Use of service vouchers expected to double this year

Press release 12.5.2011

The use of service vouchers is expected to double during the current year, according to Tuomo Melin, head of the Service Vouchers project in Sitra’s Municipal Programme. The equality of citizens and social justice is the basis for the pricing of the vouchers. “Freedom of choice belongs to each citizen regardless of the level of income,” says Melin. ”In addition to equality, the best practices governing the use of service vouchers require that the service providers not compete at the expense of their employees’ terms of employment. Laws regulating working hours and universal collective bargaining agreements must be respected.”

The Service Vouchers project carried out under Sitra’s Municipal Programme has conducted interviews with local officials to gain an overall picture of the introduction and use of service vouchers in municipalities. Based on a survey and interviews that took place at the beginning of this year, 111 municipalities use the service voucher for a total of 338 different services.

“The number of municipalities that have introduced the service voucher is estimated to be 10–15 per cent higher than the survey and interviews revealed. Based on previous surveys, however, the municipalities who have introduced the service voucher but did not participate in the recent survey use vouchers in support services, home services and providing respite periods for carers. Through publicising the table providing figures per municipality, we want to encourage municipalities to report to Sitra on their use of the service voucher,” says Melin.

The service voucher model is spreading rapidly

According to the survey carried out in January, 120 municipalities were planning to introduce the service voucher and extend its use in new services, particularly in health care and service housing. Many municipalities and municipal federations reported that they would be introducing the service voucher this spring.

“Health care services are becoming the most popular target for the service voucher. Decision-makers seem to have chosen the service voucher as a means to reduce the queues for health care services and to respond to acute needs for help,” says Melin.

Equality of citizens and social justice steer pricing policy

Local officials are currently drafting decisions on the format of and extent to which the service voucher is to be introduced and the practical execution of the process. Attention should be paid to observing the best practices governing the use of the service voucher.

“The social equality of citizens ought be the guiding principle. The pricing of the vouchers has been successful. In some municipalities, however, the excess paid by the customers may end up being too high because of the pricing policy. In this situation, the spirit of the law is no longer respected as this jeopardises the principle of equality,” says Melin.

In health care services, in particular, applying a price cap is one feasible way of securing the equality of citizens. This means that the local authorities determine a maximum price for the services provided by the accredited service providers. In this way, the service voucher will not, in effect, form a fast track to treatment or services for those who can afford higher excess.

The service voucher has also raised some concerns. There have been concerns that the municipalities’ own production of services would suffer or even decline if resources were allocated to private service providers through the vouchers. Melin emphasises that rather than sidelining municipalities’ own service production, the service voucher only supports it. Based on experience, the intended benefits have been achieved, while none of the risks have materialised.

Terms of employment must be respected

According to Melin, at its best, the service voucher can lead to improved services. By making several options available, services with a poor standard will be eliminated. Competition can, however, take many forms, and it is important to be clear about what the terms of competition are. For example, achieving a competitive price level by violating employees’ terms of contract is not in line with best practices.

“Sitra’s recommended best practices require that if a service provider wishes to be included in the list of accredited service providers, legislation on working hours and universal collective bargaining agreements must be observed. It is not acceptable to gain competitive advantage by compromising on terms of employment,” Melin stresses.

People’s freedom of choice and equality go hand in hand

Melin hopes that the stakeholders will cooperate on creating service content and the criteria for pricing policy. Melin finds that, alongside the principle of equality, people’s freedom of choice is becoming part of the value base for social and health care service provision in today’s welfare state.

“When implemented in line with best practices, the service voucher will benefit the public,” Melin says.

Sitra’s Service Voucher project will produce two guides for local authorities, one on the implementation of the service voucher and one presenting good pricing practices. The publications will be available in the autumn at the public administration fair Kuntamarkkinat.

For further information, please contact:
Tuomo Melin, Leading Specialist, Municipal Programme, Sitra, phone 040 183 4158, firstname.lastname@sitra.fi