March 8, 2019 / 8:01 AM / in 18 days

Finland's cabinet quits over failure to deliver healthcare reform

HELSINKI (Reuters) - Finland’s coalition government resigned on Friday a month ahead of a general election, saying it could not deliver on a healthcare reform package that is widely seen as crucial to securing long-term government finances.

Healthcare systems across much of the developed world have come under increasing stress in recent years as treatment costs soar and people live longer, meaning fewer workers are supporting more pensioners.

Nordic countries, where comprehensive welfare is the cornerstone of the social model, have been among the most affected. But reform has been controversial and, in Finland, plans to cut costs and boost efficiency have stalled for years.

“The picture I’ve got over the last few days from parliament forces me to draw conclusions. There is no way ahead. I am hugely disappointed,” Centre Party Prime Minister Juha Sipila told reporters at a news conference.

“We need reforms, there is no other way for Finland to succeed.”

Parliament’s constitutional committee said the reform package was unconstitutional and required significant changes the government did not have time to implement before the scheduled elections.

President Sauli Niinisto accepted Sipila’s resignation but asked his government of his Centre party and the National Coalition Party to continue in a caretaker capacity until a new cabinet has been appointed.

“My government works on a ‘result or out’ principle... one has to carry responsibility in politics,” Sipila said, adding it was his personal decision to resign.

The government had aimed to dramatically slow the increase in healthcare spending over the next decade, reducing the budget to 18.3 billion euros in 2029 against an estimate of 21.3 billion.

NORDIC PROBLEM

The reforms expected to generate savings by creating 18 new regions to organize healthcare services instead of the 200 entities that are currently responsible. Critics said the scale of the projected savings was unrealistic.

Other Nordic countries have also grappled with the need to cut costs. Sweden is to gradually raise its retirement age and has opened up parts of the healthcare system to the private sector in a bid to boost efficiency.

Finnish Prime Minister Juha Sipila announces his government's resignation at a news conference at his official residence, Kesaranta, in Helsinki, Finland March 8, 2019. Lehtikuva/Seppo Samuli via REUTERS

Denmark will gradually increase the retirement age to 73 - the highest in the world - while cutting taxes and unemployment benefits to encourage people to work more.

The problem has been particularly acute in Finland where the financial crisis of 2008-9 magnified the effects of demographic changes such as a rapidly declining birth rate.

Several Finnish governments have tried to push through healthcare reform in different forms over the past 12 years — all have failed.

Sipila had previously said he would dissolve his centre-right coalition government if it failed to push through its healthcare and local government reform.

With election so close, analysts said the effect of Sipila’s resignation would be minor.

“Since elections were already set for 14 April, the resignation of the government is not a big deal at all at this point. Still, it does create some ugly headlines,” Nordea’s chief analyst Jan von Gerich wrote on Twitter.

The latest poll by national broadcaster YLE puts the Social Democrats on 21.3 percent ahead of the National Coalition Party on 16.2 percent and the Centre on 14.1 percent.

Slideshow (6 Images)

In the 2015 general election Sipila’s Centre party topped the poll with 21.2 percent of the vote.

At 9.5 percent of GDP, Finland ranked ninth among EU countries in terms of how much it spent on healthcare in 2016, relative to the size of its economy, according to Eurostat figures. Spending has declined over recent years as a result of sluggish growth.

France topped the rankings at 11.5 percent of GDP with Germany second and Sweden third. Denmark was fifth. Non-EU member Norway would rank fourth.

Reporting by Anne Kauranen, Tarmo Virki in Tallinn, Terje Solsvik in Oslo; writing by Stine Jacobsen and Simon Johnson; editing by Larry King and Jon Boyle

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