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Social welfare and healthcare reform

The Ministry of Social Affairs and Health - Finland

1st October 2015

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Present social welfare and healthcare system in Finland• Universal services• Public, tax-based funding• Local authorities (municipalities)

responsible for organising – primary healthcare, – specialised medical care and – primary social welfare for their residents.

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Objectives of Finnish health policy

• to reduce premature deaths • more healthy years of life without loss of

functional capacity• to ensure an optimal quality of life for all • to reduce health inequalities between

population groups

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Current situation: social welfare and healthcare services in mainland Finland

Healthcare services

• Municipalities (301 in total) are responsible for arranging health care services

• Hospital districts (20 in total) are responsible for specialised medical care. A municipality has to be part of a hospital district to arrange specialised medical care.

• 5 specific catchment areas are responsible for arranging highly-specialised medical care

Social welfare services

• Municipalities are responsible for arranging social welfare services

• Municipalities are members in joint municipal authorities of special welfare districts (15+2 in total) that arrange services for people with developmental disabilities.

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Hospital districts and special catchment areas

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Population 1970 Population 2007

Inhabitant per square kilometer Inhabitants per square kilometer

Uninhabited area Uninhabited area

Demographic forecast of the elderlyby age group, Finland

Source: Statistics Finland

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

65-74-year-olds75-84-year-olds85 and older

Number of inhabitants

Demographic dependency ratio forecast, Finland

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

2019

2022

2025

2028

2031

2034

2037

2040

2043

2046

2049

2052

2055

2058

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

PensionersChildren

Statistics Finland, September 2012

The ratio of children (0-14) and pensioners (65+) to working age population

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Challenges • Ageing population• Increased need for services due to multi-

morbidity• Urbanisation

– accumulation of social and health problems: poverty, unemployment, poor health, poor mental health

– 10% of the population is using 80% of social and healthcare resources

• Increasing inequalities• Increased demand for services because people

have access to information via new technologies

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Earlier preparation of the reform• Earlier version of the reform: five social welfare

and health service regions (joint municipalities) would be responsible for planning services

• Bill for a new Social Welfare and Health Care Arrangements Act, submitted to Parliament on 4 December 2014

• Statement of the Constitutional Law Committee: the Bill was against constitutional local autonomy principles →the Bill was dismissed

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The Constitutional Law Committee’s opinionThere is an acute need, from the perspective of fundamental social rights, to

–increase the efficiency of the social and health services–improve their integration–strengthen the carrying capacity of the organisers.

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Social welfare and health care reform in the new Government Programme• Prime Minister Juha Sipilä’s Government

Programme, published in May 27th 2015

• A strategic programme

• Social welfare and healthcare reform one part of the structural reforms needed

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Main objectives of the social welfare and health care reform

• reduction of health inequality and

• cost-efficiency.

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Government’s objectives for cost reduction• Government wants to reduce public costs

by EUR 4 billion in the long term– Social welfare and healthcare reform´s share

EUR 3 billion• Measures before reform include

– Reduction of cost differences in specialised health care

– Improving efficiency in the organisations of regional specialised health care (hospital districts)

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Ways to achieve the targets of reform

The reform will be executed through

• extensive horisontal and vertical integration• strengthening the economical carrying

capacity of the areas.

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Solution for arranging the services• Social welfare and healthcare (SOTE) areas,

autonomous areas larger than a municipality – Areas will be managed by elected councils– Maximum 19 areas

• SOTE area responsible for arranging the social welfare and healthcare services in it’s area– division of work between hospitals will be reviewed– part of the specialiced care will be centralised to

special catchment areas

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Financing1. Options for financing services via

municipalities or state will be investigated• Constitution must be respected

2. Proceeding into monochannel funding

• Budgetary framework for social welfare and healthcare services to ensure effective governance

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Production of services• SOTE areas

– produce their services– can buy services from companies or

organisations– or increase the use of service vouchers

• Indicators for efficiency and quality of services will be created

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Timetable• 10/2015 Government’s decision on the number

of areas and the main structure of funding• 12/2015 Decisions on steering of digital

solutions, coordination of investments and the principles of election

• 4/2016 Circulation of the new bill for comments• 10/2016 The bill will be presented to the

Parliament• 7/2017 Enactment of the new legislation• 2017 - 2018 Elections• 1/2019 New SOTE areas start

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Multichannel funding of social and health services

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Multichannel funding system

• Funding collected from several sources and targeted through many channels

• Funders: state, municipalities, households, the Social Insurance Institution, employers, private insurance companies– tax revenue, statutory and voluntary insurance

payments, customer payments• The funding can be directed to public or

private production of services

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Challenges for multichannel funding• Incentives inappropriate from the perspective of the

funding system– Incentives transfer costs from one funder to

another → partial optimisation creates a damaging effect

• Independent decision-making in different funding channels

• Overlap• Differences between regions and population groups in

respect of availability of services• Effects on the availability of personnel

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Possible means for the discontinuation of multichannel funding

• Multichannel targeting of funding a bigger problem than multiple channels in the collection of funding

• The goal is to reduce the harm by– reducing the number of various channels

involved in decision making– reducing the number of parties responsible for

funding and decision making– reducing the overlap between the various

channels

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Thank You! Further information:

http://stm.fi/en/service-structures