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Healthcare costs continue to rise across municipalities

Starting next year, healthcare costs will be shouldered by wellbeing services counties rather than municipalities.

Increasing costs of municipal health care are part of a broader trend: health care expenditures in Finland have been rising for decades, according to the National Institute for Health and Welfare (THL). Image: Laura Hyyti / Yle

Finland's health care costs have been rising for years, with no sign of an end in sight, according to a June comparison of primary health care costs by the Association of Finnish Local and Regional Authorities (AFLRA).

The report showed that healthcare costs increased significantly last year compared to 2020, especially in large cities.

The biggest increases in cost per capita were in Vantaa (8.2 percent), Turku (8.0 percent) and Pori (6.7 percent), with Lahti experiencing the smallest increase (2.1 percent).

State aid offset some of the increased expenses for municipalities. In 2021, state aid for Covid-related care costs amounted to more than 1 billion euros. Furthermore, state subsidies to municipalities were increased by more than 300 million euros.

Two exceptional years

According to Maria Pernu, expert on social and health issues at AFLRA, municipalities have had two very exceptional years.

"Costs have already been high, and have risen further. However, there is no one cause behind the increase; it is a combination of factors," Pernu pointed out.

The first Covid pandemic year left behind a huge debt for medical services, which municipalities attempted to cover last year. Additionally, the pandemic led to an increase in the demand for child protection, mental health, and substance abuse services, resulting in higher costs.

On top of this, prices have increased, with inflation adding to the overall costs of providing services.

Costs are also rising in part because of a shortage of staff. "Many municipalities have had to hire out staff as they have struggled to find their own employees. This has pushed up salary costs," Parnu said.

Part of a broader trend

Increasing costs of municipal health care are part of a broader trend—health care expenditures in Finland have been rising for decades. According to preliminary data from the National Institute for Health and Welfare (THL), health care expenditures in Finland will amount to nearly 23 billion euros in 2020, or 9.6 percent of the country's GDP. Comparatively, in 2000, spending was around 9.7 billion euros and accounted for 7.1 percent of GDP.

Starting next year, the responsibility for organising healthcare services will be transferred to self-governing wellbeing services counties under the new healthcare, social welfare and rescue services reform. One of the aims of the reform is to curb costs.

However, Minna Punakallio, chief economist at AFLRA, says the wellbeing services counties have a number of complicated issues to deal with first.

“They should at least address the upward pressure on costs caused by an ageing population,” Punakallio noted.

In addition to expanding the tasks of the wellbeing counties, the new regions will also have to deal with wage harmonisation and various transfer costs, Punakallio said.