Reform of the administration and funding of social affairs and health care in Finland

Lääketeollisuus ry

For years, a major reform of the social welfare and healthcare systems has been in preparation in Finland. The reform aims at equality of the population, integration of the care and significant cost savings.

The reform is necessary because the majority of the municipalities – the administrative level that shoulders the responsibility for social welfare and healthcare expenses – are too small to cope with the increased expenses brought about by the ageing of the population.

This is an ambitious reform, also by international standards: not only does it aim at a horizontal integration of primary healthcare and specialised medical care (including uninterrupted, integrated care pathways and rapid access to care) but also at a vertical integration in social welfare and healthcare (for example, persons with multiple problems, old-age care included in social services). The objective is to concentrate the functions under one direction at the regional level.

Model in preparation

PM Sipilä’s Government wants to introduce a Finnish social welfare and healthcare model where the responsibility would be shifted from the local municipal level to larger regional entities. The current aim is to have 15 such regional entities or SOTE (social welfare and healthcare) areas. The reform goes hand in hand with a more extensive regional government reform. The model envisages firm State-level steering. The constitution of the areas, i.e., the regional entities, is not yet clear.

The plan is based on the notion where public sector service production is separated from the organisation responsibility. Public and private services would enjoy equal status.  The reform also includes a funding reform (see below) and freedom of choice for patients, especially as concern the primary level services. Besides steering, the State intends to take a firmer grip on social welfare and healthcare expenses. The State steering mechanisms still need to be defined.

The Ministry of Social Affairs and Health is preparing the legislation so that the draft bill could be sent for opinions in April 2016 and for the parliamentary process in late 2016.The new SOTE areas could start operating as of the beginning of 2019.

In the respective SOTE organisation act, the Government will also define the tasks for university hospitals which will impact the research opportunities in Finland.

Medicines and the pharmaceutical services 

The increased steering by the State and the SOTE areas may have an effect on both hospital and outpatient medicine use.

In addition, tougher financial discipline within the social welfare and healthcare system, increasingly integrated care pathways and a national-level procurement unit for the autonomous areas may have an impact on the use and procurement of hospital medicines.

Simultaneously with the SOTE reform, the Government has decided to implement a programme for the rational use of medicines. The Ministry of Social Affairs and Health implements the programme separate from the SOTE reform but with the aim of increasing purposeful and rational use of medicines through the measures warranted by the pharmaceutical services and SOTE service system.

PIF is actively following the preparations and will lobby for the status of the pharmaceutical services and pharmacotherapies.

Reform of the SOTE funding

In Finland, the funding of the social welfare and healthcare system is a joint responsibility of the State, municipalities, households, the national health insurance (Social Insurance Institution Kela) and occupational healthcare. A multichannel financing system may be a resource but it also means a weaker control of the costs and blurred limits of responsibility which may cause partial optimisation.

The pursuits to simplify the multichannel funding system go in line with the administrative reform but the preparatory work proceeds a step behind the organisation-related legislation. The working group instituted by the Ministry of Social Affairs and Health should submit its proposals by the end of May 2016.

The major questions related to the dismantling of the multichannel funding system relate to the doctors’ fees and occupational healthcare under the health insurance.

In this reform, Pharma Industry Finland PIF promotes a model with a single national medicines reimbursement system in outpatient care despite the fact that the various forms of financial resources will be collected together. The main argument is ensuring the equality of patients, and the cost-efficiency of one single system from the State and pharmaceutical companies’ perspective.

Social welfare and healthcare and their financing in a nutshell:

  • Finnish municipalities are responsible for the administration, organisation and expenses of social welfare and healthcare. The responsibility is divided between 89 municipalities and 63 joint municipality councils (for 231 municipalities).
  • The social welfare and healthcare services are public (financed through taxes). The private and the third sector complement the public services. Occupational health services cover those in employment.   
  • The funding comes from various sources (taxation, public health insurance, employers / employees for occupational health) and it is a joint responsibility of the State, municipalities, households, the national health insurance (Social Insurance Institution Kela) and occupational healthcare.
  • Currently, social welfare and healthcare expenses account for over half of the municipality budgets.
  • The expenses for outpatient medicines are funded through the health insurance managed by the Social Insurance Institution Kela.