Finnish government sets out why the country’s 2 huge reforms should go ahead quickly – but not all of their arguments are convincing

This week the Government has put forward its viewpoint on why the 2 big reforms should go ahead with the present very tight timetable – the decision making appears to be based on political arguments and not on cool-headed long-term planning:

  1. New project leader for 2 huge reforms: The government’s top civil servant in charge of the project to manage and implement the SOTE healthcare reform and the establishment of the new Counties has only recently been appointed to lead the project which are the 2 largest reforms ever made  in Finland’s history. There are several thousand people involved in these two projects and involve over 200 000 employees of the social- and healthcare sectors. Several other thousand of people will also take up new administrative positions in the planned 18 new Counties.
  2. Huge transfer of costs from municipal sector to new Counties: The 18 new Counties will take expenses amounting to almost €18 billion or 56% of 2019 operating expenses of social and healthcare tasks of 295 municipalities sector. Some smaller social and healthcare activities will remain with muni sector in addition to education, cultural activities, infrastructure, and a few other minor activities.
  3. “Freedom of Choice” is an essential element: The government has agreed to introduce Freedom of Choice (= coupons) within the healthcare sector. This has already been opened up mainly with the private sector and is expected to be finalised at around €6 billion out of the total of €18 billion – a few smaller pilot projects are already in operation.
  4. Tax neutral for taxpayers: €6 billion of government grants and some €12 billion of tax income will be removed from the muni sector to the Counties. The government has promised that taxation will remain the same for taxpayers. There is also a complex equaliser system that has been arranged for the municipalities to avoid hardships or windfalls, because the impact of the reforms on individual municipalities is very variable. The limit of the impact is said to be €100 per resident.
  5. Complaints from the municipal sector are unfounded: There has been much criticism from the municipal sector about these reforms, especially from Helsinki. The government claims that these complaints are unfounded because healthcare expenses are expected to increase faster than tax revenues. New healthcare investments will be needed too in these big urban areas and this was this will hit big cities more than they believe according to Ministry of Finance. According to the government, there should be little negative impact on municipalities from them ending up with empty real estate which was previously used for healthcare uses, and not used by the Counties. The Ministry is of the opinion that the 2 reforms, Healthcare and Counties, will benefit taxpayers throughout the whole nation and this overrides the interests of individual municipalities.

Some of these counter-arguments are certainly valid when weighing up the government’s viewpoints:

  1. The new project leader and tight timetable are a dangerous combination. The fact that the government has had to appoint a second project leader right in the middle of a very tight timetable. This timetable will feed huge risks that endanger a satisfactory completion of these reforms. 
  2. The reforms are huge and untested.
  3. They include a democratic election process on subjects that are not at all understood by the voters and which a have received searing criticism from independent experts.
  4. They include the creation of a totally new third level of government.
  5. They relate to €18 billion of annual costs which is a large share of the public sectors expenses.
  6. The plans for the reforms are based on forecasts that look forward decades and for which there is no certainty.
  7. The plans include private sector healthcare companies that are employing substantial share of Finland’s doctors and healthcare workers at higher salaries with the expectation that they will make comfortable profits. Either healthcare will be offered to fewer because of higher direct and induced wage costs or less healthcare will be offered to all! The belief that the private sector can be more productive and do more healthcare for less is as realistic as believing in fairies.
  8. The new Counties will be responsible for contracting the services of social and healthcare services for their residents, however they will be given a fixed budget from the Ministry of Finance and “complete freedom” to apply funding in the manner they think is necessary. The government will be responsible for managing and overseeing that budgets are not exceeded. However the new Counties do not yet exist and they have just years and months to become healthcare professionals in a rush after being elected in one year’s time…
    … and we all know what happens when the public sector tries to rush through big reforms without proper planning – the private sector takes full advantage of the public sectors weaknesses, Brexit, mass immigration to Europe, the Euro, the Greek rescue, the list is formidable.

Site Footer