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BMJ. May 1, 1999; 318(7192): 1156–1157.
PMCID: PMC1115567

Devolution in Swedish health care

Local government isn’t powerful enough to control costs or stop privatisation
Finn Diderichsen, Professor of social epidemiology and health policy research

Spending on welfare in Sweden increased from 5% of gross domestic product in the 1930s to 40% in 1980. How can a democratic state justify spending nearly half of the population’s income on health and welfare year after year? The political will to sustain this level of spending will survive only if the welfare state, particularly health care, is seen to be accessible, efficient, and equitable.1 And such expansion in spending is possible only if the administration of the system is strong and highly accountable. In 1982, in an attempt to protect these principles and to ensure closer matching to local values, needs, and priorities, the Swedish government devolved these responsibilities to county councils. It abolished many detailed national regulations for health care and laid down only general goals for county councils, such as health gain and equal access to care. The resulting system illustrates the tensions inherent in any system of devolution—and the ever present pressures that tend towards centralisation. In the attempt to main equity of access Sweden has combined strong central financial control with local political responsibility. As healthcare spending is curtailed, local authorities have had difficulty in maintaining political legitimacy for their health policies.

Sweden has a long tradition of local government, predating the modern welfare society, so the ground was already well prepared for devolution in health care. Since 1860 elected representatives in municipalities and county councils have raised taxes and run public services such as schools, hospitals, and community care. To cope with the rapidly growing welfare state the original 2800 municipalities were merged to form 300 in the 1970s, and in 1988 some of the 26 county councils joined together to form larger regional bodies.

In all, 73% of revenue for health care in Sweden is generated through local income tax. There are also some user charges, which now account for 16% of the revenue, and grants from the national government (11%). But counties in Sweden vary in both income level and healthcare need, factors that tend to be inversely related. Two different systems have been developed to ensure equity of access to health care. Firstly, the Swedish government compensates poorer counties so that all counties have the same total revenue per head. Secondly, a formula has been introduced this year to account for differential needs. This formula is based on a model developed within Stockholm County Council2 which adjusts for variations in population structure with respect to age, education, employment, and housing tenure. Variations in the prevalence of a number of costly conditions such as psychoses, cancer, and cardiovascular disease are also used in the model.

Despite the rapid increase in overall spending on welfare up to the 1980s, Swedish healthcare spending has recently been kept under very strict control. During the 1980s the national government reduced spending on health care from 9.5% to 8.8% of gross domestic product. The economic crisis of the early 1990s made things even tougher. No country in Western Europe or North America experienced such a dramatic drop in healthcare spending: between 1990 and 1996 public spending on health care in the United Kingdom increased by 38.4% and that in the United States increased by 59.8% while Sweden’s rose only by 3.4%. Central government has curtailed costs by cutting its grants to the county councils and legislating against any rise in local taxation rates. High unemployment has also reduced local tax revenues.

County councils have responded to these cost constraints by sacking thousands of auxiliary nurses, thereby reducing overall employment in health care by 25%. Some of this has been due to a shift of nursing homes to the municipalities, but the net effect on the workload of the remaining nurses has been dramatic. In the longer term, many county councils have implemented wide reaching reforms of the way they deliver health care, looking to the British NHS and introducing purchaser-provider splits, fee for service payments in hospitals, and capitation payments in general practice.1,3,4 Other councils have, however, opted to wait and see what happens before making big changes. Furthermore, some counties have preferred to expand private provision. In wealthy areas of the larger cities the number of private providers has grown sharply, but this has just added to the problem since the costs they generate have had to be paid by the county councils from within their overall budgets.

Devolution has not dealt with the underlying problems in Swedish health care. In principle Sweden’s decentralised system allows local government to tailor reforms that handle the delicate balance between efficiency, equity, and political accountability, and it has shown that equity of access across counties can be guaranteed by the use of formulas that adjust for variations in local tax income and in healthcare need. However, strict cost containment means that patients are facing decreasing access to care. Medical staff are leaving for the private sector, and more than 20% of hospital beds are now privately funded. In the long term such privatisation may seriously threaten the equity and sustainability of a universal system that depends on loyalty from broad constituencies. County councils are not powerful enough to handle this threat. Regulating a growing private sector will need national legislation, but that, in turn, will limit the freedom of local government.

Notes

Editorial p 1155, Education and debate pp 1195-1205, News p 1166, Personal view p 1221, Letters p 1215

References

1. Diderichsen F. Market reforms in health care and sustainability of the welfare state. Health Policy. 1995;32:141–153. [PubMed]
2. Diderichsen F, Varde E, Whitehead M. Allocating resources to health care—a new model applied in Sweden. BMJ. 1997;315:875–878. [PMC free article] [PubMed]
3. Saltman RB, Figueras J. European health care reform. Copenhagen: WHO Regional Office for Europe; 1997.
4. Whitehead M, Gustafsson RÅ, Diderichsen F. Why Sweden is rethinking its NHS-style reforms. BMJ. 1997;315:935–939. [PMC free article] [PubMed]

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