1. Public health and inequality after a
deep economic crisis:
the case of Finland
Jaakko Kiander, PhD
Adjunct professor, University of Helsinki
Senior Vice President, Ilmarinen Mutual Pension Insurance Company
1

2. Financial crisis and deep recession in
Finland in 1990-94
• First: period of boom and exuberance 1987-89
• Then: bursting of bubbles, banking crisis,
currency crisis, deep recession 1990-94
– Bank failures
– Mass unemployment
– Budget deficits and increasing public debt
– Austerity: deep cuts in public expenditures
2

3. Output losses
70
80
90
100
110
120
130
140
150
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
3

4. Unemployment rate
0
2
4
6
8
10
12
14
16
18
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
4

5. Economic policy and public finance
• Economic policy focused on maintaining stable
exchange rate
• Rise of unemployment was accepted as a
price of monetary stability
• Public bank support and rising unemployment
increased public expenditures
• Fiscal austerity as response: cuts in public
services and income support programmes
5

6. Fiscal policy and public spending
on health
• Major cuts in the number of public sector
employees (incl. health care)
• Cuts in provision of health care services
• Cuts in health insurance coverage of medical
expenses
• Gradual recovery in service provision after
2000
6

7. Result: Finland lagging behind
• As a results, public health expenditure
decreased in Finland in the 1990s while it
increased in other countries
• Out-of-pocket expenses increased to
exceptionally high level
• BUT: on average, national health and life
expectancy improved
7

8. Total health expenditure as percent of
GDP in 2000
0
2
4
6
8
10
12
14
16
Finland UK USA Sweden Denmark France Germany
Private
Public
8

9. Out-of-pocket payments as percent of
total health expenditure in 2000
0
5
10
15
20
25
Finland Sweden USA Germany UK Denmark France
9

10. Long term consequences of
unemployment and fiscal squeeze
• Financial crisis had long-lasting impact on
public services, including health care
• Public expenditure has not fully
recovered, private funding became more
important
• On average, overall health situation has
improved…
• …but as a result of fiscal squeeze, the services
of the poor and old have deteriorated
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11. Collapse of the ideal of universal
services?
• Socio-economic differences in health and life
expectancy now more pronounced
• Better-educated, better off males live much
longer than poor and uneducated
• Growing differences in access to services
• High medical cost (prescription drugs!)
problem for low income pensioners
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12. Conclusion
• Macroeconomic development and financial
stability seem to be important factors of
national health and well-being!
12