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Vouchers in social and health care

Country: 
Finland
Partner Institute: 
National Institute for Health and Welfare (THL), Helsinki
Survey no: 
(3)2004
Author(s): 
Hennamari Mikkola
Health Policy Issues: 
Role Private Sector, Long term care, Quality Improvement, Remuneration / Payment, Responsiveness
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no yes yes no no
Featured in half-yearly report: Health Policy Developments Issue 3

Abstract

Since the beginning of 2004 a new law has provided a legal framework for the use of vouchers in social and health services. Particularly, the new legislation encourages using vouchers in home care services. The main objectives of the service voucher system are to increase the clients' freedom of choice, to support elderly people to live home longer and to improve employment by encouraging small firms to enter home care markets.

Purpose of health policy or idea

In 1995, the Ministry of Social Affairs and Health implemented a large service voucher pilot-project in child day care involving 33 municipalities. Later on, several smaller pilots of home and housing services and support of informal care were introduced. A new law which came into force in the beginning of 2004 provides a legal framework for the use of vouchers in social and health services. Particularly, the service voucher legislation regulates the use of vouchers in home care services, but it also covers other social and health services The new service voucher legislation was needed to encourage the municipalities to use service vouchers and to clarify the rules of service voucher systems. For example, before the new legislation it was unclear if the vouchers were tax-free for the customers.

In general, a voucher is a tax-free fixed sum, which a municipality grants to a customer eligible to receive municipal services. A municipal officer (e.g. a case manager) defines a customer's need of services. A service voucher is an alternative for municipal provision of services. A customer can always choose a municipal provider, but has no right to require a service voucher for her or him.

The municipality has a responsibility for acknowledging a list of private providers allowed to offer voucher-purchased services for its residents and for monitoring the quality of the providers. The customer can choose and change a provider freely.

In the main usage area, long-term use of home care services, the customer's income influences the value of vouchers. In addition, the customer's deductible limit of the value of voucher is not allowed to exceed a municipality's user charge from similar services.

Main points

Main objectives

  1. to increase the clients' freedom of choice
  2. to support elderly people to live at  home longer
  3. to increase cost-efficiency of services
  4. to increase supply and range of services available
  5. to improve employment by encouraging small firms to enter home care markets

Type of incentives

  • For customers:  A voucher is a market instrument which encourages for free choice of customers between  range of services and providers. The possibility to choose private provider may increase access to services and thus equity of service provision
  • For a municipality: A voucher is a market instrument (fixed sum) which increase transparency of cost of services.  Transparency of costs may reduce prices of both public and private providers. Vouchers make competition possible between various providers.
  • For a private provider: A voucher creates  new possibilities to enter home care markets and other markets of welfare services

Groups affected

Customers (especially elderly people, handicapped, families with children),, municipalities, private providers

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Characteristics of this policy

Degree of Innovation traditional neutral innovative
Degree of Controversy consensual rather consensual highly controversial
Structural or Systemic Impact marginal rather marginal fundamental
Public Visibility very low neutral very high
Transferability strongly system-dependent neutral system-neutral

The service voucher system is a very innovative reform, because traditionally public providers produce most welfare services in Finland.

The voucher system initiative was widely debated in the media and the vouchers were one of social policy topics in the parliamentary elections in March 2003.

Political and economic background

The reform comply with the basic social and health policy objectives (e.g. to increase a customer's choice and access to services) stated in several social and health policy documents.

The present reform was started to investigate and prepare during the 1999-2003 Cabinet of Ministers (Lipponen II) and it was included in the program of the current (2003-2006) Cabinet (Jäätteenmäki/Vanhanen). The program states: 'Municipalities will be encouraged to use service vouchers in home care services. In the service voucher system municipalities are purchasers and they monitor quality of services. Utilisation of service voucher systems in other social and health services will be investigated.

Change of government

The reform was included in the past and new government's program.

Change based on an overall national health policy statement

A new legislation of service vouchers at the beginning of 2004.

Purpose and process analysis

Current Process Stages

Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no yes yes no no

Origins of health policy idea

After the 1993 reform of the system for central government subsidies to municipalities  the Finnish social and health care system has been highly decentralised. After the reform various financing and provision models of social and health services have implemented locally. The Ministry of Social Affairs and Health has encouraged developing local provision models and took an initiative to pilot service vouchers in child day care and in support of informal care in 1995-1997. Both pilot projects prompted to develop voucher systems further.

Among the Nordic countries, Sweden has had most experiences of service vouchers. Since 1992 in particular the municipality of Nacka, in the County of Stockholm in Sweden has financed a large share of the municipality's welfare services using vouchers. Finnish decision makers have visited Nacka and its experiences have been reported in Finland.


The association of Finnish Local and Regional Authorities and organisations of private providers have supported the service voucher system. Also the Finnish Medical Association has been lobbing the service voucher system for private health care services.

Approach of idea

The approach of the idea is described as:
renewed:

Stakeholder positions

The reform was accepted in the 2003-2006 Government's program by the political parties involved. It was put on the agenda by the Ministry of Social Affairs and Health.

To prepare the initiative, the Ministry of Social Affairs and Health commissioned evaluation studies on the pilot projects to implement vouchers and other background material, such as reports on international experiences of service voucher systems. The Ministry of Social Affairs and Health requested over 40 statements on the planned voucher system from various professional organisations and institutions. Moreover, Parliament invited several experts to give evaluations on the potential voucher systems.

The voucher system initiative was widely debated in the media and vouchers were one of the social policy topics in parliamentary elections in March 2003. However, only a part of propositions of different institutions was included in service voucher legislation. For example, the vouchers are not meant to use markedly in private health care services.

Influences in policy making and legislation

  • A new legislation on service vouchers was implemented in the beginning of 2004.
  • A new legislation encourages to use vouchers particularly only in home care services, but not some much for example not in private health care services (even not in home nursing services)
  • Particularly the Finnish Medical Association was supporting service vouchers for private health care services.

Legislative outcome

success

Adoption and implementation

The municipalities are in the key position in the implementation of the service voucher system. For the municipalities the main issue is whether they have economic possibilities in the present situation to invest for the introduction of service vouchers. Due to new legislation, the Government increased state subsidies for the municipalities by 10 million euros.

A lack of private providers in sparsely populated areas may form an obstacle to the implementation of the service voucher system.

Monitoring and evaluation

The new legislation has been implemented but it is too early to say whether it has provided the objectives of the reform.

The Ministry of Social Affairs and Health will evaluate on the implementation and the effects of the voucher system in the near future.

Expected outcome

The service voucher system for home care services is estimated to increase the annual number of customers about 10 000 corresponding to an increase of seven percent. Due to the service voucher system, the costs of home care services are estimated to increase by about 31.2 million Euros yearly. The total annual operational costs of home care in Finland are about 500 million Euros.

Impact of this policy

Quality of Health Care Services marginal neutral fundamental
Level of Equity system less equitable four system more equitable
Cost Efficiency very low neutral very high

For example in Swedish experiences on service voucher systems, supply and quality of services have improved.

During last years there has been a lack of home care services in many Finnish municipalities. If the supply of services will be increased by the voucher system, access to home care services increases. In other words the equity of service provision may increase.

Cost-efficiency potentially increases due to the voucher system, because vouchers make costs of home services more transparent and a customer can choose services she/he really needs.

References

Sources of Information

  • Niemelä J, The use of service vouchers in the social and health service in different countries, Ministry of Social Affairs and Health 15:1997 (English)
  • Heikkilä M, Törmä S, Mattila K. A service voucher in child day care, A report on the national pilot project, Ministry of Social Affairs and Health, National Research and Development Centre for Welfare and Health /Stakes reports 216:1997 (Finnish, English summary)
  • Vaarama M, Törmä S, Laaksonen S, Voutilainen P, The report on the vouchers in the support of informal care, a pilot project. Ministry of Social Affairs and Health, National Research and Development Centre for Welfare and Health /Stakes reports 10:1999 (Finnish, English summary)
  • Suominen R, Valpola O, A report how to use the vouchers more efficiently in home care services. Ministry of Social Affairs and Health 10:2002 (Finnish)
  • Mikkola H, International experience of the use of service vouchers in social welfare and health care, Ministry of Social Affairs and Health 15:2003  (Finnish, English summary) www.stm.fi/julkaisut
  • Räty T, Luoma K, Aronen P, Service vouchers in municipal social services, Government Institute for Economic Research 325:2004 (Finnish, English summary)

Author/s and/or contributors to this survey

Hennamari Mikkola

Suggested citation for this online article

Hennamari Mikkola. "Vouchers in social and health care". Health Policy Monitor, 04/04. Available at http://www.hpm.org/survey/fi/a3/1