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Extending the NHI coverage

Country: 
Finland
Partner Institute: 
National Institute for Health and Welfare (THL), Helsinki
Survey no: 
(14) 2009
Author(s): 
Liina-Kaisa Tynkkynen
Health Policy Issues: 
Role Private Sector, Funding / Pooling, Remuneration / Payment
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no yes no no no no

Abstract

Prime Minister Matti Vanhanen's second Government stated that more effective use of publicly owned healthcare facilities should be enabled. In April 2008 the Ministry of Social Affairs and Health appointed a working group to explore the possibilities to widen the National Health Insurance (NHI) coverage also to private services provided in publicly owned healthcare premises. The working group's proposal is in favor of widening coverage to such services.

Purpose of health policy or idea

Publicly owned healthcare premises (i.e. health centres and hospitals) and devices are usually used during office hours (i.e. from 8 am to 4 pm) and - except for emergency services - not on the weekends. Hence, the current utilization rate of the public healthcare facilities can be regarded as somewhat ineffective.

Prime Minister Matti Vanhanen's second Government stated that a more effective use of publicly owned healthcare facilities should be enabled. One possible solution could be leasing out public healthcare facilities to private health service providers outside office hours. This is already possible under the current legislation. A problem, however, occurs when NHI reimbursement is concerned. Citizens' private healthcare visits are partly subsidized through the compulsory National Health Insurance. However, the citizens are not eligible for the reimbursement if the private services are provided in public premises (i.e. the premises a private service provider has rented out from public sector).

In April 2008 the Ministry of Social Affairs and Health appointed a working group to explore the possibilities to widen the NHI coverage to private services provided in publicly owned healthcare premises. The working group was to introduce legislative proposals necessary to enable the reform. In particular, the group's assignment was to define the scope and content of the reform as well as the grounds for compensation. In addition to competitive and financial considerations, equality issues and the reform's effect on the public and private healthcare sector were to be explored.

Main points

Main objectives

The objective of the reform was to make more effective use of public healthcare premises by extending the National Health Insurance (NHI) coverage also to private healthcare services provided in public premises. Presently, no legislative constraint on leasing out publicly owned healthcare premises to private sector service providers exists. However, the citizens are not entitled to NHI reimbursement if the private service is provided in publicly owned premises. Hence, the premises are not leased out in practice. Another objective behind the reform is to support the private provision of services.

Type of incentives

Removal of a legislative constraint

Groups affected

Private sector, public sector, citizens

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Characteristics of this policy

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

Political and economic background

After the general elections in 2007 a right-centre coalition government was formed. In its Government programme (HPM 10/2007) one of the important themes concerning health care and social services was the endorsement of private service production. For that reason the Ministry of Social Affairs and Health appointed a consultative committee for private social and health services in 2008.

It may be said that on the whole the contemporary political mood is supportive toward all kinds of collaboration between the public and the private sector. Another objective behind the reform might be increasing the resources of the municipalities through leasing.

Purpose and process analysis

Current Process Stages

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

Origins of health policy idea

The discussion about the matter isn't novel; the extension of NHI coverage has been explored before. In 2003 a working group made similar proposals concerning NHI coverage, but the issue did not progress at the time. Now, however, the issue has been put on the agenda again and in its Government programme (HPM 10/2007) Prime Minister Matti Vanhanen's second Government stated that more effective use of publicly owned facilities should be enabled. One possible solution to make more effective use of public facilities could be extending the NHI coverage also to private services that are provided in public facilities.

Initiators of idea/main actors

  • Government
  • Providers
  • Payers

Approach of idea

The approach of the idea is described as:
renewed:

Stakeholder positions

The working group finalized its work in October 2008 and proposed widening the NHI coverage to private services that are provided in public healthcare premises. Since the leasing procedures belong under the autonomy of the Finnish municipalities, the working group did not want to propose any extensive changes to current legislation. However, the working group stated that when assessing the implementation of the reform certain stakeholder groups must be taken into account:

Private providers

Existing private providers already have premises of their own. Thus, working in the public premises must bring some additional value for the companies in order to be attractive for them. Whether this is the case is not clear. However, access to some expensive devices available in public premises, that private actors can not afford or are not willing to purchase, might enable private actors to widen the scope of services they are providing. The extension of NHI coverage could also enable private service providers to practice in regions where proper facilities for private healthcare providers are few. On the other hand, for private providers the reform might mean more competition, if enacted. 

However, the long-term effects of the reform are unclear. The working group thus proposes that the effects of the reform on private service providers should be explored before the execution of the reform. The view is shared by several stakeholder groups.

Public sector

The municipalities are free to choose whether to lease out the premises or not. However, if NHI coverage is extended the municipalities have to take competitive considerations more carefully into account. If the premises are leased out, it is the responsibility of the municipalities to assure that proper procedures are followed when choosing leaseholders and when setting the level of the lease. It is thus dependent on the willingness of the municipalities to participate in the processes - careful evaluation and description of the processes are required. All in all, the reform might increase the possibilities of municipalities to make better use of their healthcare facilities. However, it has been questioned whether the municipalities possess adequate know-how to take care of such tasks.

For the public sector employees a option to run a private practice in public premises outside office hours might work as an incentive to commit to permanent offices in the public sector. Hence, the reform could amend the situation in the regions where recruiting medical workforce to work for the public sector has been difficult. On the other hand, however, some stakeholders have been concerned that the reform might reduce the employees' time spend working for the public sector and affect working motivation, as they might be more interested in sucessfully running their own practice after-hours. Statements of labour organizations on the matter are neither for nor against the reform.

Citizens

If both, public and private services are provided in the same premises, citizens might have difficulties to distinguish between different types of providers. This may lead to situations where the citizens are not aware of their rights and responsibilities concerning the services and their financing. Should the reform be executed, the working group thus states that the patients must be fully informed on the character of the service provider and the terms under which the services are being provided (e.g. co-payments). This opinion has been voiced by many other stakeholders as well. 

As the NHI (Medical Sickness Insurance in particular) is financed equally by the insured and the state, a possible increase in NHI costs might raise the employees' share of payment. This has been a special concern of Finnish labor organizations, which have stated that in a case of increase in employees' payment proportion, employers should also participate in the financing of the Medical Sickness Insurance.

Actors and positions

Description of actors and their positions
Government
Governmentvery supportivesupportive strongly opposed
Providers
Municipalitiesvery supportiveneutral strongly opposed
Private sectorvery supportiveopposed strongly opposed
Public employeesvery supportiveneutral strongly opposed
Payers
Citizensvery supportiveneutral strongly opposed

Influences in policy making and legislation

In the Government programme for the years 2007 - 2011 (HPM 10/2007), it was stated that a more effective use of public healthcare premises must be enabled. The Ministry of Social Affairs and Health thus appointed a working group to explore the possibilities to extend the National Health Insurance (NHI) coverage to private services provided in public healthcare premises (excluding hospital beds, operating theatres and recovery wards).

The members of the group came from the Ministry of Social Affairs and Health, the Ministry of Finance, the Social Insurance Institution, the Association of Finnish Local and Regional Authorities and the Central Organization for Finnish Trade Unions. Interestingly, private service producers were not among the members of the working group. However, the private sector representatives were among the permanent experts of the working group.

The drafting of the law, which is based on the working group's report, is currently in process. It is not clear whether the situation is going to be settled by a legislation passed by the Finnish parliament, as the matter has not yet been submitted to parliament.

Legislative outcome

pending

Actors and influence

Description of actors and their influence

Government
Governmentvery strongstrong none
Providers
Municipalitiesvery strongstrong none
Private sectorvery strongweak none
Public employeesvery strongstrong none
Payers
Citizensvery strongneutral none
GovernmentCitizensMunicipalities, Public employeesPrivate sector

Positions and Influences at a glance

Graphical actors vs. influence map representing the above actors vs. influences table.

Adoption and implementation

The adoption and implementation of the reform will be the responsibility of the municipalities and hospital districts. As there are 350 municipalities and 20 hospital districts in Finland, it is not yet possible to assess whether the reform is adopted and implemented and to what extend. However, the contemporary economic crisis might facilitate adoption of the possible reform as the municipalities are struggling with budget deficits and might welcome some extra returns in a form of lease paid by private service producers. When considering the adoption and implementation, certain matters must also been taken into account:

Competitive considerations: Competition legislation must be taken into account when the implementation of the reform is discussed. Competitive neutrality must be guaranteed when leasing out public healthcare facilities for private service providers. In practice this would be a responsibility of the municipalities. Firstly, the lease for the facilities must be pitched at a market price (i.e. the premises must not be leased under the market price), so that any gratuitous state subsidies to municipal health care, likely to hinder market competition, are not canalized to private leaseholders. Secondly, the private service providers must be selected in the course of an open and indiscriminate process. That is, all providers interested in leasing public healthcare premises must be able to take part in the process. All in all, the municipalities' accounting must be transparent and detailed as far as the leasing procedures are concerned. However, the actual realization of competitive neutrality has been doubted by many stakeholders (e.g. public and private providers, municipalities and labor market organisations).

The boundary between public and private healthcare sector: The main idea behind the current reimbursement constraint has been to preserve the distinction between public and private health care. More specifically, the purpose has been to guarantee that same healthcare services are not financed through two public financing channels (i.e. municipal health care and NHI). The working group states that municipalities are responsible for guaranteeing that the distinction is preserved and that leasing out the premises does not affect the public healthcare functioning. The working group also proposes that the coverage should not concern hospital beds, operating theatres and recovery wards. Private services provided in public premises must also be clearly distinguished from services which municipalities outsource or contract out to private service providers, as those services are legally regarded as public services and financed through the municipal healthcare system. It has been doubted whether the distinction is possible to preserve and this has raised concerns in many stakeholder groups. 

Patients' rights and equality among citizens:  A working group stated that, as private providers already exist in Finnish health care, no major changes in the status of patients and in questions of equity and equality are likely to occur. It has been stated that the effect might be even positive as citizens would be more often eligible to reimbursements than presently. However, the patients' rights to publicly financed health care must not be endangered if the reform is introduced.  Moreover, the patients must be fully informed about the character of the service provider and the terms under which services are provided (e.g. co-payments).

Monitoring and evaluation

As the reform is just on the state of a policy proposal, no explicit evaluations have been possible.

In the report there are no plans for evaluation. The only effect that is mentioned for evaluation is how the possible extension of NHI coverage would affect the private sector.

Expected outcome

If the reform is to be executed, some increase in leasing public healthcare premises by private service providers might occur. However, the increase would be rather small at least in the beginning. According to the working group the main effect would be that existing private providers, especially large companies, move their practices to public premises.

However, it remains to be seen whether private companies are willing to move their practices to the publicly owned premises. This is mainly due to the fact that the private companies already have premises of their own. Rather, it could be even more likely that the reform, if executed, especially increases the possibilities of single practitioners to rent premises. Hence, it may be that if the bill is passed, the amount of single practitioners increases.

The reform might facilitate competition between providers as well as new forms of public-private collaboration and partnership. All in all, a whole host of stakeholders have, however, doubted the feasibility and necessity of the reform. Thus, its legitimacy seems not to be very strong.

The working group argues that no major increase in the amount of NHI reimbursements would occur if the reform is executed. This is mainly due to the estimate that no major increase in the supply of private services is likely to occur. The view has been supported by The Social Insurance Institution (Kela).  However, it is not possible to fully predict how the reform would affect healthcare financing. When the financing is concerned, it has also been stated that as a re-evaluation of the whole healthcare financing should be and is to be executed in the near future, extending NHI coverage is not sensible at the present situation.

One of the possible dangers of the reform is that the division between the public and the private healthcare sector is blurred. From the providers' point of view, the responsibilities between the actors may not be clear if several different private providers work in the same public premises. For patients, it may be difficult to distinguish between public and private service providers as they would be working in the same premises. This might raise questions about equality and equity between citizens. Also the question of to whom the premises should be rented have raised debate. On one hand it has been stated that the premises should be leased out only to public sector employees. On the other hand the equal treatment of all the providers has been seen as important.

Another risk concerning the potential reform is that it creates an incentive to cost shifting between public and private sectors. The possible reform must not lead to a situation where public patients are, cost savings in mind, transferred to a private service provider working in the same premises. Moreover, it is not clear whether private providers practicing in public premises would be allowed to use publicly ran laboratory, imaging and support services. The third problem concerns patient records, as private service providers practicing in public premises are not allowed to use public healthcare records, i.e. a private practitioner/company has to keep patient records of their own. This may cause problems, for instance, when it comes to flow of information. All in all, several stakeholders doubt the reforms feasibility and necessity. This may hinder a successful implementation of the reform.

Impact of this policy

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

References

Author/s and/or contributors to this survey

Liina-Kaisa Tynkkynen

Suggested citation for this online article

Tynkkynen, Liina-Kaisa. "Extending the NHI coverage". Health Policy Monitor, October 2009. Available at http://www.hpm.org/survey/fi/a14/4