Market reforms in health care and sustainability of the welfare state: lessons from Sweden.

Reforming health care systems which are predominantly publicly provided and financed has usually been motivated as a way of increasing efficiency even if it seldom is explicit whether it is in the official sense related to individual utility or in the unofficial sense related to health outcomes. In the case of Sweden the welfare state has been made politically sustainable through a construction where cash benefits and service provision are tailored to satisfy not only the basic needs but even the more discriminating needs of the middle classes. Their loyalty with the taxes is politically crucial and therefore their evaluation of the services in the welfarist sense equally important. That loyalty was however threatened in a situation where cost-containment policies were applied while equity principles were still a strong priority. Health care utilization was increasing among the very old and chronically ill while it was decreasing for other groups. The reforms introduced in some counties during the 1990s have been focussing on a purchaser-provider split and fee-for-service payment of providers. They have increased productivity sharply, increased utilization even among the groups that previously were 'pressed out' and reduced waiting lists. Increased efficiency however, threatens equity in some specific aspects. Fee-for-service payment means increased production and so far even increased costs. If they are to be met with increased private financing, rather than with present tax financing, it will bring the risk of inequities. Payment of hospitals through DRG systems means payment to providers for medical interventions with no incentives to deal with social consequences of illness. Inequities in health care can be related to the way health care deals with inequalities in health due to inequalities in living conditions or inequalities in living conditions due to ill health. In the short perspective the reforms may threaten equity in the second aspect, in the longer perspective the problems of cost control and the pressure it raises for alternative financial sources may be a more serious risk even for the former.