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Public sector reform - a bill has been proposed

Country: 
Dänemark
Partner Institute: 
University of Southern Denmark, Odense
Survey no: 
(5)2005
Author(s): 
Michael O. Appel
Health Policy Issues: 
Public Health, Prävention, Pflege, Organisation/Integration des Systems, Politischer Kontext, Vergütung
Reform formerly reported in: 
Public sector reform and hospital management I
Current Process Stages
Idee Pilotprojekt Strategiepapier Gesetzgebung Umsetzung Evaluation Veränderung/Richtungswechsel
Implemented in this survey? nein nein nein ja nein nein nein

Abstract

This piece of reform has now entered a parliamentary legislative phase as the government has proposed a bill to parliament on 24th February 2005. The bill out-lines a reform of the administrative structure of the public sector, including the health care sector.

Neue Entwicklungen

 Suchhilfe

Characteristics of this policy

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

There is general consensus on the great importance of the proposed new structure of the public sector. And in terms of administrative inconveniences and challenges the merging of several counties is, without a doubt, going to have an impact on those employed at the counties. Looking at the main actors and their incentives it is less obvious that the reform involves any relevant change. The model is still to be classified as a public, integrated model.

Compared to the previous report on the proposal it is rated as less traditional: the particular financing scheme is a novelty in a Danish context.

The political divide on the issue between government and opposition parties has turned out to persist and not, as expected, just to be part of the tactics surrounding the negotiations. Consequently, the degree of controversy has been rated as more severe.

Purpose and process analysis

Current Process Stages

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

Initiators of idea/main actors

  • Regierung
  • Parlament
  • Leistungserbringer: Counties are to be replaced by Regions. Up till now the counties have owned and run the hospitals.
  • Wissenschaft: Researchers, who have been vocal on the issue, have predicted that the reform (in its current form) will result in a rising level of expenditure
  • Andere: Municipalities are to assume responsibility in some areas previously managed by the counties

Stakeholder positions

Following the report by the Commission on Administrative Structure (se report on Public sector reform and hospital management in report 03/2004) the government announced a reform-plan and subsequently conducted negotiations with the political parties in parliament. The negotiations revealed a fairly rigid divide between the centre-right government and the opposition parties on the issue. This process of negotiations was then interrupted when the government called for general elections to be held in February 2005. The announced goal was to get a popular mandate to carry on with its intended transformation of the municipalities and the counties (reducing the number and changing how they are financed). The government-parties won enough votes to retain power and has subsequently proposed a public sector reform-bill to parliament. At present the bill has been through the first (of three) parliamentary debates. The bill out-lines a reform of the administrative structure of the public sector, including the health care sector. The bill does not imply changes to the overall purpose of the public health care sector (as a by-product of the new structure the government also introduces a new bill for the health care sector - to be treated separately here).

The main changes are a reorganisation of the counties and a new system of financing the regions:

  • The counties are to be reduced in numbers and termed "regions" and in addition there is to be a new financing system of the regions.
  • The regions are to own and run hospitals and to contract with GP's (as did the counties)
  • The regions governing body is to consist of popularly elected politicians (as did the counties)
  • The voucher scheme which gives consumers a right to treatment at rival providers (private or public providers not owned by the counties/regions or providers in other counties/regions) if the waiting time exceeds two months public is to be continued. The implication is that the regions will be obliged to contract with those rival providers (as were the counties).
  • The regions will not have the capacity to impose taxes.
  • The regions are planned to be in operation on 1 January 2007.
  • The number of municipalities is to be reduced in numbers through a process of mergers. 
  • The new financing system implies that health care services performed by the regions will be financed through four separate types of contributions:

i) a state (central government) block grant based on objective criteria for expenditure need (in 2003 it would have been equivalent to app. 77 percent),

ii) a smaller state activity pool (to be at a maximum of 5 percent),

iii) a per capita contribution by the municipalities (in 2003 it would have been equivalent to app. 8 percent).

iv) an activity based contribution from the municipalities (in 2003 it would have been equivalent to app. 11 percent) for services rendered to citizens of the particular municipality. The fee varies with the particular service. For hospital somatic treatment the fee is set to 30 percent of a DRG-tariff, however with €530 as a maximum charge.

In addition, regarding the overall financing an earmarked tax is introduced.

There has been a general consensus regarding the appropriateness in reducing the number of municipalities and counties (or equivalently: increasing their size). The disagreements have been about how to allocate the portfolio of public sector assignments among the municipalities and regions and, in particular, how to finance the regions. The two parts of the proposed bill, which have attracted most of the criticism are:

a) The involvement of the municipalities in the financing of the region.

b) The fact that the regions will not be able to (or rather: not be obliged to) raise revenue through taxes. 



Regarding a): The municipalities contribution to the financing of health care treatment has been stressed in the bill as an instrument to improve the municipalities incentive to i) strengthen public health through preventive measures in the expectation of long-run savings, and/or ii) to offer more cost-effective alternatives perhaps even in the short run. This part of the bill has been heavily criticised by both university experts and opposition parties in parliament. Experts have stressed that municipalities do not have alternatives to hospital treatment in the short run, and that it would be an expensive option should they try to establish such alternatives. The policy implication is that the planned municipal co-financing should be abandoned. Opposition politicians have directed their criticism at the possibility that the potential saving for the municipality is too small for it to have any relevant effect. In that case the policy implication is to strengthen the incentive, possibly by way of increasing the municipal co-financing. 

The government has not explicitly answered the expert line of criticism except by way of reference to some existing municipalities, which have lower hospital admission rate than average. According to the Minister of Health the lower rate is achieved through the use of policy instruments (care for the elderly and home care) available to the municipalities.

As to the criticism from opposition parties the answer from the government has been an invitation to proposals that strengthen the municipalities incentive to promote preventive care.  

Regarding b): The fact that the regions will not be able to (or rather: not be obliged to) raise revenue through taxes has caused some experts and the Association of Counties to predict that the regions will raise the level of health care expenditures. Norway (and her recently introduced model with a regional structure somewhat similar to the one proposed for Denmark) has been used as an example to support this contention. The Association of Counties (who has been in fundamental opposition to the reform) has probably promoted this line of reasoning in the hope that it would appeal to the usually very potent Ministry of Finance. However, the MoF has only played a minor role in this process (due to particular and temporary circumstances: the Minister of Health enjoys a prominent position in the hierarchy and the present government got elected not least because of its promise to reduce waiting times for treatment), and opposition parties have had no incentive to appear as opposed to an increase in funding. Moreover: opinion polls appear to suggest that the public has an appreciative understanding of an increase in funding to health care.

In sum: stakeholder positions and alliances have remained fairly stable during the process.

Actors and positions

Description of actors and their positions
Regierung
Ministersehr unterstützendsehr unterstützend stark dagegen
MoH Bureaucracysehr unterstützendneutral stark dagegen
MoFsehr unterstützendunterstützend stark dagegen
Parlament
Main supporting partysehr unterstützendunterstützend stark dagegen
Socialdemocratssehr unterstützenddagegen stark dagegen
Parties left of Socialdemocratssehr unterstützendstark dagegen stark dagegen
Leistungserbringer
Association of Countiessehr unterstützenddagegen stark dagegen
Hospitalssehr unterstützendneutral stark dagegen
Wissenschaft
Researchers (health economists, political scientists)sehr unterstützenddagegen stark dagegen
Andere
Local Government Denmark (LGDK) (Local Authority Interest Association)sehr unterstützendunterstützend stark dagegen
current current   previous previous

Influences in policy making and legislation

The government initiated a Commission on Administrative Structure to come up with proposals but the government has subsequently been very selective in its use of the recommendations by the Commission. Potentially this could have become a polical liabilty but the broader public focus has on the change in the number of municipalities and counties, and that particular aspect has support in the Comission's work.

Following the original policy-proposal by the government and its main partner few concessions have been made to opposition parties or others.

One new aspect to the actual bill is that it puts heavy emphasis on preventive care. It clearly seeks to substantiate the proposed changes by that particular reference.

The specific financing scheme is also new.     

Legislative outcome

Enactment

Actors and influence

Description of actors and their influence

Regierung
Ministersehr großsehr groß kein
MoH Bureaucracysehr großsehr groß kein
MoFsehr großgroß kein
Parlament
Main supporting partysehr großgroß kein
Socialdemocratssehr großgering kein
Parties left of Socialdemocratssehr großgering kein
Leistungserbringer
Association of Countiessehr großgering kein
Hospitalssehr großgering kein
Wissenschaft
Researchers (health economists, political scientists)sehr großgering kein
Andere
Local Government Denmark (LGDK) (Local Authority Interest Association)sehr großgroß kein
current current   previous previous
MinisterMoF, Main supporting party, Local Government Denmark (LGDK) (Local Authority Interest Association)HospitalsMoH BureaucracySocialdemocrats, Association of Counties, Researchers (health economists, political scientists)Parties left of Socialdemocrats

Positions and Influences at a glance

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

Adoption and implementation

The bill is expected to be passed by parliament before summer. Implementation then follows. 

Expected outcome

Impact of this policy

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

The basic incentives of the existing public, integrated model are retained. Therefore litlle effect is expected.

References

Sources of Information

Unfortunately all sources available on the proposed bill are in Danish only.

MoH: Forslag til lov om regioner og om nedlæggelse af amtskommunerne, Hovedstadens Udviklingsråd og Hovedstadens Sygehusfællesskab (Lovforslag nr. L 65). [Proposed Bill on the establishment of regions etc.]    

MoH: Forslag til lov om regionernes finansiering (Lovforslag nr. L 71). [Proposed Bill on the funding of the regions]  

K. M. Pedersen: "Kommunal medfinansiering af Sundhedsvæsenet" [Municipal Co-financing of the Health care Sector], 2005, University of Southern Denmark Press.

Two sources in English on the period leading up to the proposed reform are:

K. Vrangbæk and T. Christiansen: "Health Policy in Denmark: Leaving the Decentralized Welfare Path?", Journal of Health Politics, Policy and Law, Vol. 30, Nos. 1-2, February-April 2005.

K.M. Pedersen: "The public-private mix in Scandinavia", ch. 9, p. 161-189, in A. Maynard (ed.): "The Public-Private Mix for Health", 2005, Cornwall, Radcliffe Publishing Ltd.

Reform formerly reported in

Public sector reform and hospital management I
Process Stages: Gesetzgebung

Author/s and/or contributors to this survey

Michael O. Appel

Empfohlene Zitierweise für diesen Online-Artikel:

Michael O. Appel. "Public sector reform - a bill has been proposed". Health Policy Monitor, 31/03/2005. Available at http://www.hpm.org/survey/dk/a5/4