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Multisource financing of health and social care

Country: 
Finnland
Partner Institute: 
National Institute for Health and Welfare (THL), Helsinki
Survey no: 
(16)2010
Author(s): 
Keskimäki, Ilmo
Health Policy Issues: 
Rolle Privatwirtschaft, Organisation/Integration des Systems, Finanzierung, Zugang
Current Process Stages
Idee Pilotprojekt Strategiepapier Gesetzgebung Umsetzung Evaluation Veränderung/Richtungswechsel
Implemented in this survey? ja nein nein nein nein nein nein

Abstract

A review commissioned by the Ministry of Social Affairs and Health addressed the impacts of multisource financing of the Finnish social and health care system, its economic and service system consequences, and alternatives for resolving the problems. The review proposed a reform assigning the responsibility to organise and finance services to 12-15 regional organiaations managing all public funding for services coming from the municipalities, central government and national health insurance.

Purpose of health policy or idea

In Finland, social and health services have traditionally been financed through several sources. The most important financers are the municipalities, the state, households, the Social Insurance Institution, employers and private insurance companies. During the last two decades several Finnish and international experts have, in their assessments of Finnish health care, underlined the inefficiency and dilemmas related to cost shifting caused by the multisource financing system.


In the Government programme issued in 2007, the current Government launched a service innovation programme for health and social care and defined that one of its tasks is to review the multisource financing system. Accordingly, in 2010, the Ministry of Social Affairs and Health commissioned the National Institute for Health and Welfare (THL) to review the following questions regarding the multisource financing system: 1) what are the impacts of the multisource financing on social and health care?, 2) which of these impacts are most commonly occurring, and most important in terms of their economic consequences and functioning of the service system?, and 3) what are the main features of the most important alternatives to resolve the problems indicated in the review and what are the strengths and weaknesses of these alternatives?


The review was carried out by an expert group appointed by THL. The expert group interviewed several health and social care experts and evaluated earlier assessments of the multisource financing in social and health care that were carried out during the last 20 years. In addition, the review employed the most recent international comparative research on health care financing.


The review identified several advantages, disadvantages and developmental challenges in the current multisource financing system of social and health services.
The expert group argued that the multisource financing system offers several benefits for service users. It brings about earmarked funding to the service system and the system boosts freedom of choice for the solvent customers. It increases the supply of private services and offers possibilities for extra income to medical doctors working in the public sector. In addition, the employed are offered occupational health services flexibly and without costs.


The expert group considered, however, that the disadvantages of the multisource financing system are clearly more prominent than its advantages. For instance, the group claimed that the financing system supports overlapping supply of services particularly in occupational and primary health care, creates oversupply particularly in diagnostic and curative services, involves problems with the availability of personnel, and increases the inappropriate use of services and overall expenditures. It encourages transferring the responsibility for services and expenditures from one financer to another and creates inefficiency in the service system. Moreover, the multisource financing system maintains inequalities between regions and population groups. The expert group also claimed that multisource financing delays the implementation of major social and health policy goals, such as the integration of social and health services, balanced development of basic and specialised services, and the change of focus from inpatient to outpatient care and from curative to preventive measures.


As a result of the review, the expert group suggested two-level measures to develop the financing system of health and social services:

1) a reform of the whole financing system, and 2) partial reforms on the interface between different financing sources. While the main focus of the review laid on evaluating the multisource financing system, the expert group did not elaborate the reforms they proposed but only described the main ideas. Considering the reform of the whole financing system the expert group criticised models based on centralising the responsibilities to finance and organise social and health services within a single national organisation. This was recently proposed by other experts, but according to the expert group these models would take the decision-making power too far away from the municipalities, as well as from the users of services. This would create monopsonistic markets in social and health care.

Unlike these models, the expert group proposed that the reform of the financing system for social and health care should be based on the following principles: 1) the responsibility to organise and finance health and social services should lie on about 12-15 regional organisations with a population basis of 200 000 at a minimum, 2) all public funding for social and health care (raised from municipal taxes, central government subsidies and health insurance reimbursement, as well as the patients' out-of-pocket payments), should be gathered to these regional organisations which are responsible for organising and financing health and social services for their designated areas, and 3) the funding follows the users of services from the organising and financing organisations to the providers. The group also proposed that at least two regional pilots with a large enough population basis should be launched on social and health care financing and organising, as soon as the principles of the reform are decided.


The expert group stated that the partial reforms they presented to reform the interface of different financing sources are part of the total reform they proposed. These partial reforms include measures, such as 1) abolishing public health insurance reimbursement for the employers on occupational health services which they are not legally obliged to organise, 2) abolishing public health insurance reimbursement on private health care services,  3) assigning the responsibility for financing outpatient pharmaceuticals to the same regional organisation as the other health care services, and 4) assigning the responsibility to finance and organise dental care, medical rehabilitation and psychotherapy services to the same regional organisation as the other health care services. Among other, the reforms proposed would effectively mean dismantling the national health insurance run by the Social Insurance Institution and assign its functions to the 12-15 regional financing bodies.


As a conclusion, the expert group claimed that their review demonstrated that just minor partial reforms aiming to mend the black spots of the current financing system are not sufficient to abolish the disadvantages of multisource financing. The disadvantages can only be solved by reforming the whole financing system of the social and health care system. The group also stated that financing social and health services cannot be addressed separately from the organisation if the services, but the responsibility for financing and organising social and health care should be reformed simultaneously.

Main points

Main objectives

In 2010, the Ministry of Social Affairs and Health commissioned the National Institute for Health and Welfare (THL) to review the following questions regarding the multisource financing system of social and health services in Finland:

1) What are the impacts of the multisource financing in social and health care?

2) Which of these impacts are the most common, and most important in terms of their economic consequences and functioning of the service system?

3) What are the main features of the most important alternatives to resolve the problems indicated in the review and what are the strengths and weaknesses of these alternatives?

As a conclusion of the review, the THL expert group proposed a reform of the financing and organisation of health and social services. The reform would 1) assign the responsibility to organise and finance health and social services to about 12-15 regional organisations with a population basis of 200 000 at a minimum, 2) gather all public funding for social and health care to these regional organisations, and 3) organise the funding of social and health services according to the principle that funding follows the users of services from the organising and financing organisations to the providers.

Type of incentives

The proposed reform would assign the responsibility to organise and finance all publicly funded health and social services to a network of regional bodies which would have all public funding for the services at their disposal. This is expected to abolish the incentives of cost transferring brought in by the multisource funding. Moreover, it would potentially increase capacity to coordinate health and social care, as well as publicly and privately produced health services. Moreover, the proposed principle of funding following the user of services would create a strong incentive for service providers to improve access to and quality of services.

Groups affected

All stakeholders in social and health care, Providers (public and private), Municipalities

 Suchhilfe

Characteristics of this policy

Innovationsgrad traditionell recht innovativ innovativ
Kontroversität unumstritten recht kontrovers kontrovers
Strukturelle Wirkung marginal fundamental fundamental
Medienpräsenz sehr gering recht hoch sehr hoch
Übertragbarkeit sehr systemabhängig recht systemabhängig systemneutral

If the multisource financing of Finnish health and social care would be reformed according to the principles proposed by the expert group this would imply a fundamental change in the financing and administration of the service systems, as a network of powerful regional financing and organising bodies would be established. It would also challenge the current system of local government by dismantling the role of municipalities in health and social services constituting nearly half of the municipal budgets.

Political and economic background

The multisource financing of health services in Finland has been criticised for a long time and many experts have repeatedly pointed out its negative consequences, which were reviewed in the expert group's report as well. In the programme of the current Government the review of the multisource funding was, however, listed, obviously due to the fact that critical views on the multisource financing system have gradually gained support. The multisource financing also is increasingly considered as partly blocking other reforms of health and social care. Generally, it is anticipated that the reform of the health and social care financing will be one of the central issues in the negotiations of the next Government's programme after the general election in April 2011.

Change of government

The review on financing was listed in the Government's programme.

Purpose and process analysis

Current Process Stages

Idee Pilotprojekt Strategiepapier Gesetzgebung Umsetzung Evaluation Veränderung/Richtungswechsel
Implemented in this survey? ja nein nein nein nein nein nein

Origins of health policy idea

The criticism of the multisource financing of the Finnish health and social care has repeatedly been presented by Finnish and international experts since the 1980s. Similarly, several experts, think tanks and stakeholders (including the the Finnish Innovation Fund (SITRA), the Social Insurance Institution, and the Finnish Medical Association) have proposed health and social care reforms which have also comprised a reformed financing system which addresses the flaws of the multisource financing.

Initiators of idea/main actors

  • Regierung: The review presented in the Governent's programme and commissioned by the Minister of Health and Social Services.
  • Leistungserbringer: Their views vary; private providers are opposed due to changes in occupational care financing, but some public providers are supportive.
  • Andere: Employer organisations and trade unions will probably oppose the proposed decrease in health insurance reimbursement for occupational health services.

Approach of idea

The approach of the idea is described as:
renewed: Several proposals on reforming multisource financing have been presented since the mid 1990s.

Stakeholder positions

The Government and the political parties have not yet taken any positions regarding the expert group proposals. Most stakeholders´ comments have been positive, acknowledging the results of the review on the flaws of the multisource funding. The proposals of the expert group regarding the reform of the financing system are not very precise. The public criticism of the expert group's work has mainly focused on the proposal to decrease social insurance reimbursement for occupational health services.

Actors and positions

Description of actors and their positions
Regierung
Cabine partiessehr unterstützendneutral stark dagegen
Leistungserbringer
Public providerssehr unterstützendunterstützend stark dagegen
Private providerssehr unterstützenddagegen stark dagegen
Andere
Employer organisationssehr unterstützenddagegen stark dagegen
Trade unionssehr unterstützenddagegen stark dagegen

Influences in policy making and legislation

The reform of the current financing system would imply considerable changes in legislation. The process would take a long time. The launch of the reform depends on the negotiation of the next Government's programme after the Parliamentary elections in April 2011. In general, a reform of the financing system has wide support, but views on the reform vary among major parties. For instance, some representatives of the Central Party (which is currently the Prime Minister's party) have spoken for a more centralised financing system based on one national health and social care financing agency.

Legislative outcome

n/a

Actors and influence

Description of actors and their influence

Regierung
Cabine partiessehr großgroß kein
Leistungserbringer
Public providerssehr großgroß kein
Private providerssehr großneutral kein
Andere
Employer organisationssehr großgroß kein
Trade unionssehr großgroß kein
Public providersCabine partiesPrivate providersEmployer organisations, Trade unions

Positions and Influences at a glance

Graphical actors vs. influence map representing the above actors vs. influences table.

Adoption and implementation

The expert group's proposal is about the principles of the financing reform and about starting a comprehensive preparation of the reform. If the reform is launched, it will change the financing and administrative structures completely, not only in health and social services but in all municipal sector and in local governments as well.

Monitoring and evaluation

Not yet relevant.

Results of evaluation

Not yet relevant.

Expected outcome

It is very difficult to foresee what the decision regarding the health and social care financing reform will be. The pressure to start a financing reform is propably higher than ever since the early 1980s, and the need for abolishing the multisource financing is widely recognised. However, the present system involves vested interests with major stakeholders, such as reimbursement for occupational health services among employer and employee organisations, and large autonomy of decisions concerning health and social care among muncipal decision makers, which may block any reforms of the financing system.

Impact of this policy

Qualität kaum Einfluss neutral starker Einfluss
Gerechtigkeit System weniger gerecht System gerechter System gerechter
Kosteneffizienz sehr gering high sehr hoch

There is a wide consensus that the multisource financing in Finnish health and social care has many unfavourable consequences, such as inequities in access to care and irrational incentives in decision making. If a reform group is launched that complies with the principles proposed by the experts, it would potentially have a favourable influence on both equity, as well as cost-efficiency of the health and social care system. 

References

Sources of Information

Pekurinen M, Erhola M, Häkkinen U, Jonsson PM, Keskimäki I, Kokko S, Kärkkäinen J, Widström E, Vuorenkoski L. Sosiaali- ja terveydenhuollon monikanavaisen rahoituksen edut, haitat ja kehittämistarpeet (Advantages, disadvantages and developmental challenges in the multisource financing of social and health care, in Finnish with English summary). National Institute for Health and Welfare, forthcoming 2011.

Author/s and/or contributors to this survey

Keskimäki, Ilmo

Empfohlene Zitierweise für diesen Online-Artikel:

Keskimäki, Ilmo. "Multisource financing of health and social care". Health Policy Monitor, January 2011. Available at http://www.hpm.org/survey/fi/a16/1