Privatising basic healthcare increases prices…

Finland is small but well developed country with an excellent and high standard of living… and being small means that it can be used as a test bed for seeing what happens when the government makes changes to the public services.

One of he biggest policy changes that has been driven by the last 3 governments over the past 12 years has been attempts to reform public healthcare and social care.

When you read about Finland and Sweden, Norway and Denmark, you will often see comments that we are taxed rather heavily, and that we embrace socialism, whatever that means!Nothing could be further from the truth when you actually look at what we pay and to whom.

First, all working people are covered by compulsory basic healthcare through their employers. That is laid down by law and means that employees have easy and free access to basic healthcare with mainly private healthcare companies. Specialist and demanding care at hospitals is normally covered by the public system for very low fees. 

Second, the actual cost of healthcare per head of the population is low and the quality of care is very high. Compared to almost all other countries it is highly cost efficient and effective. The costs are around the same level as the UK and Germany, and a fraction of the cost per head of the US system – you can see these costs in the OECD statistics.

The past governments have tried in vain so far to reform the system. The last government actually had to resign because they messed up doing this reform. The cost to taxpayers has been high because of their policy errors. The worst mistake was to encourage the public sector to outsource the public healthcare services to the private sector. The result of this policy was to allow the private sector to replicate healthcare centres by attracting doctors and nurses with higher salaries while offering slightly worse services to the general public. The result of the mushrooming of for profit healthcare business has been a sharp increase in wage costs for doctors, nurses and other healthcare workers. The numbers are here in the latest  statistics on these indexers published by the public body, Statistics Finland. You can see that the increases in these costs is miles above the increase in the Consumer Price Index, and these costs are felt by all taxpayers thanks to the last government’s errors:

The new government is planning to continue the healthcare reform but they news on exactly what they are planning to do is not yet very concrete. On the other hand it is feasible top expect that they will backtrack on a number of past policies.

Privatising public healthcare is exactly what the public sector should avoid because healthcare centres and hospitals are all natural monopolies in their own regions. Patients cannot be expected to travel vast distances across the country to receive basic healthcare or surgery and demanding remedies when seriously ill. Naturally the private sector lobbies hard for such privatisation because natural monopolies are nothing more than gold mines.

Photo: Wikimedia Commons

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