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Government’s draft legislation on the reform of healthcare, social services and rescue services circulated for consultation

Ministry of FinanceMinistry of Social Affairs and HealthMinistry of the Interior 15.6.2020 12.01
Press release

The Ministry of Social Affairs and Health, the Ministry of Finance and the Ministry of the Interior request comments on the draft government proposal concerning the health and social services reform and the organisation of rescue services from the municipalities and joint municipal authorities of mainland Finland and other parties mentioned in the request for comments. The deadline for submitting comments is 25 September 2020.

In line with the draft proposal, 21 health and social services counties would be established in Finland and entrusted with the health, social and rescue service duties that are currently the responsibility of municipalities. In Uusimaa, the responsibility for organising healthcare, social welfare and rescue services would differ from elsewhere in Finland so that in addition to the four health and social services counties in Uusimaa, the City of Helsinki would be responsible for organising services. In addition, the joint county authority for the Hospital District of Helsinki and Uusimaa would be responsible for organising healthcare as provided for in the relevant act and in the agreement on the organisation of services in the Hospital District of Helsinki and Uusimaa.

Promoting health and wellbeing would continue to be the responsibility of municipalities, but work in this field would be carried out in cooperation with the counties. Environmental healthcare would continue to be the responsibility of municipalities. The tasks of school social workers and school psychologists in student welfare would be transferred to the health and social services counties.

The proposed acts essential for the establishment and operation of the counties are:

  • act on organising healthcare and social welfare
  • act on organising rescue services
  • act on health and social services counties
  • act on the structure of health and social services counties
  • act on organising health, social and rescue services in Uusimaa
  • act implementing the reform
  • act on the funding of health and social services counties.

The legislative proposal also includes bills for amending legislation on central government transfers to municipalities, tax legislation, legislation on the personnel of health and social services counties and certain acts on general administration. In total, the legislative proposal consists of 48 acts and legislative amendments.

Act on organising healthcare and social welfare provides a more solid foundation for creating seamless service chains

The act on organising healthcare and social welfare would bring together under the health and social services counties the basic-level and specialised services in healthcare and social welfare. Integrating the responsibility for organising and funding services within the health and social services counties would make it possible to improve the flow of customer service chains. Integration is one of the main tools for achieving the objectives of the reform.

The act on organising healthcare and social welfare would also lay down provisions on five collaborative catchment areas for healthcare and social welfare. The health and social services counties of each collaborative catchment area would agree on the division of labour, cooperation and coordination in the healthcare and social welfare matters prescribed in greater detail in the act. In addition, the act would contain provisions on the duty of bilingual health and social services counties to agree on cooperation and the division of labour in the provision of health and social services in Swedish.

The Uusimaa health and social services counties and the City of Helsinki would have the primary responsibility for organising healthcare and social welfare but the joint county authority for the Hospital District of Helsinki and Uusimaa would have the statutory responsibility for organising specialised medical care and university hospital duties.

Proposed legislation aims to strengthen the health and social services counties’ responsibility for organising healthcare and social welfare and to make further specifications on the use of outsourced services and temporary agency labour

The proposed legislation would lay down more precise provisions on the health and social services counties’ responsibility for organising services and clearly delimited provisions on the procurement of services from private service providers and the use of temporary agency labour.

The act implementing the reform would include provisions on the invalidity of outsourced service contracts transferred to the health and social services counties that would violate the provisions of the act on organising healthcare and social welfare concerning the responsibility for organising services and the use of outsourced services, if the contract could not be rendered lawful. It is estimated that the risk of invalidity will mainly concern extensive total outsourcing contracts.

Rescue services reform aims to achieve national efficiency and more harmonised rescue services

According to the draft proposal, rescue services would in future be organised by the health and social services counties and the City of Helsinki, which would also be responsible for organising health and social services in their areas. 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 equal rescue services throughout the country. The aim is also to develop the operations of rescue services as a national system.

Act on health and social services counties creates the basis for organising the administration and funding of the counties

As in the Local Government Act, the act on health and social services counties would make it possible for the counties to organise their administration in a way that is suitable for the local conditions. No statutory separation of the organisation and provision of healthcare and social welfare services is proposed.

The statutory bodies of health and social services counties would be the county council, the county executive and the audit committee. Bilingual health and social services counties should have a national language board and the health and social services county of Lapland should have a Saami language board.

Health and social services counties would organise the statutory duties assigned to them, namely health, social and rescue services. They could also assume, within their areas, responsibility for duties that support their statutory duties; thus, they would have a restricted general mandate as provided by law. Health and social services counties could engage in low-risk business activities that support the performance of their statutory duties.

Health and social services counties could perform duties jointly by making an agreement to this effect. Joint county authorities for health and social services could only perform duties related to the provision of support services; they could not assume responsibility for organising statutory duties. Every council term, the health and social services counties and the municipalities in their areas would discuss the cooperation, objectives and division of labour related to the performance of their duties.

Two options for the member municipalities of the East Savo Hospital District regarding the division into health and social services counties

The structure of health and social services counties would be defined in the act implementing the reform.

Comments are requested on two options for the counties of North Savo and South Savo regarding the placement of the municipalities within the East Savo Hospital District (Enonkoski, Rantasalmi, Savonlinna and Sulkava) either as part of the county of North Savo or as part of the county of South Savo in accordance with the current division into regions. Impact assessments and detailed calculations for the two options are annexed to the government proposal. This potential change to the current division into regions would also apply to the Regional Councils, Centres for Economic Development, Transport and the Environment, judicial districts of District Courts and the electoral districts of parliamentary elections. The division into counties will be decided after the consultation round.

Funding and impact on taxation

The activities of health and social 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 the funding of health and social services counties would be laid down in the act on the funding of health and social services counties.

County funding would be based on the municipalities’ costs of organising the transferable tasks of healthcare and social welfare and rescue services. A proportion of the municipalities’ revenue and costs, amounting to an estimated EUR 19.1 billion at the 2020 level, would be transferred from the municipalities to finance the counties’ activities. While a proportion of the municipalities’ revenue and costs would be transferred in equal measure when examined for the country as a whole, there could be great differences among municipalities. Changes in local government finances would be made more equitable among municipalities by introducing different kinds of equalisation elements to the system of central government transfers to local government for basic public services.

This funding base for health and social services counties would be raised annually based on estimated service needs and growth in the level of costs. Any changes in duties would be taken into account in the cost level and, moreover, the level of county funding would be adjusted retrospectively so that imputed costs would not diverge from the actual costs incurred by counties.

The funding for health and social services counties would be universal. It would be divided among the counties based on imputed factors related to service needs and circumstances, covering healthcare and 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 finance model for the health and social services counties will be reviewed again on the basis of the comments received during the consultation round.

Municipalities' tax revenue would be transferred to the State to fund the counties’ activities. The transfer would be achieved by decreasing municipalities’ central government transfers, compensations for tax losses, municipalities’ share of corporation tax revenue, and municipal income tax. Transfers through taxation would amount to around EUR 12.7 billion (EUR 12.1 billion in earned income tax revenue and EUR 0.6 billion in corporation tax revenue).

A proportion of the municipal income tax would be transferred to fund the counties’ activities by lowering the municipal income tax percentages equally among the municipalities. A current estimate of the cut is 12.63 percentage points. A uniform reduction in municipal income tax rates and a corresponding increase in central government taxation would ensure that taxation of municipal residents would remain almost unchanged. The differences between municipal tax rates would also remain unchanged.

Guidance and direction to be strengthened — annual negotiations with health and social services counties to be introduced

It is proposed that the powers of central government to guide and direct the organisation of public healthcare, social welfare and rescue services be strengthened. The Government would confirm the national strategic objectives of healthcare, social welfare and rescue services every four years. The targets set by the Government for general government finances would be incorporated into the national objectives. The achievement of the strategic objectives would be monitored annually and revised as necessary.

As part of the national guidance and direction, ministries would hold annual negotiations with each health and social services county. The aim of these negotiations would be to monitor, assess, guide and direct the organisation of duties that belong to health and social services counties. Negotiations would also provide information for the preparation and monitoring of the Budget and the General Government Fiscal Plan. The aim of the annual negotiations and other national guidance and direction would be an interactive and continuous process for providing guidance and direction.

As part of the direction of finances and activities in the health and social services counties, ministries would also direct the counties’ investments. On the basis of a proposal by the Ministry of Finance, the Government would decide each financial period whether to authorise counties to take a long-term loan to finance their investments.  The Ministry of Social Affairs and Health and the Ministry of the Interior would decide on the approval of health and social services counties’ investments, taking into account the Government’s decision on the loan authorisation of health and social services counties. To this effect, they would approve each county’s investment plan.

Ministries would also hold annual negotiations with each collaborative catchment area for healthcare and social welfare. In addition, in certain pressing cases that are related to the organisation of healthcare and social welfare and prescribed by law, the Government would have, on the proposal of the Ministry of Social Affairs and Health, the right to decide on the content of cooperation agreements between collaborative catchment areas and bilingual health and social services counties.

Impact on personnel

The personnel of the municipal health, social and rescue services, apart from the personnel of the City of Helsinki, would be transferred to the employment of the health and social services counties on the principles of transfer of business. School social workers and school psychologists in municipalities would also be transferred to the employment of the counties. The personnel of the Hospital District of Helsinki and Uusimaa would be transferred to the employment of the joint county authority for the Hospital District of Helsinki and Uusimaa.

In addition, the personnel of municipalities and joint municipal authorities performing support service tasks in healthcare and social welfare would be transferred to the employment of health and social services counties when at least half of their tasks are municipal healthcare and social welfare support tasks. All tasks supporting the activities of healthcare, social welfare and rescue services would be considered support services. Such tasks would include centralised food supply, cleaning, financial and human resources services, ICT services, medical laboratories and imaging services.

The transfer to the employment of counties would apply to a total of 170,000 municipal employees.

Impact of the reform on general government finances

Population ageing weakens the revenue base of general government finances and increases the need for health and social services. The decline in the working-age population is a growing challenge. The health and social services reform aims to curb the growth of costs.

The draft government proposal takes into account the preconditions set earlier by the Constitutional Law Committee for the sufficient funding of health and social services counties to safeguard people’s fundamental rights. County funding would be imputed and universal, which would make it possible for the health and social services counties to allocate funding according to the service needs.

The preliminary review of funding would take account of people’s service needs almost in full (80%) and the estimated growth in the level of costs. The funding would be adjusted retrospectively to correspond to the actual costs at the national level.

The system for guiding, directing and funding the activities and finances of the health and social services counties would bring stability and predictability to general government fiscal planning. The reform of healthcare, social welfare and rescue services would develop the public sector structures that can be used to increase the productivity of labour, utilise modern technology solutions and practices proven to be effective, and streamline operating processes. With these operational changes, it would be possible to achieve benefits that balance growth pressures related to general government finances that are caused by the ageing of the population and the weakening of the dependency ratio.

Schedule

According to the draft proposal, the first county elections in the health and social services counties would take place in early 2022. The timing of the county elections would be depend on the time needed for Parliament to consider the proposal.

The goal is for the acts related to the proposal to enter into force from the beginning of 2023. The government proposal is scheduled to be submitted to Parliament in December 2020.

Links

Inquiries:

Health and social services reform:

Requests to interview Minister Kiuru: Laura Lindeberg, Special Adviser, tel. +358 2951 63109, laura.lindeberg(at)stm.fi

Consultation round:

Päivi Salo, Secretary General, Ministry of Social Affairs and Health, tel. +358 295 163 113, paivi.salo(at) stm.fi

Auli Valli-Lintu, Senior Ministerial Adviser, Ministry of Social Affairs and Health, tel. +358 295 163 463, auli.valli-lintu(at)stm.fi

Act on organising healthcare and social welfare:

Pirjo Kainulainen, Senior Ministerial Adviser, Ministry of Social Affairs and Health, tel. +358 295 163 092, pirjo.kainulainen(at)stm.fi 

Act on organising healthcare and social welfare, guidance and direction, and collaborative catchment areas for health and social services counties: 

Taina Mäntyranta, Senior Ministerial Adviser, Medical Affairs, Ministry of Social Affairs and Health, tel. +358 295 163 692, taina.mantyranta(at)stm.fi 

Suvi Velic, Lawyer, Ministry of Social Affairs and Health, tel. +358 295 163 477, suvi.velic(at)stm.fi

Act on special arrangements for Uusimaa and act implementing it:

Auli Valli-lintu, Senior Ministerial Adviser, Ministry of Social Affairs and Health, tel. +358 295 163 463, auli.valli-lintu(at)stm.fi

Establishment and administration of counties, and division into counties:

Erkki Papunen, Ministerial Adviser, Ministry of Finance, tel. +358 2955 30167, erkki.papunen(at)vm.fi

Funding:

Markku Nissinen, Senior Ministerial Adviser, Ministry of Finance, tel. +358 2955 30314, markku.nissinen(at)vm.fi

Ville Salonen, Ministerial Adviser, Ministry of Finance, tel. +358 2955 30388, ville.salonen(at)vm.fi

Funding for counties:

Miikka Vähänen, Ministerial Adviser, Ministry of Finance, tel. +358 2955 30341, miikka.vahanen(at)vm.fi

Jenni Jaakkola, Senior Specialist, Ministry of Finance, tel. +358 2955 30493, jenni.jaakkola(at)vm.fi

Asset arrangements:

Pasi Leppänen, Ministerial Adviser, Ministry of Finance, tel. +358 2955 30564, pasi.leppanen(at)vm.fi

Mervi Kuittinen, Senior Ministerial Adviser, Ministry of Finance, tel. +358 2955 30445, mervi.kuittinen(at)vm.fi

Ville Koponen, Ministerial Adviser, Ministry of Finance, tel. +358 2955 30504, ville.koponen(at)vm.fi

Personnel:

Marja Isomäki, Senior Ministerial Adviser, Ministry of Finance, tel. +358 02955 30414, marja.isomaki(at)vm.fi

Anu Hernesmaa, Ministerial Adviser, Ministry of Finance, tel. +358 2955 30027, anu.hernesmaa(at)vm.fi

Taxation:

Timo Annala, Ministerial Adviser, Ministry of Finance, tel. +358 2955 30318, timo.annala(at)vm.fi

Marja Niiranen, Ministerial Adviser (VAT), Ministry of Finance, tel. +358 2955 30238, marja.niiranen(at)vm.fi

Rescue services reform:

Kimmo Kohvakka, Director General for Rescue Services, tel. +358 02954 88400, kimmo.kohvakka(at)intermin.fi

Ilpo Helismaa, Senior Ministerial Adviser, tel. +358 295488422, ilpo.helismaa(at)intermin.fi