1. Recentralization in Norway: Why, what and what now?
Jon Magnussen
Norwegian University of Science and Technology
LSE – September 14th 2010

2. Background Norway – population 4,7 million
Government – coalition of social democrats, left wing socialists and centrist party – first electet 2005, reelected 2009
Predominantly public provision of services
Education
Health care
Social services

3. Three level political governance
Central government
Specialised health care
Defense
etc
Counties – elected county councils (19)
Upper secondary school (11-13)
Regional development
Municipalities – elected municipal councils (430)
Primary and lower secondary school (1-5, 6-8)
Nurseries/kindergarten
Primary health care / care for elderly and disabled
Social services
Municipal development

4. Fiscal governance Non discretionary local taxes
21 % municipal income tax
7 % county income tax
Central grants in the form of
General purpose grants (tax equalization)
Earmarked grants
Compared to Nordic neighbors - low share of unconditional central grants
Thus higher level of fiscal centralization

5. Health care: 1980-2002 Period of decentralization
Specialised health care county responsibility
Primary health care a municipal responsibility
Fiscal federalism – although without benefit taxation
From 1997 – activity based financing through DRGs
Varying levels from 30 % via 60 % to 40 % over the years
In both cases a political decentralization to elected local bodies
But limited autonomy, central supervision and control, central planning of capacity

6. Developing concerns Low levels of efficiency
Large geographical variations in health care spending
Local excess capacity and duplication of services
Deficits and a ”blame game” between counties and state
Extra central funding – soft budgeting
Note: Less focus on primary health care and care services

7. 2002 Recentralization of specialist health care
Ownership from 19 counties to the state.
From devolution to deconcentration; organize the sector in 5 regional health authorities (RHA)
No politicians on the boards of the health authorities
Funding is a combination of block and matching (activity based) grants to the RHAs
RHAs own hospitals (“local health authorities”)

8. Why recentralize? Economic goals related to Management goals
Cost containment
the state decided to quit the blaming game
“one owner – one health policy”
Technical efficiency
Economics of scale and scope
Less duplication of services between regions/counties
Management goals
A more professional management
Professional boards

9. Adjustments Appointed – not elected – politicians on the boards (2006)
Strong concerns about ”deficit of (local) democracy” in model with professional management/boards
Further centralization
RHAs reduced from 5 to 4 (2007)
Southeast (55%), West (20%), Middle (15%), North (10%)

10. Effects Higher levels of efficiency
Gradual restructuring – larger and more specialised units
Growth in activity – against the explicit policy goals of the government
Persistant deficits – with some exceptions in well managed enterprises
Strong focus on regional equity

11. Norway vs NHS - differences
Part of RHA income based on activity (40% DRG for somatic care)
”Quasi-devolution” – through appointed politicians on regional boards
Separation of responsibility for primary and secondary care; municipalities vs RHAs

12. Policy issues Share of activity based financing
40 % too high?
Central vs. local strategic governance
Lack of integration between primary and secondary care
Necessity of RHA level – bureaucracy

13. Future directions Abolish RHAs in favour of a central directorate
Would imply a more ”NHS” like organization
But fuzzy about the role of possible ”SHAs”
Reduce activity based financing to 30%
Concerns about selection problems
But still not clear why RHAs are partly funded through activity

14. ”Interaction” reform
Municipalities cover 20 % of the costs in regional health enterprises
In this model 20 % of the grants currently given to specialised health care goes to the municipalities
More GPs – no growth in # of (hospital) specialists
More funds to preventive care
Municipalities must cooperate to increase the capacity of health centers that provide both primary and (less) specialised care

15. The main dilemma Devolution implies geographical variations
Politically unacceptable
Deconcentration implies lack of local political control
Hard to accept when decisions are ”unfavorable”
Could we please have our cake and eat it too?

16. Where to?
Strengthen role of municipalities – as purchasers and planners
Remove RHA level, and fund hospital trusts directly from the state
Resolve dilemmas – equity vs local governance?

17. Thank you!