the anticipated impact of increasing alcohol consumption on population health. In the first year after the reform, there was a 0.4% increase in alcohol consumption, reversing a decade-long decreasing trend (THL, 2019a).