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2012 Conference Presentation

Markets/regulation Finland

7 September 2012

Welfare effects of vouchers: evidence from Finnish sheltered housing

Ismo Linnosmaa, National Institute for Health and Welfare (THL), Finland
Timo Seppälä, National Institute for Health and Welfare (THL), Finland
Jan Klavus, National Institute for Health and Welfare (THL), Finland
Tuija Oksanen, National Institute for Health and Welfare (THL), Finland


Utilization of vouchers has expanded in the provision of social care services in Europe. In Finland, a law regulating the use of vouchers in health and social care was reformed in August 2009. The objective of the reform was to increase freedom of choice and competition among private providers, and to improve efficiency of service production in general. It is commonly believed that increased consumer choice adds to consumer welfare, because clients are able to choose those providers and services, which match best to their needs.

However, current literature provides little empirical evidence supporting this claim. The goal of this article is to fill this gap by examining welfare effects of vouchers. We examined elderly clients in sheltered housing with 24-hour assistance in Helsinki area. We applied ASCOT Chint3 questionnaire, which was developed to measure SCRQol and effectiveness of care home services. The questionnaire was translated into Finnish using backward-forward translation techniques. In order to have a treatment group in the study, we selected randomly 60 clients using vouchers in the provision of sheltered housing. Clients were matched to 60 clients for whom residential services were organized by Helsinki city. The latter group was then used as a control group. We applied propensity score matching techniques to match clients on the basis of age, gender and income. ASCOT Chint3 was mailed to 120 clients in the control and treatment groups in November 2011. Due to clients’ low ability to function, questionnaires were answered by clients’ relatives. In addition, English utility weights were applied, because no Finnish weights exist. We obtained 46 answers, giving us a 49.5% response rate among those clients who were potentially able to answer the questionnaire.

No statistically significant differences were observed between clients in the treatment (n = 25) and control groups (n = 21) in terms of age, gender, income or ability to function, suggesting that matching was successful. Results indicate that clients’ quality-of-life was better among the users of vouchers than in the control group in almost every dimension of the ASCOT measure, when clients were using services. On the other hand, expected SCRQol was lower among the users of vouchers in every dimension of ASCOT. As a result, the average SCRQol was 0.764 (n = 14 due to missing values) among voucher users and 0.580 (n = 7) among clients using services organized by Helsinki city. Results suggest that the use of vouchers increases effectiveness of services, when assessed by their relatives.


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