A Norwegian government report examining the marketization of welfare services has sparked debate by challenging the prevailing notion that choice is inherently beneficial. The report, led by Jan-Erik Stöstad, argues that genuine user influence within institutions is more crucial than the ability to choose between providers, especially when those providers are part of large, international corporations. While Norway has a lower proportion of commercial actors in tax-funded welfare than Sweden (7% versus 20%), the report concludes that even a limited market presence impacts the entire welfare sector, including publicly run services. This influence stems primarily from the inherent conflict between the profit motive and the societal goal of providing comprehensive welfare within budgetary constraints.
The Norwegian report expresses concern about the consequences of market-driven welfare in Sweden, highlighting issues such as educational inequality, segregation, and the infiltration of organized crime. The Nordic countries share a tradition of robust public sectors providing universal, tax-funded social services, contributing to greater social equality than countries like the UK and the US. The report emphasizes that welfare services, unlike commodities in a typical market, fulfill a societal function, often serving vulnerable individuals unable to make informed choices. These services are complex, and the need for them, such as education or emergency medical care, is not comparable to the desire for a consumer good like a bicycle. The report specifically highlights the vulnerability of children and young people in social care, arguing against market-based approaches in this sector.
Sweden’s extensive marketization of welfare, driven by arguments for choice and lobbying efforts since the 1980s, has led to a situation where 44% of primary care centers and 32% of upper secondary schools are privately operated. The issue of profits in welfare remains highly controversial, with around 70% of Swedes opposing it, according to surveys. This public sentiment contrasts with the views of elected officials, and the report suggests a potential link between this discrepancy and the revolving door between politicians and welfare companies. Marta Szebehely, a member of the Norwegian commission, points to the potential naivety of Sweden’s trust-based governance model in a market-driven context, necessitating increased regulation and potentially diminishing freedom. The report specifically criticizes the unchecked establishment of private providers and the uncontrolled costs associated with online healthcare in Sweden, raising concerns about the potential for ”cream-skimming” – where providers prioritize profitable patients, leaving the most vulnerable at risk.
However, the report’s findings are contested by Lena Furmark of the Confederation of Swedish Enterprise, who argues that market competition fosters innovation and quality improvement. Furmark denies that profit-taking exacerbates inequality, citing examples of private actors providing services in areas where public provision has failed. She argues that as long as private providers deliver high-quality services, any resulting surplus is not problematic. Regarding public opposition to welfare profits, Furmark suggests that citizens desire choice, necessitating a diverse range of providers, including private ones. She maintains that any systemic issues are manageable, and emphasizes the need for improved information to guide citizens’ choices.
The report further highlights the experiences of professionals within the system, like Hale Falsafi Amin, a general practitioner at Ersta Hospital in Stockholm, a non-profit institution. Falsafi Amin agrees with the Norwegian report’s concerns, arguing that phasing out profits may be the only way to salvage publicly funded healthcare, especially given ongoing budget cuts. She notes that even in a non-profit setting, financial incentives related to service provision create perverse incentives and undermine the overarching goal of investing in public health. This system prioritizes short-term financial gains over long-term health outcomes, ultimately detracting from the public good.
The Norwegian report concludes that phasing out for-profit companies from the welfare sector is feasible, suggesting a transition period where alternative providers are developed to ensure uninterrupted service delivery. This transition would prioritize public and non-profit providers while allowing for the continued, but heavily regulated, participation of for-profit actors. The report advocates for limiting procurement and scrutinizing existing choice systems, proposing alternative funding mechanisms like grants. Furthermore, it suggests pre-approval and registration requirements for for-profit welfare providers, along with improved data collection on ownership structures. The report acknowledges the dilemma of balancing increased regulation with the risk of excessive micromanagement, emphasizing the importance of avoiding a two-tiered welfare system that exacerbates inequality. The report’s recommendations, while controversial, contribute to the ongoing debate about the role of private profit in ensuring equitable and high-quality welfare services.
