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Economic Freedom


Sweden's Health Care System

Margit Gennser

Swedish attitudes about health care

TO UNDERSTAND THE SWEDISH SOCIAL security and health care system, the historical perspective is important. A traditional strong state bureaucracy and citizens' natural acceptance of state planning in their lives explain a lot about the structure of the Swedish health care system.

Between 1958 and 1963, a government commission investigated health care in Sweden's county regions.
[SOU 1963:21, Sjukhus och öppenvård: Swedish government report on "Hospitals and Open Care."] In its report, the commission held that expenditures on education and health care would greatly increase, as would expenditures in other areas of the economy, and that these increases could produce problems in the manufacturing sector. Total health care costs were 1.8 percent of GDP in 1946: by 1960 the figure had increased to 3.5 percent of GDP, and the commission expected it to grow to 4 percent or 5 percent by 1970. This growth in health care expenditures had to be accepted, according to the commission. It pointed out one major benefit of increased expenditures-less loss of production due to illness.

The commission estimated the benefits of providing health care at about 5 billion crowns a year, somewhat less than US$1 billion. However, it also pointed out that the expansion of the health sector would create financial problems. In times of low economic activity, incomes would shrink and the costs of health care would remain high. In the commission's opinion, though, investments in the health sector should be used to create work: "If rising total costs for the health care sector were to be accepted, it was necessary . . . to maintain economic efficiency." Planning and rationalization were looked on as important factors, along with medical innovation and research. It was recommended that economic expertise be secured for the health care sector: the commission also wanted resources put into the collection and analysis of health care statistics.

Increased educational requirements for nurses, doctors, and health economists formed a major element of the commission's report: so did different models of organization. For example, which level of the public sector should be responsible for the health care system: the central state, county regions, or local councils? What is more, should the responsibility for health care be the same for every kind of health care? The answer to the last of these questions was "Yes," even if standardization could not be implemented at once.

The consumers, the patients, and their wishes were not really a major focus of the commission's discussions. The patient was looked on as an object of the state health care system. In the whole of the commission's report, there are only two places where the patient is even discussed. First, a member of the Social Democratic Party stressed that patient fees ought to be low and the same for both in- and out-patients. The Conservative commission member remarked that it was necessary that all patients receive the same care regardless of age.

Sweden's health care sector before the reforms that began in the 1960s

The Swedish health care sector was small compared with countries like Great Britain. The costs of health services were borne partly by the state (district doctors and mental hospitals), partly by the social insurance system, partly by taxes (county and/or local council income taxes), and partly by patient fees. The organization of the health care system was not integrated. In many ways, it reflected the special circumstances of a geographically large country with a small population.

Hospitals were managed by the bigger towns and county regions. Private hospitals were rare: in 1950, they provided only 2,600 of a total 58,000 beds for somatic care.
[Ibid.] Heads of clinics in hospitals were allowed to treat private patients, and hospitals had private wards. By the end of the 1950s, the hospitals started to phase out both private wards and the senior physicians' privilege of serving private patients.

During this time, the majority of doctors were employed in the public sector: 20 percent were state-employed district doctors (general practitioners), 7 percent were district doctors employed by local councils, and about 47 percent were employed by hospitals managed by local councils (towns) or county regions. Doctors in private practice constituted about 25 percent of the total.

In the 1950s and even more during the 1960s, physicians were well paid compared with other professionals. From the late 1940s on, the blue collar unions and Social Democrats pursued a wage policy of solidarity with low-paid workers. The ideological goal was to gradually decrease the wage disparities between higher-paid groups like physicians and the blue collar workers. Now this goal could be reached in different ways-raising the educational requirement for physicians, abolishing the fee-for-service system in the public sector, trimming rewards to doctors in private practice by limiting the fees they could charge, and so forth. The commission proposed all of these measures.

The county regions and the Swedish health care model

The purpose of many of the political decisions made in Sweden during the 1960s was to create larger government administrative units. The local councils were examples of this. In the 1950s, Sweden had 2,500 local councils: twenty years later they had been merged, leaving only a couple of hundred. Whereas the old local councils were managed by laymen and administrative staffs were small, the reform created a new type of bureaucracy and also a new type of career politician.

The new local councils were to implement a new building and housing policy and also create a new comprehensive school system. In order not to overload the local councils, it was thought necessary to have the county regions manage the integrated health care system. Changes in various laws and regulations created a health care model which was founded on the following principles:
[SOU 1993:38, Halsovården i framtiden-Tre modeller: Swedish government report on "Health Care for the Future-Three Models."]

1.The ultimate goal of public health laws is "that the population should be in good health." Preventive care is therefore included in the Swedish health care system.

2.Important to the health care system are the principles of "justice" and equal "availability." All patients should have the same access to care and no patient should be discriminated against on the basis of age. Patient fees should be the same across the whole country.

3.The county regions have responsibility for health care planning. Democratically elected politicians decide the scope and direction of health care services.

4.The county councils can impose income taxes.

5.People living in a county must receive their health care in that county.

6.The county is responsible for both the financing of health care services and the production of health services.

The integrated county model ("landstingsmodell") health system was shaped by the following changes in different laws and regulations: [Ibid.]

1960 - Private beds in hospitals were abolished. Counties were made responsible for open care.

1970 - A single fee was decided on for public care. (Today there are different fees in the range of 80-150 kroner.) Publicly employed doctors were salaried. All pharmacies were bought by the state and a state monopoly of pharmacies was founded.

1975 - Private doctors were permitted to work for the social insurance system. The fees they could charge and the number of patients they could see were regulated.

1983 - County councils were requested,, by law,, to take responsibility for all kinds of health care (Health and Medical Services Act).

1985 - County councils were given the right to control the establishment of private practices.

Problems in the Swedish health care system

The cost of the Swedish health care system is comparable to that of countries with similar standards of living. From 1980 to 1990, health care costs increased by 145 percent and the productivity of the sector fell.
[Ibid.] GDP was nearly constant during the 1980s, but the numbers of people employed in the Swedish health care sector rose from about 300,000 in 1980 to 370,000 in 1990: the number of assistant nurses increased by 600 percent, doctors and nurses by 200 percent, and secretaries by 300 percent between 1975 and 1990. [Ibid.] A reasonable conclusion would be that the health care sector did not use its capacity optimally. There are figures that show large differences in health care costs per capita and discrepancies in the costs of the same operation in different clinics. [Ibid.]

Some 75 percent of health care is financed by county income tax and 25 percent is financed by the state through a per-capita state contribution that is calculated from the regional tax base and demographics (age groups, for example). County regions were not allowed to raise taxes between 1991 and 1994. From 1991 to 1993, the growth of the economy was negative and county tax bases diminished: the financial situation has thus been insecure in the counties for the last four to five years.

To try to fend off these financial problems, the government and the counties have made some administrative changes. For example, long- term care is now a responsibility of the local councils and not county regions. When the acute care of a patient is complete, it is the local council which has to pay if the patient still occupies a hospital bed. As hospital beds are expensive, local councils are eager to move patients out of hospitals to nursing homes or home care. The Department of Social Affairs is now aware that elderly patients are often moved too fast from hospitals and that the standard of care for these patients is not satisfactory.
[Socialstyrelsen, Ädelreformen, Årsrapport 1995: Swedish Department of Social Affairs 1995 Annual Report on local councils and their responsibility for elderly long-term care.]

Another of the problems with reorganizing long-term care is financial. Local councils define "living in a nursing home" as "living in one's own home." The result of this definition is that the local council can charge US$300 to US$400 and sometimes more for "rent"-very high rent indeed for a small room or in some cases only a bed in a nursing home. Financial problems can result if, for example, in a married couple, the husband has to be transferred to a long-term care facility and he has high pension benefits while his wife has low pension benefits. The "rent" is calculated on his income with very little regard for her situation. Cases have been reported in which patients have had to pay US$1,100 a month for inferior facilities.

The county councils have both benefited and suffered from the reorganization of long-term care. Productivity in hospitals has increased, yet at the same time the fixed costs invested in hospitals and personnel for long-term care remain to be paid.

The shift of long-term care responsibility from counties to local councils has not been the only big change over the last few years. The government has also implemented changes in the state contributions system. These changes benefited the northern part of Sweden but have created problems for the large specialized hospitals in Stockholm, Gothenburg, and Malmö. During the last three years, these hospitals have run up very large deficits. To cope, politicians have introduced new administrative systems that looked promising at first but which have failed to solve the administrative problems. In Malmö's hospital, for example, the financial situation has deteriorated and the hospital administration can only be described as unacceptable. There are considerable discrepancies between budgeted and real costs and nobody can explain why they exist. The politicians, pressured by the need to cut costs, are asking for more savings: the staff cannot cope as they have no acceptable analysis of the hospital's real financial situation and they have no guidance concerning what types of care, or what quality of care, to provide under cost restraints.
[Audit of local government in Malmö: interviews, 1995.]

The Swedish health care system is a planned system, and problems arising in it are all too often met by new organizational or administrative changes. Workers in the health care sector have been living with turbulent working conditions for a long time. The motivation and morale of health care personnel is falling. Over the last year, more than ten of the top managers of the larger hospitals have resigned from their positions, as have many heads of clinical departments, due to conflicts between financial demands and the ethics of the medical profession.

The centre/right position on the Swedish health care system

The scope for choice in the Swedish health care system has always been small. The Conservative Party wanted to introduce more choice into the system but they had no support from the coalition government. This centre/right government (1991-1994) appointed a commission
[SOU 1993:38, Halsovården i framtiden-Tre modeller: Swedish government report on "Health Care for the Future-Three Models."] to look into three health care models: an insurance model (planned national model), a reformed county-regional model, and a model akin to the British General Practitioner Fundholding model.

The commission did not complete its investigations. The only report published was one written by experts who were not allowed to make any recommendations. Discussions about choice were limited to the possibility of consumers (patients) choosing their doctors and hospitals. The possibility of consumers choosing among different insurance companies or insurers was thought to be irrelevant and therefore not aired.

The new Social Democratic government is only interested in a reformed county model. A new commission to examine the system is working very slowly, and it appears that no reforms will happen before 1998, with the exception of changes in the regulations pertaining to pharmaceuticals.
[SOU 1995:122, Reform på recept: Swedish government report on "Prescription Reform."]

How much choice is there in the Swedish health care system today?

In some county regions, mostly ones with earlier Conservative majorities, there are opportunities for patients to choose between different hospitals in the county and sometimes between different hospitals in neighbouring counties. Patient choice of this kind is promoting competition.

However, the private wing of the health care system is in bad shape. Physicians can establish new practices only with permission from the county, and no doctors over age 65 are allowed to have reimbursed private practices. The result is that they cannot sell their practices. Of course, doctors can work outside the public health care system entirely. Patients have to pay the full costs, and for some specialties this is still possible.

Pharmaceuticals are now paid for by the social insurance system plus a patient fee. A government commission has proposed that, in future, counties be made responsible for reimbursing the entire cost of prescription medicine. It is highly unlikely, however, that counties will agree to pay for medicine prescribed by doctors who are not in the public system. This will make the cost burden too heavy for most patients of private practitioners. Private sector involvement in health care delivery will certainly decrease in the coming years, as will patient choice.

What can other countries learn from the Swedish health care system?

1.Choices for the middle class in the towns have diminished since the 1950s. One cannot get into a private clinic except in Stockholm and Gothenburg, and it is only the very well-to-do patients who can afford private hospital care. Patients have little consumer choice.

2.Productivity in hospitals has fallen sharply since the 1970s, when doctors began receiving fixed salaries and not a fee per patient.

3.Productivity in hospitals has increased recently only as a result of diminishing financial resources. The productivity of district doctors can be extremely low-it is not unusual for a doctor to treat an average of only six to 12 patients a day.

4.Long-term care reform has increased the number of available beds, but the quality of care for elderly patients is not satisfactory.

5.A worker with a wage of US$20,000 pays about US$3,000 a year in taxes for health care. A scientist at Astra with a salary of US$50,000 has to pay more than US$7,000 in taxes for health care, plus a fee of at least US$22 for prescription medicine or consultation with a doctor.

6.When Sweden was a rich country in the 1970s, there were few restrictions on the introduction of new medical methods, new pharmaceuticals, etc. Now the environment is different, and there is a tendency to block or restrict the availability of specialized care in order to save money. Some new medical procedures are introduced as standard later than they are in other countries. For example, while bypass operations were standard (with overcapacity) in Switzerland in 1983, patients in Sweden had to wait more than a year for bypass operations.

7.Waiting lists have become a big problem. "Care guarantees" have reduced the waiting list problem temporarily in the past, but these problems began reappearing during the last few months of 1995.


Problems arising in Sweden's planned health care system have usually been met by new organizational or administrative changes. Changes of this kind have tended to make things worse. The changes are expensive and time-consuming; any improvements in cost-effectiveness are hard to measure when big changes are made; and the motivation and morale of the medical profession are adversely affected when these people are not included in the decision-making process. Sweden has yet to recognize that organizational change alone is not enough and that a planned health care system will always be very vulnerable to variations in the government's financial circumstances.

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Last Modified: Wednesday, October 20, 1999.