Etusivu \ Deregulation and New Legislation \ Social Welfare and Health Care Reform

Social Welfare and Health Care Reform

The preparation of the Social Welfare and Health Care Reform continued in 2017, and participation in this accounted for a considerable part of the FCCA’s operations. An FCCA representative participated in a preparatory group tasked with preparing and assessing the impact of the legislation on clients’ freedom of choice and the simplification of multi-channel funding. In March, the FCCA commented on the draft law in its statement (in Finnish) to the Ministry of Social Affairs and Health, drawing attention to issues such as the obvious problems in impact assessment. The reform was passed on for a reading by Parliament in the spring term, and, during the spring, the FCCA was heard in a number of committees.

At different states of the reform, the FCCA has emphasised that freedom of choice is a key element of the historically major and necessary reform pertaining to social welfare and health care services. Factors related to the aging of the population, growing demand for social welfare and health care services, and the inefficiencies in the their current method of organisation and production will without a comprehensive reform, in the long run, lead to problems of which freedom of choice is an essential part.

Public debate has focussed on highlighting the risks associated with freedom of choice. Less attention has been paid to the obvious impact on efficiency of freedom of choice: clients’ freedom of choice produces efficiency, as the operators offering the services face a genuine risk of the client choosing another service provider. For this reason, all operators must, to be on the safe side, seek to provide increasingly better service and other outputs.

If the principles for the supply of competing service options and their comparison are established in an appropriate manner, freedom of choice will also have a significant impact on the operating environment of the existing service providers. Even if citizens only infrequently changed service providers, freedom of choice would still prompt these producers to improve their quality and skills. The introduction of competition will benefit both the citizens who change service providers and those who are not even considering a change of service provider. This topic was discussed in an article published in Sitra’s blog in January 2018. 

Achieving the goals set for the freedom of choice system requires a properly functioning competitive situation on the market. The FCCA participated in the working group set up by the Ministry of Employment and the Economy to assess whether separate competition rules for the social welfare and health care sector are required to ensure functioning competition. The report of the working group  (in Finnish)was published in June 2017 and was on a review round with stakeholders in the summer.

The draft law on freedom of choice was revised on the basis of the changes required in the statement of the Constitutional Law Committee on 29 June 2017, and a new draft was circulated for statements in the autumn. In its statement (in Finnish) issued in December, the FCCA drew attention particularly to competitive neutrality and its supervision as well as questions relating to consumer protection and marketing supervision.

Competitive neutrality is a necessary and essential precondition to provide both publicly owned and privately owned operators with the appropriate opportunities and incentives to compete on the markets and develop their operations. The draft proposal noted that the role of the Finnish Competition and Consumer Authority as a supervisor of competitive neutrality will be significant, as it will monitor and supervise both the functioning of the freedom of choice system and the equal operating conditions of the regional public enterprises and private service production.

In order to ensure the comprehensive supervision of competitive neutrality, it would be important that the authority of the competition authority encompass all the practices – regardless of form or manifestation – as a result of which competition is not equal between the public and private sectors. Therefore, the FCCA was of the opinion that its authority should be defined in more detail.

The FCCA supported the provisions of the draft law concerning the separation of the regional public enterprise direct-choice services in accounting and the market-based pricing of regional services in a situation in which a regional direct-choice service provider purchases services from a regional public enterprise or service centre. The FCCA remarked that from the perspective of transparency and comparability, however, an even better alternative than the unbundling of accounts would be that the regions  corporatise direct-choice services.

The draft law also included reporting obligations that would partly unjustifiably increase administrative burden and would be unnecessary in other respects as well, especially for large companies. Although the promotion of corporate responsibility that lies behind the obligations is a commendable goal, the specified requirements were not in all respects in accordance with the principle of proportionality and were not clearly linked to the specific goals pertaining to taxes.

In the opinion of the FCCA, the provisions on consumer protection in the draft law for freedom of choice require further work. The draft law did not specify, for example, whether the relationship between the client and business would be subject to the provisions on contract terms in the Consumer Protection Act and the principles concerning the consumer protection of services expressed in the law.

A separate provision on supervising the marketing of social welfare and health care services should be added to the draft law, specifying that the legality of the social welfare and health care services referred to in the Freedom of Choice Act from the perspective of consumer protection would be supervised by the Consumer Ombudsman. The marketing of social welfare and health care services will be a new area for both the operators in the field and the authorities. The FCCA launched an investigation into the marketing of health care services, which is scheduled for completion in the spring of 2018.

For the implementation of consumer protection, it would be justifiable that the social welfare and health care services that will be produced as public services in accordance with the Freedom of Choice Act would have the same type of consumer protection as private social welfare and health care services already do. It is not sustainable to create a regulatory system in which the consumer’s position depends on whether a service is produced by a private or public sector service provider or on whether the service is a direct-choice service, a service acquired using a client voucher, or a service implemented through a personal budget.

In its statement, the FCCA proposed assessing the need for a centralised client function, which it had already outlined in its previous report. This would a “social welfare and health care services watch” similar to the Healthwatch used in Great Britain. The client centre would a function separate from and independent of the organisers and producers, which would ensure the fulfilment of the key preconditions required for implementing the client’s freedom of choice. The client centre would support clients’ active decision-making by making them aware of their rights and providing them with up-to-date and comparable information on possible alternatives. The function would strengthen the demand aspect of social welfare and health care services and, hence, contribute to well-functioning markets.