Neoliberalism in Health Care in Sweden SWEDEN—RECENT CHANGES IN WELFARE STATE ARRANGEMENTS Bo Burström

The Swedish welfare state, once developed to create a new society based on social equality and universal rights, has taken on a partly new direction. Extensive choice reforms have been implemented in social services and an increasing proportion of tax-funded social services, including child day care, primary and secondary schools, health care, and care of the elderly, is provided by private entrepreneurs, although funded by taxes. Private equity firms have gained considerable profits from the welfare services. The changes have taken place over a 20-year period, but at an accelerated pace in the last decade. Sweden previously had very generous sickness and unemployment insurance, in terms of both duration and benefit levels, but is falling behind in terms of generosity, as indicated by increasing levels of relative poverty among those who depend on benefits and transfers. Increasing income inequality over the past 20 years further adds to increasing the gaps between population groups. In some respects, Sweden is becoming similar to other Organisation for Economic Co-operation and Development countries. The article describes some of the changes that have occurred. However, there is still widespread popular support for the publicly provided welfare state services.

In the last decades, Swedish welfare state has changed in many aspects. The Swedish welfare state, which was developed to create a new society based on social equality and universal rights, has taken on a partly new direction. Social services, including child day care, primary and secondary schools, health care, and care of the elderly, are increasingly being provided by private entrepreneurs, although funded by taxes. Sweden has a highly decentralized political system, with politically elected leaders of county councils (responsible for health care International Journal of Health Services, Volume 45, Number 1, Pages 87–104, 2015 © 2015, The Author(s) doi: http://dx.doi.org/10.2190/HS.45.1.g joh.sagepub.com

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services) and municipalities (responsible for other parts of social services, including child day care, primary and secondary schools, and care of the elderly). County councils and municipalities collect taxes to finance their services, and the degree of privatization of the provision of services varies between county councils and municipalities. Another feature of the Swedish welfare state that has changed in recent years is the generosity of the sickness insurance and of the benefit levels to those dependent on transfers (unemployment benefits, sickness benefits, and social assistance). Sweden was previously among the most generous countries in this respect, but is falling behind, as indicated by increasing levels of relative poverty among those who depend to a greater extent on benefits and transfers. Increasing income inequality over the past 20 years further adds to increasing the gaps between population groups. This article attempts to highlight some of the changes and their potential impact on the notion of the Swedish welfare state. In some aspects, Sweden is becoming more similar to other Organisation for Economic Co-operation and Development (OECD) countries. BACKGROUND Sweden has a comprehensive, universal welfare state that aims to reduce inequalities and increase individual autonomy, through supporting individuals in need at various phases of the life cycle (1). Swedish welfare state policies are based on universalism, gender equality, and equity. The coverage is high and the social insurance system is comprehensive with generous benefit levels. Public services are extensive, including child day care, schools, health care, and care of the elderly. The welfare state is based on commitment to full employment and active labor market policies (1, 2). The welfare state policies affect many of the social determinants of health (3). In 2013, the proportion of the Gross Domestic Product going to social expenditure was 28.6 percent in Sweden, lower than in Denmark (30.8%) and in France (33.0%) (4). Sweden has long been a prominent example of a Nordic or Scandinavian welfare state (5). Swedish welfare services were developed after World War II, with the aim of creating a comprehensive public system for provision of services. Services should be of high quality and universally accessible for all, thereby making private providers of services redundant. This meant at the same time that options for choice of provider became minimal. All citizens were referred to service providers operating in their close neighborhood. The system would require the loyalty of the middle class, in order to be sustained (6). This in turn meant that the services had to be of high quality, to satisfy all users, an idea referred to by Rothstein as “the high-quality standardized solution.” If successful, the system could then promote egalitarianism and social integration (7).

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Swedish social welfare services include child day care, primary and secondary schools, health care, and care of the elderly. These sectors have each had a history of their own. Health care is the responsibility of county councils; the other areas are municipal responsibilities. National health insurance was introduced in 1953. Sweden had a comparatively small private sector of health care providers, which diminished further following reforms that required hospitals to provide outpatient services at subsidized cost to patients. In 1969, a comprehensive reform (the Seven Crowns reform) made all hospital doctors full-time salaried employees, and private providers were further reduced in numbers, from 25 percent in 1970 to 5 percent in the 1980s (6). Primary schools were subject to a comprehensive reform in the 1950s, increasing the level of compulsory schooling from six to nine years. Schools mixing pupils from different groups were seen as an integral way to create an egalitarian society and as an important way of promoting tolerance and social integration, and state support for non-public schools was restricted (6). Similar developments took place in child day care and care of the elderly, where municipalities developed services on an egalitarian basis. Child day care services were expanded during the 1970s, in order to increase labor supply among women. In the 1970s, 96 percent of the child day care services were provided by municipalities. Services are heavily subsidized, parents pay only about 10 percent of the total cost, and a majority of eligible children attend child day care centers (8). When elder care expanded after World War II, it was almost entirely provided by public services. Elder care includes both services in the home and institutional living. In the last decade, there has been a shift toward fewer people living in homes for the elderly, and more elderly people receiving help in the home (9). The emphasis on public provision of social services in Sweden probably has many explanations, including the early development of a strong and professionalized state bureaucracy, the absence of a strong church, and deliberate political choices by the Social Democrats. The Social Democrats saw a strong public sector as a guarantee to access to high-quality services to all citizens, and as a notion of freedom—freedom from relying on the market. A universal system would create broad public support, but the services also needed to be of high quality, not to create a demand for private services from other providers. Ensuring broad public support for such high-quality welfare state services was important for promoting egalitarianism and social integration (6). Development of Social Insurance Benefits and Social Assistance Sweden has been known for its generous income-related social insurance system, when it comes to sickness insurance and unemployment insurance (10). In the 1970s and 1980s, the replacement rate in sickness insurance was 90 percent of the net wage of an average industrial worker. The unemployment insurance

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replacement rate in the early 1990s corresponded to 85 percent of the net wage of an average industrial worker. However, since the economic crisis in the early 1990s, there have been cuts in the level of benefits and restrictions in eligibility, together with limitations to the maximum income level for replacement, both causing a decline in the compensation level. In 2010, the replacement level of sickness insurance was well below 80 percent, while the unemployment insurance came to less than 60 percent of the net wage of an average industrial worker. The maximum amounts in sickness insurance and unemployment insurance have been greatly reduced from 1975 to 2010—for sickness insurance from 140 percent to 80 percent, and for unemployment insurance from 80 percent to 55 percent of the net wage of an average industrial worker (10). The unemployment insurance is limited to one year. The duration of the sickness insurance was unlimited from the 1960s until 2008, when it was reduced to one year (10). The intention was to increase the rate of return to the labor market among people with longer sick leave spells. However, follow-up studies showed that about 50 percent of those who had run out of sickness insurance returned to the insurance within a year (every other person of these returned within 90 days). Others were directed to labor market programs, but a considerable proportion were too sick to work. The proportion receiving income support (social assistance) among those who had run out of sickness insurance increased from 2.5 percent to 8.6 percent (11). Because of increases in fees for the income-related unemployment insurance, the participation rate declined from 70 percent in 2004 to 55 percent in 2008. The policy changes that have been implemented have meant that social insurance benefits in Sweden now are quite similar to, or lower than, other OECD countries. The decline in the level of benefits may also partly be caused by non-decisions (10). Social Assistance Social assistance expenditure in the Nordic countries has been low, compared to other countries, due both to the emphasis on full employment and to the universal and income-related provisions. However, with the economic crisis in the early 1990s, Finland and Sweden in particular experienced high unemployment rates that have also remained at high levels, even as the economy improved. There was a reorganization of social assistance benefits, with cutbacks in legislated benefits, tighter eligibility criteria, and an emphasis on means-tested policies (12). In their study of the development level of minimum income benefits in 20 countries from 1990–2009, Kuivalainen and Nelson found that the development in Finland and Sweden was below the average. The adequacy rate of minimum income benefits in Sweden increased in the mid-1990s, but the index figure dropped from 100 in the year 1990 to 75 in the year 2007. In 1990, Sweden was ranked at the top concerning benefit levels—having clearly higher

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benefit levels than the Netherlands, Germany, and the United Kingdom. By 2009, Sweden provided less generous benefits than those three countries. In 1990, Sweden was one of few European countries to provide benefits above the E.U. “at-risk of poverty” threshold (< 60% of median disposable income), while in 2009 Sweden was providing benefits clearly below that level (12). Hence, benefit levels in social insurance and in social assistance have not been increased along with increases in prices and salaries, and their value has therefore been reduced. In addition, market incomes for those working have increased considerably, by 41 percent from 1999 to 2011 for those gainfully employed, compared to 9 percent for those not working (13). The decile with the highest income had an increase of 51 percent from 1999 to 2011, compared to 18 percent in the lowest decile. Tax cuts for those working is part of the reason behind the difference. The overall proportion at-risk of poverty in the population increased from 8 percent in 1999 to 14 percent in 2011. Among single parents, the proportion at-risk of poverty increased from 11 percent to 30 percent from 1999 to 2011 (13). One study compared the rate of being at-risk of poverty among persons with a limiting longstanding illness and outside the labor market, in Sweden, Denmark, and the United Kingdom, in 2005 and 2010. The rate of being at-risk of poverty in this group was highest in the United Kingdom in both years (37% and 34%, respectively) and lowest in Denmark (9.7% and 13.3%, respectively). In Sweden, the rate of being at-risk of poverty increased from 12.1 percent in 2005 to 23.3 percent in 2010. All three countries experienced an economic recession between these years, but the large increase in the rate of being at-risk of poverty was seen only in Sweden. Explanations for this development are likely to include increasing income inequality, caused by increasing market incomes and changes in the tax system primarily benefitting those in employment. In addition, it may reflect the decreasing real value of unemployment benefits and the reduction of sickness insurance to one year, which may have made more people depend on social assistance, which in turn does not protect against poverty (14). Development of Private Provision of Publicly Funded Social Welfare Services Another area where considerable changes have taken place is in the provision of publicly funded social welfare services. Criticism against the social welfare system started in the 1970s, with a deteriorating economy. In the 1980s, the employers’ organization and the Conservative party criticized the public welfare service sector for being wasteful and bureaucratic and depriving people of the choice of services and providers (6). However, there was still popular support for the publicly provided welfare state services (15, 16). Although elections came out in favor of public services, some influential Social Democrats started to question the productivity of the public sector. Quasi-markets were introduced

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to separate the provision from the purchasing of services, as well as contracting competing providers to perform the services. The issue of free choice of providers among users was also introduced in the discussions (16). During the Conservative bourgeois reign from 1991–1993, a “choice revolution” was proclaimed, and privatization of public services was expanded (6). This coincided with the deepest economic recession that Sweden had seen in 30 years. Public services were cut back, public sector employees (to a large extent women) were laid off, and the provision of social services was handed over to private entrepreneurs (17). This continued under the Social Democratic reign starting in 1994 (6). The number of employees in the local government sector declined from nearly 1.3 million to less than 1.1 million from 1990 to 1998 (18). This decline hit women in particular, as their employment was more concentrated in the public sector. At the same time, private provision of publicly funded social welfare services increased, and market-oriented practices became more common, in both publicly and privately operated services. The increase of female employment in the private sector did not match the decline in female public employment (17). There were increases in user fees and children’s groups were increased in size in child day care and schools. Income maintenance systems were restricted in eligibility and benefit levels (18). The Swedish Choice Revolution The Swedish choice revolution thus started some 20 years ago, after a non-Social Democratic coalition won the elections in 1991 and came into government. The municipal act was changed in 1992, in order to make it possible for local government (municipalities and county councils) to contract out the provision of health care and social services (e.g., care of the elderly and children) to private actors. The system with school vouchers, enabling parents to choose privately operated, independent “free schools,” was also introduced in 1992. Over this 20-year period, private service providers have increased from 1 to 2 percent of all service provision to between 10 percent (in schools) and 20 percent (elderly care). In health care, the proportion of private providers had reached 10 percent in 2010 (25% in primary care). The increase in private provision of different social welfare services has become more rapid since 2006, during two periods of non-Social Democrat government. Legislation has been altered to enable (and in some instances make mandatory) the establishment of privately provided, publicly funded social welfare services (Blomqvist, 2013). Much of the increase in private provision of such services started in the 1990s (Burström, 2012), but has further increased in the recent decade. From 2006, privatization of the provision of public services has increased rapidly, under the banner of “free choice” of providers—when it comes to schools, health services, child care, and care of the elderly. However, as these services are the responsibility of 284 municipalities

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and 21 county councils/regions with politically elected leadership, the degree to which privatization has occurred varies considerably (19). LEGISLATION TO FACILITATE PRIVATIZATION Privatization of social welfare services has been facilitated by legislation. A law on public purchasing (LOV) came into effect in 2008 and regulates the purchases done by public authorities and activities financed by public funds. The purpose of the law is to enable all actors who want to sell their services to the public sector to compete on equal terms. The value of purchasing is estimated at about SEK 500 billion annually. The law contains detailed regulation concerning the purchasing process. The provider with the most advantageous proposal wins the contract (20). Another law on choice systems (LOV) was passed in 2009 and is applicable when authorities allow their users to choose a provider in health care and social welfare services. In contrast to the law on purchasing, where one provider wins the contract, the law on choice system says that all providers who meet the requirements and demands should be contracted, and that the user subsequently chooses which specific provider to use (20). New Public Management In order to increase the efficiency of public social services, the provision of services is increasingly being monitored by methods of New Public Management (NPM), and activities are broken down into separate measurable components that should be performed with maximum efficiency. This type of management creates goals and objectives for social services that are quite different to those in the initial intentions of the universally available, high-quality social services for all (20). NPM represents different market-oriented managerial techniques but also includes deregulation, decentralization, contracting out of public tasks to private providers, separation of purchasers and providers within the public sector, performance measurement, and an emphasis on consumer choice (20). Building on the notion that markets, through competition, are more effective and efficient than the state in providing goods and services, NPM is founded on economic theory and neoliberal ideas. Consumer choice is considered an important market mechanism in the allocation of resources between competing providers, but also an important value in itself as it is seen to empower the users (20). If the needs of the users are not satisfied by their provider, they may change providers. In the social services context, the most commonly used organizational practices to bring about competition and choice are contracting and vouchers. Contracting means open competition between private and public providers for public contracts, where the contract is given to a certain provider on the basis of price and/or quality. In Sweden this has become common in health care services. The voucher system means that providers are authorized by public authorities to

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provide a certain service in a specific area. Citizens can then choose a specific provider at no or low cost to the user (20). The voucher system is, for instance, used in schools: parents may choose which school their child should attend, and the school is reimbursed by public authorities. LOV applies in municipal and county council health and social services. The law instructs municipalities and county councils to detail a list of quality indicators and costs for a particular service. If private providers on the market meet these requirements, they can offer their services and their costs are reimbursed by public funds according to the contract with the municipality or county council. The purchaser (municipality or county council) maintains the responsibility for monitoring quality of services (20). Primary Care Privatization and market-oriented reforms in health care have been ongoing for many years in Sweden, in all types of health care provision, as recently described by Dahlgren (21). However, it has been most extensive in primary care. LOV is optional to municipalities and county councils, except when it comes to primary care, where LOV has been mandatory for county councils since 2010. The law on free choice of primary care provider came into effect in 2010, making it mandatory for county councils to allow the establishment of primary care clinics by authorized actors and to fund their services with tax money. In effect, the law enables private actors to set up a clinic where they choose, and if they manage to attract patients/clients, they can send the bill to the county council. County councils have no say as to where the clinic should be located, or that it should be placed where the need is the greatest. Most new clinics have been opened up in bigger cities, and half of these in turn have been set up in central areas of the cities (22). Primary care was subject to a similar reform in January 1994, when a bourgeois coalition government passed a law forcing county councils to allow free establishment of primary care doctors. However, when the Social Democrats won the elections later the same year, the free establishment was stopped after January 1995. However, the law had already resulted in an increase of private health care providers, and the proportion of private actors continued to increase, although mainly through contracts with county councils. The degree of privatization varied between county councils, with Stockholm County Council having the greatest proportion of private providers. The aims of privatization were to cut costs and increase productivity. However, later complaints against the purchasing of services (high costs, inflexibility, and that it favored large actors) changed the interest and focus to customer choice rather than contracts, paving the way for the current system of free choice of provider. This system started on a voluntary basis in 2007 and 2008 in three county councils and was followed by legislation

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in 2010, making it mandatory for county councils to implement free choice of providers and free establishment of private primary care clinics (22). The reimbursement system to clinics has taken different developments in different county councils. Most county councils have a mixture of capitation, fee-for-service, and target-oriented reimbursement. The capitation part may be weighted by age; for differences in the socioeconomic composition of the population served; for differences in disease burden; and other factors. In many county councils, most of the reimbursement is through a capitation fee. In Stockholm County Council, however, approximately 60 percent of the reimbursement is through fee-for-service (i.e., the number of visits), and the capitation is weighted only for age (22, 23). A previous need-based resource allocation system in primary care in Stockholm County Council, which benefitted areas with greater health care needs, was discontinued as a consequence of the reform. Evaluations have shown that the number of visits to primary care doctors in Stockholm County Council have increased in all areas, among all types of patients. Nevertheless, the distribution of resources to primary care has changed to benefit non-disadvantaged areas (23). A study in Skåne region in the south of Sweden found that higher-income earners had increased their visits to a greater extent than lower-income earners (24). Comparisons of private and public primary care clinics have generally found small differences in costs and quality of care. Public clinics have somewhat higher costs per standardized visit, explained by greater costs for support staff. The lower costs for private services have benefitted their owners as profits. In patient surveys, private clinics often tend to have better evaluations than public clinics (22). However, there are many different factors that may contribute to explain this finding. Communication between doctor and patient may be easier in some populations than in others; expectations on care may vary. Extent of Private Social Welfare Services Nearly one-fifth of all employees in the welfare service sector are employed in the private sector. The extent to which services are provided by private entrepreneurs varies considerably between social service sectors and between geographical regions. The highest proportions of private providers are found in bigger cities and municipalities adjacent to cities. There has been a substantial increase in the number of private providers since the year 2000, particularly since 2006, when the current center-right government came into office. Larger for-profit actors constitute much of the increase; in elderly care, two actors dominate, both owned by private equity firms (20). It is the responsibility of the municipality to offer child day care to its citizens. Some 84 percent of all children aged 1–5 years in Sweden attend child day care. In 2012, about 20 percent of all child day care was organized by non-municipal actors, up from 11.5 percent in 2001. The non-municipal actors get

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the same reimbursement per child and year as municipal child day care centers. Parents pay a maximum fee, which is the same regardless of who provides the services (25). Municipalities are also responsible for primary and secondary schools. Since the reform in 1992, the number of independent “free schools” has increased steadily—from some 200 to 800 primary schools and from 70 to 450 secondary schools. As with child day care centers, the reimbursement per pupil to private independent schools is the same as that for municipal schools. The number of pupils in independent primary schools has risen from 17,000 in the mid-1990s to 126,000 in 2013. The corresponding number of pupils in secondary schools increased from 5,000 to 85,000 (26). In total, about 10 percent of primary school pupils and more than 25 percent of secondary school pupils attend independent schools (27). The independent schools, as well as the child day care centers, are operated by cooperatives, church organizations, and private companies. The recent increase of independent schools has primarily been in private for-profit companies, owned by private equity firms (27). Elderly and social care is also a municipal responsibility. In 2012, municipalities purchased some 17 percent of all such care from other providers, corresponding to SEK 37 billion (28). The proportion of employees in the private sector working with care of elderly or disabled persons increased from about 2 percent in 1993 to nearly 20 percent in 2010. Most of the increase occurred in employees in for-profit companies. The proportion of private provision of care of the elderly and disabled varies considerably between municipalities. In Stockholm municipality, 60 percent of home care services is operated by private providers, while in the municipality of Gothenburg all such services are municipally provided. Private provision of care of the elderly and disabled is an ideologically laden issue. In opinion surveys, respondents who sympathize with the Conservative party are more positive to private provision than those who sympathize with the Social Democratic party. A few large, private actors dominate the market for care of the elderly and disabled, which has become attractive also for international investors. The caring sector is seen as a stable and well-financed market with growth potential and a comparatively low degree of regulation (9). Early evaluations showed that purchasing of privately provided care for the elderly and disabled lowered costs, but that this also came with reduced quality of services. More recent studies have not found differences in costs between public and private services. Transaction costs associated with customer choice may increase costs. Quality of care has been difficult to compare between providers (9). Some attempts to study these aspects have found higher staff density and greater staff continuity in publicly operated services. However, in terms of other indicators (choice of dinner meals, participation in the planning of care) the private providers came out more positively than the public providers (29). There are

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different opinions about the equity aspects of customer choice in the care of elderly and disabled. As choice of provider should be founded on information about the provider, it will be up to the customer to obtain such information. Those with more resources are more likely to do so, and those with less resources may fall behind (9). One study of elderly people found that those who were in most need of care are also those with less ability to make informed choices. In a nationally representative sample of Swedes aged 77+ years, one third scored low on a cognitive test or were so cognitively impaired that they could not be interviewed directly. Another 22 percent scored poorly on a test of the ability to find and process information. A further 32 percent had adequate cognition but had limitations in sensory function or mental vitality or were unable to go outside on their own. The authors concluded that those with the greatest need of care are also those with lesser cognitive and physical capacity to make use of choice (30). Financially better off elderly persons may also be more likely to supplement public services with private purchases of services, which can also be tax-deductible (19). Social Welfare Services as a Business The business for private companies in schools, health care, and care of the elderly and disabled is increasing. Private companies in the social service sector have grown and each year some SEK 30 billion of public funds goes to private providers of health care, care of the elderly, and schools. Investments into these sectors are attractive, as activities are not very capital-intensive. Investments have already been done, and it is more about running services efficiently (31). Private provision of social services has become a booming business. In 2008 and 2009, two private health care companies had a combined profit of SEK 2.4 billion, from contracts paid by tax funds. Nevertheless, these companies paid no taxes in Sweden but instead channeled their profits to Jersey or Luxembourg (32). The high profit rate and the fact that the private equity firms pay no taxes in Sweden has become an issue of debate. The private equity firm Nordic Capital, one of the owners of the health care company Capio, which operates a tax-funded private hospital in Stockholm, lost a court case of SEK 672 million against Swedish tax authorities and may be taxed an additional SEK 2.6 billion (33). Such tax evasion of the private equity firms has also received media focus and has caused considerable public discontent (21). Experiences of Private Provision of Services One study compared private and public providers of elderly care and found that public providers had better values on structural indicators (number of staff, continuity of staff), while private providers offered more choice for customers in terms of participation in planning of care and choice of meals. The study concluded that private care providers emphasize service aspects more than

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structural prerequisites for care (29). In recent years, there have also been events where private providers of care for elderly and disabled have been criticized for poor services. In 2011, unacceptable conditions were revealed at a nursing home for elderly care in Stockholm, operated by the private company Carema. Health care staff reported that a patient had died from septicaemia because of an improperly treated ulcer; several patients were malnourished; unnecessary amputations had been performed; and there was a lack of pharmaceutical drugs, staff, and properly trained personnel (34). This caused the municipality to discontinue the contract with Carema. A review of Swedish and Danish studies of home care for the elderly, provision of child care, and the operation of nursing homes found no general evidence that private services were more cost-effective or enhanced service quality in these three areas (35). Effects of Privatization of Schools and Free School Choice The free choice system in schools has been in place since the early 1990s and allows parents to choose between municipal and independent schools—which are all financed by tax money. The underlying idea was that the quality of education would improve with competition. However, there seems to be little evidence to support this (27). The free choice system has increased differences between schools, as the best students tend to choose the same schools, leaving behind those who perform less strongly (36). There are different opinions concerning the effects of school choice in Sweden, in terms of segregation, costs, and student achievements. In recent years, Swedish schools have fallen behind in results of the Programme for International Student Assessment study. The gap in results between schools has increased, which some attribute to the free choice of schools (36). Some argue that the impact on overall educational quality and equity has been relatively small, but that market forces are gaining influence, in terms of school choice (37, 38). In addition, independent schools may have added to increasing residential segregation (38). A discourse analysis study of the increasing influence of private independent schools concluded that there was a new market discourse, representing a break with the previous Social Democratic education policies to enhance citizenship and wider democratic values in an inclusive public school (39). RECENT DEVELOPMENTS Privatization of social welfare services is an ideological issue. The Social Democrats have given up the idea of stopping privatization, but want to cap profits and regulate quality of care more closely (33). While support in the population for private provision of social welfare services was high in the early 1990s, the trend has shifted so that a greater proportion now

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would favor public provision (15, 16). In addition, the reports of maltreatment of elderly, the bankruptcy and closure of independent schools, and the high tax-free profits gained by private equity companies who dominate the private provision of social welfare services work against popular support for further development of private social welfare services. Elections are to be held in September 2014, and profits in social welfare services is one major issue dividing the political parties. The Social Democrats, who are leading opinion polls, are critical of private companies not investing in enough staff, but still do not want to prohibit for-profit services. The Left party, who could be a partner in a Social Democratic government, is calling for all social welfare services to be nonprofit. The current center-right Swedish government wants to maintain private for-profit services, but says it will change to tougher rules for private equity firms. This has also caused private equity firms to reduce investment in public service provision in Sweden (40). Private equity firms invested only SEK 59 million in 2013, compared to an average of SEK 2.3 billion in previous years. THE IMPACT ON RESOURCE ALLOCATION, DEMOCRACY, AND SOCIAL CITIZENSHIP One issue that has been little debated in Sweden is what impact the choice reform has on the allocation of public resources and how it affects the balance of power between users/customers on one hand and politically elected leaders on the other (41). The voucher system used in schools means that if a pupil moves to another school, he/she brings the public resources to that school— removing it from the initial school. The same thing applies in primary care, where the individual’s choice of provider directs the public resources available for that individual to the chosen provider (41). In Stockholm County Council, where there was previously a need-based resource allocation system in primary care, the choice reform has led to a change in the utilization of resources for primary care, such that patients in better-off areas have benefitted at the expense of patients in poorer areas (19). Hence, in effect, policymakers can no longer distribute resources for primary care according to need; the resources are allocated by the choice of individual patients. In addition, the economic empowerment of the individual means that the collective voice of citizens that is channeled through representative democracy is reduced. Who is to be held accountable for the services? The notion of welfare services being of high quality and accessible to all is also no longer a priority—it is the responsibility of the consumer to inform himself/herself and make the best choice of provider (41). Utilization of the right to choose privately provided services tends to be more common among higher educated groups. However, there is currently no evidence that private services are of better quality than public services. Therefore, the universal character of social citizenship is not regarded as undermined by the increasing private provision of services (19). However, as noted by Blomqvist:

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“…there are developments underway that pose a threat to the egalitarian nature of the system in the longer run if they are not moderated.” The school system is becoming more educationally stratified and differences between schools have increased. In the health care and elderly care sectors, new markets for privately financed care are coming up alongside the public system (19). Having a two-tier system might erode the loyalty of the middle class to pay high taxes for a system of social welfare services that they do not utilize, and it might also result in lower quality of public services. POPULAR OPINION REGARDING THE CHANGES The attitudes among Swedes regarding support for the Swedish welfare state are positive (15, 16). A study investigating trends from 1981–2010 showed that attitudes are stable, and where changes are seen, they tend to reflect increasing support. An increasing proportion are willing to pay more taxes for welfare policies, and in 2010 an overwhelming majority thought the state or local authorities to be best suited to deliver services (15). A recent opinion poll reported in 2014 that a majority (69%) of respondents think the statement that profits in tax-funded schools, health care, and care of children and the elderly should be stopped is very good or rather good. “There is wide discontent in the welfare area, not least with declining school results,” says Lennart Nilsson, associate professor and researcher at the SOM institute in Gothenburg, which follows public opinion in different matters. According to Nilsson, at the same time, the support for the public sector increases, with record strong support for the welfare state. Almost half of respondents object to cuts in the public sector and only 19 percent are positive to a reduced public sector. It is also remarkable that a majority are against profits, even among those who have chosen private alternatives. Instead, many respondents want to see nonprofit organizations as alternatives in the welfare sector, but think that purchasing rules benefit international private equity firms at the expense of nonprofit organizations (42). DISCUSSION In its basic structures, the Swedish welfare state still seems intact; a large proportion of the Gross Domestic Product goes to social expenditure. However, the examples presented in this article indicate that there have been considerable changes to the generosity of welfare benefits and an increasing private provision of social welfare services over the last decades. According to some, Sweden is seen as becoming more similar to other OECD countries, concerning social insurance benefits, and the real value of social assistance benefits has been eroded in the last 20 years. Income inequality has increased considerably in the last 20 years, but Sweden is still among the OECD countries with the lowest

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levels of income inequality (43). Large parts of the population have experienced increases in income, primarily those with higher incomes, but some vulnerable groups in Sweden who to a greater extent depend on welfare benefits (e.g., single mothers, the unemployed) are certainly falling behind in terms of income security. Privatization of social welfare services has happened at an accelerated pace in the last decade and in a more unregulated manner than in many other countries. Private equity firms have reaped large tax-free profits from their business in the tax-funded Swedish social welfare sector, but are now starting to withdraw, as public opinion is critical to their profits and the tax evasion. However, privatization is not occurring in the same manner across the country; there are important regional differences, and the bulk (80 to 90%) of publicly funded social service provision is still public. A comprehensive evaluation of studies of the different social welfare sectors concluded that there is no evidence that privately provided services are better than publicly provided services (20). Most studies indicate that more educated people to a greater extent choose private providers. However, the fact that no studies have shown that private provision is superior to public provision indicates that there is no difference in terms of the services citizens receive and that the universal character of social citizenship therefore is not undermined (19). On the other hand, the increasing differences in school results show an increasing stratification in terms of education and indicate that the educational background and ethnic origin of parents have become important determinants of the quality of education of their children—which is affecting social citizenship negatively (19). This has also caused concern in the general population. Another feature that may be important is that in health care, as in elderly care, a market for privately financed services has emerged. If this development continues, it may cause income differentials in the access to such services. However, as noted by Blomqvist, choice and privatization have long been common in other European welfare systems (19). User choice has important implications for resource allocation, an issue that has hardly been part of the discourse of the pros and cons of choice. If the current development continues, it may have important implications for resources and services among disadvantaged people and in disadvantaged areas. The choice reforms have been beneficial particularly to those in urban areas who are wellinformed and in a position to make use of the possibilities to choose. The results of the elections in September 2014 may provide an important indication of which direction Sweden will take in the future. The Swedish population is concerned about the declining school results, increasing differences between schools, and tax-free profits in the welfare sector, and a large majority is in support of public welfare services. Sweden still has a leading position as a welfare state, with a population strongly supporting the notions of taxfunded, publicly provided, equal, and good welfare social services for all—the question is whether there are politicians to lead the continued development in that direction.

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Corresponding Author: Bo Burström, MD Professor in Social Medicine Department of Public Health Sciences Widerström Building, 10th floor Karolinska Institutet SE 171 77 Stockholm Sweden [email protected]