05.06.2020

Prime Minister Marin’s Government decides basis for health and social services reform The Government has finalised the policy outlines for the health and social services reform, on the basis of which preparations for the reform will continue. The aim is to circulate the draft bills on the restructuring of health and social services for comments in June. The reform is progressing both as a structural reform and as a service reform. Health and social services will be developed as part of the Future Health and Social Services Centres programme. The call for applications for funding from the programme closed at the end of May. The results of the call will be published at the end of June.

Division into regions and Hospital District (Enonkoski, , responsibility for integration and ) either as part of the county of North The division into regions would be implemented in a Savo or as part the county of in accord- way that, after the reform, there would be one joint ance with the current division into regions. Impact Act on the Division into Counties. The division into assessments and detailed calculations for the two counties would provide an area of operation not only options will be annexed to the government proposal. for health and social services counties but also for This potential change to the current division into regional councils and form the basis for the regional regions would also apply to the Regional Councils, divisions of regional state administration. The act Centres for Economic Development, Transport and implementing the reform would lay down provisions the Environment, judicial districts of District Courts on the division into counties as the reform enters into and the electoral districts of parliamentary elections. force. The division into counties will be decided after the The responsibility for organising services would consultation round. be integrated so that there would be one organiser responsible for both basic-level and specialised ser- Responsibility for organising services vices in healthcare and social welfare. Some of the The health and social services counties would be services and duties in healthcare and social welfare responsible for their statutory duties, and they would would be integrated into larger packages for one or also decide on the equal availability of services, de- more counties. A total of 12 health and social services fine the need, quantity and quality of services and counties and HUS would be responsible for providing determine the way services are provided. They would extensive 24-hour services in healthcare and social be responsible for exercising the powers assigned to welfare. There would be five collaborative catchment them as public authorities (exercise of public author- areas for the regional coordination, development and ity) and supervising the provision of services. cooperation of healthcare and social welfare organ- In addition to the services, the health and social ised by the counties. services counties would assume responsibility for A basic solution based on the health and social preventive healthcare and social welfare services, services counties would be applied to the Uusimaa training and research, preparedness for incidents and region, apart from the City of Helsinki and the joint emergencies, security of supply and duties related county authority for the Hospital District of Helsinki to the prevention of communicable diseases, for and Uusimaa. As a city, Helsinki would be responsible example. The counties should have sufficient compe- for organising health and social services as well as tence, functional capacity and preparedness to take rescue services, and the joint county authority for the responsibility for the organisation of healthcare and Hospital District of Helsinki and Uusimaa would per- social welfare and they must ensure the availability form the statutory duties assigned to it. A special act of health and social services according to their resi- would complement the general regulation. dents’ service needs in all situations. Comments are requested on two options for the The counties should also have in place a sufficient counties of North Savo and South Savo regarding the service provision system of their own to fulfil their placement of the municipalities within the East Savo responsibility for organising services. The services

FINNISH GOVERNMENT | Snellmaninkatu 1 A, Helsinki, PO Box 23, FI-00023 Government, of school social workers and school psychologists another act. The provider of purchased services and would be organised in the future health and social its subcontractor must fulfil the conditions laid down services counties but they would be a locally accessi- in the Private Healthcare Act and the Act on Private ble service in the same way as before. Close cooper- Social Services (in future, the conditions laid down in ation between the education and culture sector and the Service Provision Act and the Enforcement Act). the counties would be ensured by creating the neces- Private service providers could purchase health and sary cooperative structures. Measures would also be social services from subcontractors to supplement taken to strengthen student welfare services, and for their own activities. this purpose, binding levels of student welfare ser- vices would be set. Supervision The Act on Organising Healthcare and Social Organisation of rescue services Welfare would include provisions on the supervi- The responsibility for organising rescue services sion of counties, according to which the Regional would rest with 21 health and social services counties State Administrative Agencies and the National and the City of Helsinki. Because the health and social Supervisory Authority for Welfare and Health (Valvira) services counties would be responsible for organising would act as the supervisory authorities. The Act both health and social services and rescue services in would also contain provisions on the self-supervision their areas, the rescue departments could, in addition of counties. Provisions would be introduced whereby to their rescue service duties, continue to provide the health and social services counties would be prehospital emergency medical services and first required to state the reasons for procurement deci- response services. Rescue services would continue sions, undertake risk management in their areas, and to be a separate sector working in parallel with the prepare for the expiration of contracts for purchased healthcare and social welfare sector. As a result of the services and for possible breaches of contract and reform, the role of central government guidance and disruptions. The counties would be obliged to super- direction in rescue services would be strengthened vise and guide outsourced service activities at both and, in future, rescue services would be funded from the population and individual levels. In addition, pro- the Budget. Stronger national guidance and direction visions would also be introduced whereby the coun- would improve the provision of more harmonised ties’ outsourcing plans would be monitored as part and equal rescue services throughout the country. of the annual discussions with the Ministry of Social Affairs and Health. Responsibility for organisation, and purchased services Guidance and direction of counties The health and social services counties could pur- The Government would confirm the national and chase health and social services from private service fiscal policy strategic objectives for health, social and providers if that is necessary to ensure the sufficiency rescue services for a four-year term. The counties’ and equal provision of services and to perform their activities and funding would be assessed annually duties appropriately. The content, scope and quantity when the Ministry of Social Affairs and Health holds of the services to be purchased should be such that negotiations with the counties to provide guidance the counties could, in all situations, fulfil their re- and direction. The following new advisory boards sponsibility for organising services in an appropriate would be established under the relevant Ministries — manner. the advisory board for healthcare and social welfare However, it would not be permitted to purchase (Ministry of Social Affairs and Health), the advisory services relating to duties fulfilling the responsibil- board for rescue services (Ministry of the Interior) and ity for organising services or the exercise of public the advisory board for county funding and govern- powers, 24-hour social services, primary and spe- ment (Ministry for Finance). All counties and the rele- cialised 24-hour health services, and services related vant Ministries would participate in the work of these to the organisation of prehospital emergency med- boards. ical services. Under similar conditions, it would be possible to use temporary agency labour. Private Administration service providers can perform duties involving the Provisions on the matters relating to the activities, use of public powers only if separately provided in administration and funding of counties would be laid

FINNISH GOVERNMENT | Snellmaninkatu 1 A, Helsinki, PO Box 23, FI-00023 Government, Finland down in the Counties Act, the provisions of which funding. The preparation of the criteria for determin- would be very similar to those laid down in the Local ing funding for counties will examine the need and Government Act. The provisions of the Counties Act possibility to take into account the counties’ different would be general and allow the county councils to possibilities to collect income-related client charges. decide on the organisational structure of counties in more detail. An elective county council would be Environmental healthcare the highest decision-making body of counties. The Tasks related to environmental healthcare would activities of counties would be managed in accord- not be transferred to the counties at this stage. The ance with a county strategy approved by the county Ministry of Social Affairs and Health and the Ministry council. In addition to the organisation of the coun- of Agriculture and Forestry will launch a study on ties’ administration, the Counties Act would lay down other possible environmental healthcare arrange- provisions on the opportunities of county residents ments to reduce the number of organisers alongside to influence and participate, for example. the health and social services reform. The Ministry of Agriculture and Forestry will set up a working group Provisional governance to reform legislation on veterinary services. during the initial stage After the establishment of counties, but before the Municipal funding start of the county council’s’ term of office and the A proportion of the municipalities’ revenue and costs, appointment of a county executive, it would be amounting to an estimated EUR 19.1 billion at the 2020 necessary to set up a body responsible for preparing level, would be transferred from the municipalities to the launch of the county’s activities. Such provisional finance the counties’ activities. This would be achieved preparatory bodies would consist of representatives by decreasing central government transfers, compen- of the authorities who currently perform the duties to sations for tax losses, municipalities’ share of corpora- be transferred to the counties. Provisions on the com- tion tax revenue, and municipal income tax. Taxation position of the bodies would be laid down in the act would account for approximately EUR 13 billion. A implementing the reform with the effect that the rep- proportion of the municipal income tax would be resentation of different operators would be secured. transferred to finance the counties’ activities by low- The responsibility for appointing and organising such ering the municipal income tax percentages equally bodies would rest with municipalities or joint munici- among the municipalities. A current estimate of the pal authorities, but first the municipalities in the area cut is 12.63 percentage points. While a proportion of would have to reach a unanimous decision on this. the municipalities’ revenue and costs would be trans- ferred in equal measure when examined for the coun- Personnel try as a whole, there could be great differences among All personnel and their tasks would be transferred municipalities. Changes in local government finances from municipal units and institutions providing would be made more equitable among municipalities health, social and rescue services and from joint mu- by introducing different kinds of equalisation ele- nicipal authorities to the employment of the health ments to the system of central government transfers and social services counties and joint county author- to local government. The difference between trans- ities for health and social services on the principles ferable costs and revenue for a municipality would be of transfer of business. School social workers and restricted by the use of a separate change limiter. The school psychologists, too, would be transferred to overall change in finances would be curbed by a tran- the employment of the counties. Personnel would sitional equalisation of five years that would limit the be transferred from joint municipal support services change in a municipality’s financial balance in stages, to the employment of the counties and joint county eventually reaching a limit of +/- EUR 100 per capita. authorities when at least half of their tasks are subject For the time being, any amounts exceeding the limit to transfer. would be offset by a continuous adjustment equali- sation. In the year of the reform’s entry into force, the Client charges change in financial balance would be restricted to Client charges would be subject to annual assess- zero in relation to the situation in the preceding year. ment as part of the guidance and direction of the In addition, significant changes would be made to the counties and the assessment of the sufficiency of revenue equalisation system.

FINNISH GOVERNMENT | Snellmaninkatu 1 A, Helsinki, PO Box 23, FI-00023 Government, Finland Funding for health and would get the movable assets and contracts of the social services counties municipalities and joint municipal authorities relating The funding for the health and social services coun- to healthcare and social welfare and rescue services ties would be based to a large part on state fund- as well as the holiday pay liabilities of the transfera- ing as well as on client and user charges. In the first ble personnel. The counties would lease municipali- phase, the counties would not have the right to ty-owned premises for healthcare and social welfare levy taxes. County funding would be based on the and rescue services for a transitional period (at least municipalities’ costs of organising the transferable three years with one year’s option). tasks of healthcare and social welfare and rescue services. This funding base would be raised annu- Taxation ally based on estimated service needs and growth Municipalities’ tax revenue would be transferred in the level of costs. Any changes in the duties of the to the state to finance the counties’ activities. The counties would be taken into account in the cost current estimate is around EUR 12.1 billion in earned level. Moreover, the level of county funding would be income tax revenue and around EUR 0.6 billion in adjusted retrospectively so that imputed costs would corporation tax revenue at the 2020 level. Changes in not diverge from the actual costs. The funding for the earned income taxation would be carried out within health and social services counties would be univer- the current tax system by changing the deductions sal. It would be divided among the counties based on and the state and municipal income tax percentages. imputed factors related to service needs and circum- The basis of state and municipal income taxation stances, covering healthcare and social welfare and would be amended at the same time. According to rescue services. current estimates, the municipal income tax per- Some of the funding would be based on popu- centages would be reduced for all municipalities by lation numbers and some would be determined by 12.63 percentage points, while state taxation would the criteria for health and wellbeing performance. be raised correspondingly. Any changes to earned The health and social services counties would also be income taxation would be implemented in ways that eligible for additional funding to secure health, social have as little impact as possible on taxpayers’ taxa- and rescue services if the level of funding allocated tion levels: the aim is not to lighten or tighten any- to them jeopardised the organisation of services. A one’s taxation. comprehensive finance model would be introduced Current estimates indicate that earned income already in the year of the reform’s entry into force, taxation would have to be cut by around EUR 185 which means that changes in needs-based factors billion to prevent any increase in earned income tax- would be fully taken into account. However, during ation. The municipalities’ share of corporation tax rev- the transition period, the difference between the enue will be reduced by one third, while the state’s transferable costs and the funding calculation for share will be raised correspondingly. In income tax- the counties would be adjusted by means of a tran- ation, the tax status of the health and social services sitional equalisation, so that the change would not counties would correspond to that of other public exceed the limit of +/- EUR 150 per capita over seven sector entities. The intention is that there will be no years. For the time being, any amounts exceeding tax consequences in income taxation, value-added the limit would be offset by a continuous adjustment taxation or capital transfer taxation when the joint equalisation. The finance model for the health and municipal authorities and their assets and liabilities social services counties will be reviewed on the basis are transferred in the manner outlined in the Act of the comments received during the consultation implementing the reform to the health and social round. services counties or to the joint county authorities for health and social services. Assets The health and social services counties would be ob- Value-added taxation ligated to have the assets necessary for fulfilling their To improve the purchasing neutrality of county-level responsibility for organising services. The joint mu- operations, the counties would be compensated the nicipal authorities for hospital districts and special- value-added tax (VAT) costs included in the acquisi- ised healthcare and their assets and liabilities would tions for general administration, health and social ser- be transferred to the new counties. The counties vices, and rescue services, among others. Health and

FINNISH GOVERNMENT | Snellmaninkatu 1 A, Helsinki, PO Box 23, FI-00023 Government, Finland social services counties and joint county authorities would be linked to the VAT system in the same way for health and social services would have the right to that applies to the municipal sector at the moment. get a refund for VAT included in taxable acquisitions Tax costs included in acquisitions would be refunded and the imputed VAT included in tax-free acquisitions through the VAT system. As a result, the amount of in healthcare and social welfare. VAT included in acquisitions of the municipal sector Other public sector entities responsible for or- would decrease an estimated EUR 1.6 billion, and a ganising health, social and rescue services would be corresponding amount would be transferred to the considered equal to the health and social services county sector. counties. To reduce administrative burden, the refund

Inquiries: Government proposal Senior Ministerial Adviser Funding for counties: Senior Ministerial Adviser for the health and social Taina Mäntyranta Ministerial Adviser Marja Isomäki services reform: Ministry of Social Affairs and Antti Väisänen Ministry of Finance Health tel. +358 2955 30414 General Secretary Ministry of Social Affairs and tel. +358 2951 63692 Health [email protected] Päivi Salo [email protected] Ministry of Social Affairs and tel. +358 2951 63044 Ministerial Adviser Health Legal Adviser [email protected] Anu Hernesmaa tel. +358 295 163 113 Suvi Velic Impact assessment: Ministry of Finance [email protected] Ministry of Social Affairs and tel. +358 2955 30027 Health Ministerial Adviser Piia Pekola [email protected] Act on the Uusimaa tel. +358 2951 63477 Ministry of Social Affairs and arrangement, act [email protected] Health Taxation: implementing the reform: tel. +358 2951 63694 Ministerial Adviser Senior Ministerial Adviser Establishment and [email protected] Timo Annala administration of counties, Auli Valli-Lintu Asset arrangements: Ministry of Finance Ministry of Social Affairs and and division into counties: tel. +358 2955 30318 Ministerial Adviser Health Ministerial Adviser [email protected] tel. +358 50 570 4394 Erkki Papunen Pasi Leppänen Ministry of Finance Ministerial Adviser [email protected] Ministry of Finance tel. +358 2955 30564 Marja Niiranen tel. +358 2955 30167 [email protected] Ministry of Finance Act on Organising [email protected] Healthcare and Social tel. +358 2955 30238 Senior Ministerial Adviser [email protected] Welfare, guidance Funding: Mervi Kuittinen and direction, and Senior Ministerial Adviser Ministry of Finance Rescue services reform: collaborative catchment Markku Nissinen tel. +358 2955 30445 Director General areas for health and social Ministry of Finance [email protected] of the Rescue Services services counties: tel. +358 2955 30314 Kimmo Kohvakka [email protected] Personnel: Senior Ministerial Ministry of the Interior Director of Collective Agreements Adviser Pirjo Kainulainen Ministerial Adviser tel. +358 2954 88400 Sari Ojanen Ministry of Social Affairs and Ville Salonen [email protected] Health Ministry of Finance Ministry of Finance tel. +358 2955 30109 Ministerial Adviser tel. +358 2951 63092 tel. +358 2955 30388 [email protected] [email protected] at Ministry of the Interior [email protected] (only 5.6.2020) Ilpo Helismaa Ministry of the Interior tel. +358 2954 88422 [email protected]

FINNISH GOVERNMENT | Snellmaninkatu 1 A, Helsinki, PO Box 23, FI-00023 Government, Finland