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Government proposal for health and social services reform and related legislation proceeds to Parliament

Ministry of FinanceMinistry of Social Affairs and HealthMinistry of the Interior
8.12.2020 10.12
Press release

The Government proposes that wellbeing services counties be established and healthcare, social welfare and rescue services be reformed. The proposed counties would be established as soon as possible after the passing and approval of the relevant bills. The bills would enter into force in stages, the first ones on 1 July 2021 and the last ones on 1 January 2023. However, Parliament needs to pass the legislative package before the reform can enter into force. The Government submitted its proposal to Parliament on 8 December.

The aim of the health, social and rescue services reform is to reduce inequalities in health and wellbeing; safeguard equal and quality health, social and rescue services for all; improve the availability and accessibility of services; ensure the availability of skilled labour; respond to the challenges of changes in society; curb the growth of costs; and improve safety.

Responsibility for health, social and rescue services duties to rest with 22 organisers

In line with the government proposal, 21 wellbeing services counties would be established in Finland and entrusted with the health, social and rescue services duties that are currently the responsibility of municipalities and joint municipal authorities. A total of four wellbeing services counties would be established in the Region of Uusimaa, based on the special arrangements made for Uusimaa. The City of Helsinki would also in the future be responsible for organising healthcare, social welfare and rescue services. In addition, the joint county authority for the Hospital District of Helsinki and Uusimaa would be responsible for organising specialised medical care in Uusimaa. The responsibility for organising healthcare would be divided between the wellbeing services counties in the Region, the City of Helsinki and the joint county authority for the Hospital District of Helsinki and Uusimaa as separately laid down by law and in an agreement on the organisation of services.

In the wellbeing services counties, rescue services would be a separate sector working in parallel with the healthcare and social welfare sector. The level of rescue services in the wellbeing services counties should correspond to national, regional and local needs and the counties should prepare for accidents and threats in their areas.

The operation of hospital districts and special care districts would be transferred to the wellbeing services counties.  Similarly, the responsibility for organising the services of school social workers and school psychologists would be transferred to the wellbeing services counties. Both the wellbeing services counties and the municipalities would be in charge of promoting health and wellbeing. The municipalities would assume responsibility for the organisation of environmental healthcare as a whole.

A county council, elected by direct popular vote, would be the highest decision-making body of wellbeing services counties. The activities of each wellbeing services county would be managed in accordance with the strategy for the wellbeing services county approved by the relevant county council, which would also decide on the organisational structure of the county. The act on organising health and social services would lay down provisions on the responsibility for organising healthcare and social welfare, the promotion of wellbeing and health, the securing of locally accessible services and linguistic rights, cooperation between wellbeing services counties and their guidance, direction and supervision. The act on organising rescue services would lay down provisions on the responsibility for organising rescue services and on their development, guidance, direction and supervision.

Role, responsibility and obligations of organisers are specified 

The proposal defines in more detail the wellbeing services counties’ responsibility for organising services. The counties should have sufficient competence, functional capacity and readiness to take responsibility for organising health, social and rescue services in all situations, including incidents and emergencies. The counties should have in their employment all the necessary professionals and other personnel. They should also have appropriate premises and tools at their disposal and ensure other necessary working conditions. In addition, the counties should have a sufficient service provision of their own in the healthcare and social welfare sector but they would not be required to maintain overcapacity.

The responsibility for organising services would include the responsibility for statutory duties; decision-making; the supervision of the provision of services; the integration of services; and the exercise of powers assigned to the counties as public authorities. The wellbeing services counties would also assume responsibility for preventive healthcare and social welfare, training and research, preparedness for incidents and emergencies and the security of supply, among other things.

The counties would be public law entities that have autonomy in their areas. In mainland Finland, the areas of the new wellbeing services counties would correspond to those of the current regions, but the Region of Uusimaa would be divided based on the decision on special arrangements for Uusimaa. An elective county council would be the highest decision-making body of counties.

There would be five collaborative catchment areas for regional coordination, development and cooperation in healthcare and social welfare. The counties of each collaborative catchment area would draw up a cooperation agreement every four years.

Purchased services and use of temporary agency labour 

The proposal defines in more detail the general conditions for purchasing health and social services.

The model of multiple providers could still be applied to the provision of health and social services but within the limits imposed by legislation. All services could be purchased from private service providers, unless specifically prohibited by law. Service vouchers could continue to be used to procure services.

The wellbeing services counties could purchase health and social services for clients from private service providers based on an agreement, if that was necessary to perform their duties appropriately. The content, scope and quantity of the services to be purchased should be such that the counties could, in all situations, fulfil their responsibility for organising services.

The counties could not purchase from private service providers services relating to duties fulfilling the responsibility for organising services or the management of public administrative duties, social work, emergency social services or primary and specialised 24-hour healthcare services. However, the counties could procure labour and temporary agency workers in 24-hour emergency services to supplement their own personnel. Private service providers should fulfil the conditions laid down in the Private Healthcare Act and the Act on Private Social Services. The counties would supervise private service providers and their subcontractors. Private service providers would also supervise their subcontractors.

The proposed implementation act would lay down provisions on the invalidity of contracts for purchased health and social services in certain situations, the opportunity of the counties to terminate such contracts and the opportunity of private service providers to receive reimbursement.

Central government guidance and direction 

The wellbeing services counties would be provided with guidance and direction by using an interactive and continuous process designed for this purpose. Guidance and direction would be strategic in nature, and it would focus on issues essential to organising duties and ensuring the sufficiency of funding. 

The Government would confirm the strategic objectives of healthcare, social welfare and rescue services every four years. The counties should take the objectives into account in their own activities and also when preparing cooperation agreements with collaborative catchment areas for healthcare and social welfare. 

An advisory board for healthcare and social welfare would be established under the Ministry of Social Affairs and Health. The Government would appoint the board for a term of four years. Its task would be to monitor and assess the fulfilment of health and social services duties and support the national guidance and direction of healthcare and social welfare.

Similarly, an advisory board for rescue services would be established under the Ministry of the Interior. The Government would appoint the board for a term of four years. Its task would be to monitor and assess the fulfilment of rescue services duties and support the national guidance and direction of rescue services.

The Ministry of Social Affairs and Health, the Ministry of the Interior and the Ministry of Finance would hold annual negotiations with each wellbeing services county. The aim of these negotiations would be to monitor, assess, guide and direct the organisation of healthcare, social welfare and rescue services in the counties at the strategic level.

A shared knowledge base for guiding and directing the counties would consist of information and key indicators concerning the counties’ population and finances and the organisation of healthcare, social welfare and rescue services.

Each county would draw up an annual investment plan, and the Ministry of Social Affairs and Health and the Ministry of the Interior would decide whether to approve it. An approved investment plan would be a requirement for new investments and asset transfers in the county.

Funding of wellbeing services counties and municipalities

One of the objectives of the health and social services reform is to curb the growth of general government expenditure. The proposed funding model aims to ensure this. However, major reforms always cause significant transition costs. Taking into account all costs arising from the reform, the reform would weaken the balance in general government finances in the 2020s, after which the costs would start decreasing.
The operation of wellbeing services counties would be financed mainly from central government funds and partly from client fees to be collected from the users of services. Provisions on funding would be laid in the act on the funding of wellbeing services counties. 

The funding of wellbeing services counties would be universal. It would be divided among the counties based on imputed factors describing the service needs and conditions for duties related to healthcare, social welfare and rescue services. Some of the funding would be based on population numbers and some would be determined by the criteria for health and wellbeing performance. The funding of rescue services would also be determined on the basis of a risk coefficient.

The imputed funding for healthcare and social welfare would be based on the service need coefficients that describe the need for healthcare, social welfare and services for older people. In calculating these coefficients, account would be taken of the information on the age and gender structure, morbidity and socio-economic factors of the population and their use of services as well as the costs arising from the use of services. The health and social services need coefficients and the coefficient for services for older people would be determined annually for each wellbeing services county. They would describe the service needs of residents in the county in relation to other counties. 

The needs-based factors incurring healthcare and social welfare costs along with their weighting coefficients would be determined so that each factor would have different weighting coefficients based on how common they are and how high the costs are. In healthcare, for example, the needs-based factors would include a total of about 50 diseases that are significant in terms of costs. Socio-economic factors describing income, education and training, single-parent family, marital status, one-person household and main activity would also be considered as new needs-based factors more broadly than the current system of central government transfers for basic public services. 

The needs-based factors and weighting coefficients are based on a study by the Finnish Institute for Health and Welfare that was published in April 2020 . The needs-based factors and weighting coefficients would be assessed regularly after the Act’s entry into force, and they would be updated as criteria for determining funding.

Transferring the responsibility for funding from municipalities to the central government would mean that the central government revenue would need to be increased and, at the same time, the revenue of municipalities would need to be reduced to correspond to the responsibility for funding transferred from them. To prevent the total tax ratio from rising, all municipalities would be obligated to reduce the municipal income tax. The reduction would be 13.26 percentage points in all municipalities. Moreover, the municipalities’ share of corporation tax revenue would be reduced and the state’s share would be increased correspondingly. The changes in taxation would be as neutral as possible from the standpoint of taxpayers. On their entry into force, the changes to the tax structure would not result in tax increases.

The wellbeing services counties would not, as a rule, be authorised to take a long-term loan. However, they could take a loan to finance their investments if the Government granted them the authorisation to do so. In addition, provisions would be introduced whereby it would be possible to take a further loan to finance urgent and necessary investments. 

Organisation of rescue services

According to the government proposal, rescue services would in future be organised by the wellbeing services counties and the City of Helsinki, which would also be responsible for organising healthcare and social welfare in their areas. Rescue departments could continue to provide prehospital emergency medical services for healthcare. Currently, the rescue departments carry out approximately 500,000 urgent prehospital emergency medical care duties every year. Rescue services would, however, continue to be a separate sector working in parallel with the healthcare and social welfare sector.

As a result of the reform, the role of central government guidance and direction in rescue services would be strengthened. Stronger national guidance and direction would improve the provision of more harmonised and thus more equal rescue services throughout the country. The aim is also to develop the operations of rescue services as a national system.

The Ministry of the Interior will issue a separate press release on the organisation of rescue services.

Personnel transfers 

The reform would entail major organisational changes and changes in the organisation of services that would materially affect the duties and placement of personnel. In 2023, about 172,900 people currently employed by 332 municipalities or joint municipal authorities would be transferred to the employment of the wellbeing services counties in line with the transfer-of-business principle. Based on 2018 statistics, the labour costs of personnel affected by the reform are estimated to be around EUR 10.7 billion per year, which is about 52 per cent of all labour costs in municipalities and joint municipal authorities.

All healthcare and social welfare personnel and their tasks would be transferred from municipalities and joint municipal authorities to the employment of the wellbeing services counties. School social workers and school psychologists working in the education sector in municipalities would also be transferred to the employment of the counties. Personnel would be transferred from joint municipal support services to the employment of the wellbeing services counties if at least half of their present duties were devoted to municipal health, social or rescue services. Personnel would be transferred in accordance with the transfer-of-business principle so that at the time of the transfer they would retain their current rights and obligations under the terms of their employment or public service relationships.

The arrangements required by the reform would be made in 2021 and 2022 in cooperation with the wellbeing services counties, the municipalities and the representatives of personnel of the municipalities. The scope of the Act on Cooperation between the Employer and Employees in Municipalities would be expanded to apply to the wellbeing services counties, too. The scope of application of other local government employment legislation would also be expanded to apply to the personnel of the wellbeing services counties. This would mean that the status of personnel would not change in this respect.

Transfers of assets and liabilities

The joint municipal authorities for hospital districts and the joint municipal authorities for special care districts would be transferred to the wellbeing services counties with their assets and liabilities. The wellbeing services counties would acquire the movable assets and contracts of the municipalities and joint municipal authorities relating to healthcare, social welfare and rescue services as well as the holiday pay liabilities of the transferable personnel without compensation.

The counties would lease municipality-owned facilities for healthcare, social welfare and rescue services for a transition period of three years with one year’s option. Liabilities transferred from hospital districts and special care districts to the wellbeing services counties would be granted a state guarantee to safeguard the status of creditors and keep the loans in the zero-risk category. The transfers would be carried out based on reports drawn up by the municipalities and joint municipal authorities.

Asset arrangements could generate costs for municipalities which are beyond their control. For this reason, the proposal includes a compensation rule as required by the Constitutional Law Committee. According to the proposal, municipalities would be entitled to receive compensation for costs incurred in making asset arrangements when the costs exceed the compensation limit set by law. 

Wide-ranging impact assessment of the legislative proposal

In line with the guidelines for the impact assessment of legislative proposals and the Bill Drafting Instructions, the impact assessment describes the main impacts of the proposed reform. The economic effects are assessed particularly from the viewpoint of municipal finances, central government finances, the finances of the wellbeing services counties, the tax system and asset arrangements. The effects of the reform on pension funding and ICT services are also assessed, along with the overall effects on general government finances. During the consultation round, the effects of the reform on the regional division and ICT services were addressed extensively in separate background memorandums. The costs arising from the implementation of the reform have also been assessed.

In assessing the effects on the authorities, emphasis was placed on the effects on the organisations of the municipalities and wellbeing services counties, duties related to the management of agreements and contracts, supervisory authorities and courts. The effects of the reform on the Åland Islands were assessed separately. In addition, the harmonisation of client fees, the effects of data protection regulations and the resource needs of the authorities were assessed.

Impacts on society were assessed both at the system level and from the perspective of impacts on people. Particular attention was paid to the effects on different population groups and civic engagement. An assessment was also made of the effects on personnel, preparedness, contingency planning and organisations.  The effects on linguistic rights and fundamental and human rights were also assessed.

The effects of the reform on the service provision were assessed from the viewpoint of services purchased by clients and from the viewpoint of temporary agency workers and workers procured through other procedures. It was also assessed how the reform would affect businesses.

Government proposal contains key provisions

The government proposal includes the key provisions required for the establishment of wellbeing services counties, the transfer of duties and the operation of counties, namely the provisions on the regional division, duties, management and audit of the administration and finances, funding, changes in central government transfers to local government, taxation and the application of legislation on general administration. All in all, the government proposal includes 50 bills.

The bills relevant for the establishment and operation of the counties and the transfer of duties are:

  • act on wellbeing services counties
  • act on organising health and social services
  • act on organising rescue services
  • act on the division into counties and regions
  • act on organising healthcare, social welfare and rescue services in the Region of Uusimaa 
  • act implementing the reform of health, social and rescue services and the related legislation
  • act on the funding of wellbeing services counties

In addition, the Government proposes that legislation on central government transfers to local government, tax legislation, legislation on the personnel of wellbeing services counties and certain acts on general administration be amended. 

Timetable — some of the bills to enter into force in summer 2021

The proposed wellbeing services counties would be established as soon as possible after the entry into force of the implementation act. The Government proposes that the act enter into force on 1 July 2021. The joint county authority for the Hospital District of Helsinki and Uusimaa would be established through an agreement approved by the wellbeing service counties of the Region of Uusimaa and the City of Helsinki. The first county elections would be held on early in the year 2022. The county elections would not apply to the residents of the City of Helsinki. 

At the first stage, the counties’ provisional governance and, after the county elections when the county councils would start their work, the counties would prepare the organisation of their activities and the transfers of personnel and assets jointly with the municipalities and joint municipal authorities. The responsibility for organising healthcare, social welfare and rescue services and other services and duties to be stipulated separately would be transferred to the wellbeing services counties from the beginning of 2023.

The aim is for the bills included in the proposal to enter into force in stages so that some of them would enter into force on 1 July 2021 while others would enter into force on 1 March 2022 when the new county councils would start operating. The last bills would enter into force on 1 January 2023. The proposal also includes transition periods. The act implementing the reform is scheduled to enter into force on 1 July 2021. In addition, parts of the act on wellbeing services counties would be applied to the operation of counties immediately. 

The health and social services reform requires that a wide range of technical changes be made to other legislation, too. The preparation of these changes is already underway, and the proposals for the necessary amendments will be submitted to Parliament in spring 2021.
 

Inquiries: 

Laura Lindeberg, Special Adviser to Minister Kiuru, tel. +358 295 163 109, firstname.lastname(at)stm.fi
Kari Hakari, Director General, Ministry of Social Affairs and Health, tel. +358 2951 5163642, firstname.lastname(at)stm.fi 
Auli Valli-Lintu, Senior Ministerial Adviser, Ministry of Social Affairs and Health, tel. +358 2951 63463, firstname.lastname(at)stm.fi
Tanja Rantanen, Senior Ministerial Adviser, Ministry of Finance, tel. +358 2955 30338, tanja.rantanen(at)vm.fi (funding)
Minna-Marja Jokinen, Senior Ministerial Adviser, Ministry of Finance, tel. +358 2955 30018, minna-marja.jokinen(at)vm.fi (administration, assets and personnel)
Jani Pitkäniemi, Director General, Ministry of Finance, tel. +358 2955 30494, jani.pitkaniemi(at)vm.fi
Kimmo Kohvakka, Director General for Rescue Services, Ministry of the Interior, tel. +358 295 488 400, [email protected]
Ilpo Helismaa, Senior Ministerial Adviser, Ministry of the Interior, tel. +358 295 488 422, [email protected]