Health is recognized by the Philippine constitution as a basic human right. The Philippines, compared to most Asian countries, produces more and better human resources for health. However, the Philippines are challenged by attracting and retaining staff in the under-served areas of the country. Philippine allotted 4.2-4.4% of its GDP to health from 2009 to 2011. Furthermore, considerable inequities in health care access and outcomes between Socio-economic groups remain. The Phil Health's limited breadth and depth of coverage has resulted in high levels of out of pocket payments. The implementation of the reforms in financing, service delivery and regulation which are aimed to tackle the inefficiencies and inequalities in the health system has been challenged by the decentralized environment and the presence of private sector, often creating fragmentation and variation in the quality of health services across the country.
Svetlana Jovanović, Srđan Milovanović, Jelena Mandić, Sinisa Jovović
The health system is one of the most complex systems in any country. Each state has an obligation to take care and care about the health of its population. The health care system includes the health infrastructure that provides a range of programs and services, and provides health care to individuals, families and communities. The health system must ensure the physical, geographical and economical accessiblity and affordability of integrated and quality health care. It should also provide for the development of health personnel, finance sustainability, decentralization of management and financing of health care and placing the citizens at the centers of the health system. The purpose of the health care system is the preservation and improvement of human health by providing health services, modern as well as traditional medicine, in an efficient manner and at the same time accessible and acceptable to the people. Due to its importance and impact on the population of each country, as well as its large economic impact, the government implemented a series of measures in planning and managing the health care system to ensure stable funding and rational and a quality health care delivery system, and all this in order to provide within the available resources a basic health care. In all the countries, the aging of the population and the introduction of new and expensive technologies present a constantly increasing cost of health care delivery. Modern health care systems differ from each other mainly in the methods of raising funds for health care, as well as in methods of payment for the service providers in the health sector. Problems of health care systems rarely, if ever, can be solved forever. As countries develop, their health care systems must respond to new challenges.
This issue marks a transition point in the life of this journal. Readers who peruse the inside cover of the journal (or our website) will notice that the editorial board has been (thoroughly) renovated. Self-questioning, self-criticism and even a penchant for self-subversion have been constitutive of the identity of the European Law Journal since its foundation. The new editorial board will contribute to keep this identity alive. I am extremely happy to report that the new board is close to complete gender balance (and hopefully will be rather soon in full gender balance). The new board is also more inclusive of the different legal, political and cultural traditions that make up the European legal mosaic. This will certainly lead to new ideas, new debates and new sections, in all cases reflecting an invariable commitment to thinking law in its economic, political, historical, social and cultural context. Never before was the reporting of the content of European law an act so pregnant of radical implications. Never before so much was at stake in Europe: socially, economically and politically. Not since the end of the Second World War was the very identity of European societies as open and cooperative, democratic and socially just societies so much challenged. If the proof of the cake is in the eating, the proof of the journal is in its contents. Both Gareth Davies and Marija Bartl break new ground on subsidiarity. Both authors focus on the structural constitution of power allocation in Europe. Separately, each piece challenges not only the existing literature, but also the practice (and discourse) of European institutions. Jointly, Davies and Bartl redefine the very terms in which the debate on subsidiarity should proceed from now onwards. Tanja Ehnert draws major theoretical and constitutional lessons from the study of what is at first sight the rather specialised if not esoteric subject of nanotechnologies in food (including nanofood). She acknowledges that European institutions produce lots of expertise, but she puts forward powerful reasons to doubt that this expertise amounts to the kind of knowledge which could justify the claim to legitimacy implicit in European practice. The point she raises goes far beyond the specific subject she studies. Nanofood may be physically tiny, but after you read the paper, you will be forced to agree that its legal implications are far from small. Fabien Terpan offers a systematic and theoretically grounded reconstruction of soft law. After the inflation (and recent devaluation) of the concept, it is high time we come to terms with what exactly soft law is and with what we mean when we characterise law as soft. Terpan puts us on a promising track. Marek Szydlo revisits one of the key affirmative action policies in European law: gender equality on company boards. He makes us rethink the legal framework and suggests some reasons why we should be careful when drawing conclusions on the matter. Finally, William Phelan invites us to revisit the very first European ‘troika’, namely the trio of founding cases of European constitutional law. Phelan's work is both a piece of legal history and a very contemporary plea for a different understanding of European law.
Nader Markazi Moghaddam, Aidin Aryankhesal, Mohammad Arab
BACKGROUND: Liberalization and decentralization of public sector has been triggered in some developing countries and in Iran by the Ministry of Health and Medical Education (MOHME) that granted autonomy to 54 public hospitals. However, establishment of such a complex organizational reform was rather unsuccessful. We aimed to explore the obstacles and barriers caused such a failure and their mechanisms. METHODS: Using a qualitative approach in 2013, we consulted key informants at the autonomous hospitals and their affiliating universities. Data collection was done within two phases: (i) 276 unstructured questionnaires asking respondents of barriers, and (ii) 23 semi-structured interviews from the first phase's key respondents. The first phase data were analyzed using thematic analysis and the second's by framework approach based on the frame shaped at the first phase. RESULTS: Nine obstacles were recognized including "autonomous hospitals' board composition", "delay in announcing autonomous hospitals' charges by the MOHME", "lack of financing by the committed organizations", "poor follow up for implementation of the reform", "irregular board meetings", "lack of an external overseer", "shortage of full-time physicians", "lack of management stability", and "health insurance organizations' delayed payments". CONCLUSION: The MOHME and insurance organizations did not pay the reform expenses. There were some competing motives as well to slow the reform or to shut it down. The stages of policy formulation and implementation were done separately in Iran, so this big organizational reform encountered serious obstacles.
Background: In 2004, the health system in Iran initiated an organizational reform aiming to increase the autonomy \nof teaching hospitals and make them more decentralized. The policy led to the formation of a board of trustees in \neach hospital and significant modifications in hospitals’ financing. Since the reform aimed to improve its predecessor \npolicy (implementation of hospital autonomy began in 1995), it expected to increase user satisfaction, as well as \nenhance effectiveness and efficiency of healthcare services in targeted hospitals. However, such expectations were \nnever realized. In this research, we explored the perceptions and views of expert stakeholders as to why the board of \ntrustees’ policy did not achieve its perceived objectives. \nMethods:We conducted 47 semi-structured face-to-face interviews and two focus group discussions (involving 8 \nand 10 participants, respectively) with experts at high, middle, and low levels of Iran’s health system, using purposive \nand snowball sampling. We also collected a comprehensive set of relevant documents. Interviews were transcribed \nverbatim and analyzed thematically, following a mixed inductive-deductive approach. \nResults: Three main themes emerged from the analysis. The implementation approach (including the processes, views \nabout the policy and the links between the policy components), using research evidence about the policy (local and \nglobal), and policy context (health system structure, health insurers capacity, hospitals’ organization and capacity \nand actors’ interrelationships) affected the policy outcomes. Overall, the implementation of hospital decentralization \npolicies in Iran did not seem to achieve their intended targets as a result of assumed failure to take full consideration \nof the above factors in policy implementation into account. \nConclusion:The implementation of the board of trustees’ policy did not achieve its desired goals in teaching hospitals \nin Iran. Similar decentralization policies in the past and their outcomes were overlooked, while the context was not \nprepared appropriately and key stakeholders, particularly the government, did not support the decentralization of \nIran’s health system.
Across the Asian region, models of health administration vary from centralized management arrangements to more open decentralized systems. Utilizing a historical perspective, this review compares and contrasts health systems transition in seven countries (the Democratic People’s Republic of Korea, Myanmar, Timor Leste, Bhutan, Mongolia, Cambodia and the Philippines) against the background of macro-political and economic reform, and then considers the implications of these findings for approaches to health policy analysis. Four management areas are presented to demonstrate variation in health system design over the last 40 years: centralization and decentralization, human resource management, health financing and constituency emergence. Historical records illustrate that these functions have evolved through political reform eras of centralist, early reform, established reform and pluralist models of administration, with the main driver of system change being periodic historical shifts in the design of the macro-political and socio-economic order. The cross referencing of management variables with these stages of transition illustrates the degree to which health policy parameters are reset by periodic historical shifts in the political and social order. The findings in these case studies call for a more nuanced classificatory system for health systems and policy analysis that unites a technical perspective with a wider social and political field of vision, and, in doing so, builds a more comprehensive picture of the way in which health systems function in the real world.
In 1991, Indonesia began a process of decentralization in the health sector which had implications for the country's public hospitals. The public hospitals were given greater authority to manage their own personnel, finance and procurement, with which they were allowed to operate commercial sections in addition to offering public services. These public services are subsidized by the government, although patients still pay certain proportion of fees. The main objectives of health sector decentralization are to increase the ability of public hospitals to cover their costs and to reduce government subsidies. This study investigates the consequences of decentralization on cost recovery rate of public hospitals at district level. We examine five service units (inpatient, outpatient, operating room, laboratory and radiology) in three public hospitals. We find that after 20 years of decentralization, district hospitals still depend on government subsidies, demonstrated by the fact that the cost recovery rate of most service units is less than one. The commercial sections fail to play their role as revenue generator as they are still subsidized by the government. We also find that the bulk of costs are made up of staff salaries and incentives in all units except radiology. As this study constitutes exploratory research, further investigation is needed to find out the reasons behind these results.
This paper examines the infrastructure–decentralization nexus in the production of health services with a particular emphasis on the issue of health infrastructure. The first part of the paper presents evidence on health services and infrastructure spending in health for various countries or groups of countries showing the importance of infrastructure spending in the provision of health services. The second part of the paper examines why and how health services are joint production with collective and private characteristics. These characteristics affect the decentralization of such services and thus the decentralization of health infrastructure; it also raises the issue of who should finance what in health care. The third part examines case studies and policy choices in USA, Canada and Switzerland related to various aspects of health care and health infrastructure financing.
This article is a reflection about whether new public management (NPM) styles of reforms seen in other developing countries are also seen in Nepal, and to substantiate these facts with the available evidence and findings. The author saw the emergence of NPM ideas in Western industrialized countries like the United Kingdom and New Zealand. Now it exists in several developing countries of Africa and Asia; but it is very hard to generalize the degree and scope of NPM elements' existence. In Southeast Asia, there is still a mix of the old bureaucratic system with new NPM-oriented reform initiatives. Series of administrative reforms, donor conditionality, and the reestablishment of democracy in the country after 1991 have influenced an orientation toward an efficient, people-oriented, mixed-economy model with increasing partnership of private agencies and nongovernmental organizations in Nepal. The political movement of the last 15 years in the country has strongly called for a new, efficient, and performance-oriented administration and management culture in the country. There are several initiatives already introduced (public-private partnership, decentralization, good governance, accountability/public auditing, performance-based outcome/results-oriented financing and reporting systems). However, to take this momentum up, it still requires strong willingness of political leaders and senior administrators. At the moment, peace and stability of turmoil, political stability, state-of-the-art management skills, and supportive organizational culture are the fundamental requirements for increasing the realization of, and sustaining the NPM-oriented reforms in Nepal.
This paper examines how organization and financing of maternal health services influence health-seeking behavior in Bosomtwe district, Ghana. It contributes in furthering the discussions on maternal health-seeking behavior and health outcomes from a health system perspective in sub-Saharan Africa. From a health system standpoint, the paper first presents the resources, organization and financing of maternal health service in Ghana, and later uses case study examples to explain how Ghana's health system has shaped maternal health-seeking behavior of women in the district. The paper employs a qualitative case study technique to build a complex and holistic picture, and report detailed views of the women in their natural setting. A purposeful sampling technique is applied to select 16 women in the district for this study. Through face-to-face interviews and group discussions with the selected women, comprehensive and in-depth information on health- seeking behavior and health outcomes are elicited for the analysis. The study highlights that characteristics embedded in decentralization and provision of free maternal health care influence health-seeking behavior. Particularly, the use of antenatal care has increased after the delivery exemption policy in Ghana. Interestingly, the study also reveals certain social structures, which influence women's attitude towards their decisions and choices of health facilities.
OBJECTIVE: China's ongoing new health reform aims to reduce individual out-of-pocket (OOP) payments for healthcare services. The aim of this article is to analyse the impact of this reform and to draw policy implications. METHODS: Data are retrieved from the relevant government publications. Polynomial regression models are used to predict future health expenditures. An extensive sensitivity analysis is conducted to investigate the ratios of OOP payments to the total health expenditures (THEs) and to the disposable personal income (DPI) for 2009-11 under different scenarios of cost projections and personal income distributions. Both quantitative and qualitative analyses are carried out to draw conclusions. RESULTS: The ratios of OOP payments to THE and DPI vary significantly across scenarios tested. Only if all committed government investments and social health expenditure are realized can China's new health reform reduce both ratios and achieve its target goals. In particular, the ratio of OOP payments to DPI can also be significantly reduced by improving income distribution. Due to the complicated interplay among different cost components in health expenditures, these two ratios may not change in the same direction, indicating that both need to be examined when evaluating the reform. CONCLUSION: The new health reform in China aims to alleviate the high OOP payments for healthcare services, but it has not yet been able to reduce both OOP-to-THE and OOP-to-DPI ratios simultaneously. Major reasons include (1) inability of local governments to fulfil their responsible investments due to health finance decentralization and uneven economic development in China and (2) a serious cost inflation in health expenditures coupled with a low level of income distribution. It is suggested that the central government should bear more financial responsibility and assist local governments to fully invest, and should improve individual incomes, in particular for the poor.
OBJECTIVE: To evaluate implementation of the National Essential Medicines Scheme (NEMS) in rural China. METHODS: Two rural counties/districts in each of three provinces where NEMS had been implemented were surveyed. Information was collected from NEMS staff at the province, county/district, township and village levels; patients with chronic disease were also interviewed. Service provision, finances, prescriptions, inpatient records and the expenditures of patients with certain diagnoses were investigated in township hospitals and village clinics. The results were compared with the corresponding data recorded before NEMS was introduced. FINDINGS: Following the introduction of NEMS, drug procurement in each study location was systematized. Total drug costs declined. This, and improved prescribing, reduced the costs of outpatient and inpatient care and led, apparently, to increased uptake of health services. However, the prices of some drugs had increased and the availability of others had declined. The compensation of health-care providers for NEMS-related reductions in their incomes had been largely ineffective. As a result of the introduction of NEMS, health facilities relied more on public financing. Many health-care providers complained about higher workloads and lower incomes. CONCLUSION: Although it was well conceived, the introduction of NEMS into China's decentralized, fee-for-service system of health care has not been straightforward. It has highlighted the problems associated with attempts to modernize health care and health financing for patients' benefit. Sustainable mechanisms to compensate health-care providers for lost income are needed to ensure that NEMS is a success.
Hana Brixi, Yan Mu, Beatrice Targa, David Hipgrave
China's current health system reform (HSR) is striving to resolve deep inequities in health outcomes. Achieving this goal is difficult not only because of continuously increasing income disparities in China but also because of weaknesses in healthcare financing and delivery at the local level. We explore to what extent sub-national governments, which are largely responsible for health financing in China, are addressing health inequities. We describe the recent trend in health inequalities in China, and analyse government expenditure on health in the context of China's decentralization and intergovernmental model to assess whether national, provincial and sub-provincial public resource allocations and local government accountability relationships are aligned with this goal. Our analysis reveals that government expenditure on health at sub-national levels, which accounts for ∼90% of total government expenditure on health, is increasingly regressive across provinces, and across prefectures within provinces. Increasing inequity in public expenditure at sub-national levels indicates that resources and responsibilities at sub-national levels in China are not well aligned with national priorities. China's HSR would benefit from complementary measures to improve the governance and financing of public service delivery. We discuss the existing weaknesses in local governance and suggest possible approaches to better align the responsibilities and capacity of sub-national governments with national policies, standards, laws and regulations, therefore ensuring local-level implementation and enforcement. Drawing on China's institutional framework and ongoing reform pilots, we present possible approaches to: (1) consolidate key health financing responsibilities at the provincial level and strengthen the accountability of provincial governments, (2) define targets for expenditure on primary health care, outputs and outcomes for each province and (3) use independent sources to monitor and evaluate policy implementation and service delivery and to strengthen sub-national government performance management.
George Schieber, Cheryl Cashin, Karima Saleh, Rouselle Lavado
Identifies the strengths and weaknesses of Ghana’s health system in three broad areas: (1) governance, management, and organization; (2) delivery system, pharmaceuticals, and public health; and (3) financing. Ghana’s well-developed, highly decentralized, and evolving health system operates on an integrated three-level (national, regional, and district) scheme and incorporates a community-level health delivery system.Improving health outcomes, financial protection, and consumer responsiveness in an equitable, efficient, and sustainable manner requires a well-functioning delivery system of human and physical infrastructure that includes reasonably priced, available, and effective pharmaceuticals and well-functioning public health programs that target the major disease burdens and are tightly coordinated with the National Health Insurance Scheme (NHIS) basic benefits package. Ghana has come a long way toward developing a modern health care delivery system, improving the availability of effective drugs, and operating effective public health programs but continues to grapple with interrelated management, delivery system, and financing issues.
The issue of small and declining health sector financing by the central and state governments in India is addressed by the launching of National Rural Health Mission in 2005-06. Bottom up planning starting with village as unit used as the main strategy of NRHM to meet the region specific health needs would serve well to promote health sector development. The provision of effective and quality health services with a special focus on the backward districts with weak human development is also slated to be an important objective of NRHM. Analyzing the district level NRHM funds flow and expenditure in Karnataka the present paper argues that the district wise allocations are wrought with poor expenditure planning. Program implementation plans and allocations significantly vary from one another. Such deviations in the earmarking of planned funds defy the very purpose of stringent bottom up planning involving colossal manpower and financial resources to track the grass root felt needs. In addition such aberrations do not help the government in the achievement of professed outcomes. This is a serious lapse in NRHM implementation and can seriously distort the effectiveness of public spending and to be taken care of in future. Utilisation of the allocated resources is poor and there is absolute mismatch between the planned estimates for important components of NRHM like RCH, NRHM additionalities, Disease control program and Immunisation and actual expenditure. Enhancing the government health sector financing in a big way to reach 2-3 percent mark of GDP by 2012 has been an important objective of National Rural Health Mission (NRHM) launched by the Government of India in 2005-06. Both the Central and state governments share the responsibility of enhancing the government spending. As we get closer to 2012, it is necessary to review the success of the NRHM in enhancing the health sector funding by the government, more importantly to know how effectively these funds have got transmitted to the grass root level to be translated to healthcare services. Regarding the aggregate funding of the health sector at the national level to reach 2-3 percent level, it has been observed that while the health sector outlay as a percent of GDP has been increasing ever since the launch of NRHM, it is unlikely that the goal of 2-3 percent of GDP would be reached by 2012. (Berman et al, 2010) At the grassroots level important issues in translating outlays into outcomes relate to whether funding reflects the local needs as identified in the Program Implementation Plan (PIP); whether adequate and timely funding is provided to the health facilities in the districts; whether the backwardness focus that NRHM professes to achieve is attained or not. This gains special importance in the context of NRHM policy pronouncements to provide accessible, affordable, accountable, effective and quality healthcare services, especially to the rural population and vulnerable groups throughout the state with special focus on the backward districts with weak human development and health indicators especially among the poor and marginalized groups like women and the vulnerable sections of the society. (NRHM, Mission document, 2005) The main strategy of the NRHM adopted for the purpose is the decentralized planning in the form of health plans prepared starting with village as a 1 Faculty of Economics, Institute for Social and Economic Change, Nagarabhavi, Bangalore 560072 can be reached at gayithri@isec.ac.in
Using cross-country analysis and case studies, this book provides new insights and potential policy responses for the key fiscal policy challenges that both advanced and emerging economies will be facing.
INTRODUCTION: In recent years, the country of Mongolia (population 2.8 million) has experienced rapid social changes associated with economic growth, persisting socio-economic inequities and internal migration. In order to improve health access for the urban poor, the Ministry of Health developed a "Reaching Every District" strategy (RED strategy) to deliver an integrated package of key health and social services. The aim of this article is to present findings of an assessment of the implementation of the RED strategy, and, on the basis of this assessment, articulate lessons learned for equitable urban health planning. METHODS: Principal methods for data collection and analysis included literature review, barrier analysis of health access and in-depth interviews and group discussions with health managers and providers. FINDINGS: The main barriers to health access for the urban poor relate to interacting effects of poverty, unhealthy daily living environments, social vulnerability and isolation. Implementation of the RED strategy has resulted in increased health access for the urban poor, as demonstrated by health staff having reached new clients with immunization, family planning and ante-natal care services, and increased civil registrations which enable social service provision. Organizational effects have included improved partnerships for health and increased motivation of the health workforce. Important lessons learned from the early implementation of the RED strategy include the need to form strong partnerships among stakeholders at each level of the health system and in the community, as well as the need to develop a specific financing strategy to address the needs of the very poor. The diverse social context for health in an urban poor setting calls for a decentralized planning and partnership strategy, but with central level commitment towards policy guidance and financing of pro-poor urban health strategies. CONCLUSIONS: Lessons from Mongolia mirror other international studies which point to the need to measure and take action on the social determinants of health at the local area level in order to adequately reduce persistent inequities in health care access for the urban poor.
Public health expenditure is an important part of fiscal expenditure.With the establishment of the public finance system,it is important to define the ratio of public health expenditure in the fiscal expenditure reasonably.The paper uses panel data to analyze empirically what factors influence spending behaviors of local governments on health in China.The result indicates that there exists a certain correlation between economic development,population size,urbanization and local public spending on health.There is no necessary relation between population structure,the organization and official amount expan sion and public health expenditure.The fiscal decentralization has only a small negative effect on the public health expendi ture.
The Kenya government has over the years reiterated its commitment towards the provision of quality primary health care (PHC) to her populace.The various macroeconomic performance experienced in the late 1980s and early 1990s, however affected the government's ability to sustain the continued provision of PHC.This is not only demonstrated by the high out-of-pocket spending but also low budgetary allocation currently estimated at less than ten (10) percent.The funding levels have negatively affected the ability of the poor to access primary health care while the quality of health care provided has equally been a concern as witnessed by high incidences of lack of essential drugs and other medical supplies, low morale amongst the health personnel involved in the provision of primary health care, lack of medical equipments in most facilities and skewness in the deployment of staff countrywide.The objective of the study was therefore to examine the various alternative financing mechanisms to mitigate against the trends, Since various financing mechanisms have been suggested for consideration.In the study it was found that providers of these services prefer financing mechanisms that pool funds together to ensure that the poor and other vulnerable are cushioned against the catastrophic health expenditure.Other mechanisms favored included establishment of specific taxes to finance health care, and where possible consider issuance of health infrastructure bonds to facilitate construction of modern health facilities across the country within the decentralized framework of counties.Although these mechanisms sound promising, their success will depend not only on political and leadership commitment but also on the ability to identify the poor and where possible provide the necessary safety nets such as waivers and exemptions.It will also be necessary to establish the necessary legal framework that will spearhead the collection and management of the funds collected.
Alexandr Katsaga, Maksut Kulzhanov, Marina Karanikolos, Bernd Rechel
Since becoming independent, Kazakhstan has undertaken major efforts in reforming its post-Soviet health system. Two comprehensive reform programmes were developed in the 2000s: the National Programme for Health Care Reform and Development 2005-2010 and the State Health Care Development Programme for 2011-2015 Salamatty Kazakhstan. Changes in health service provision included a reduction of the hospital sector and an increased emphasis on primary health care. However, inpatient facilities continue to consume the bulk of health financing. Partly resulting from changing perspectives on decentralization, levels of pooling kept changing. After a spell of devolving health financing to the rayon level in 2000-2003, beginning in 2004 a new health financing system was set up that included pooling of funds at the oblast level, establishing the oblast health department as the single-payer of health services. Since 2010, resources for hospital services under the State Guaranteed Benefits Package have been pooled at the national level within the framework of implementing the Concept on the Unified National Health Care System. Kazakhstan has also embarked on promoting evidence-based medicine and developing and introducing new clinical practice guidelines, as well as facility-level quality improvements. However, key aspects of health system performance are still in dire need of improvement. One of the key challenges is regional inequities in health financing, health care utilization and health outcomes, although some improvements have been achieved in recent years. Despite recent investments and reforms, however, population health has not yet improved substantially.
Although decentralization is based on the simple idea that smaller organizations, properly structured and steered, are inherently more agile and accountable than larger organizations, in the health system this idea requires much more exploration (Saltman et al. 2007). Health systems are large and composed of several subsystems, including health care providers, health financing, and public administration. All of them have their own organizational patterns and values. Furthermore, inside each of them are further divisions, sometimes with almost opposite approaches: health promotion, disease prevention, clinical medicine, or palliative care. All of these subsystems and divisions could recognize decentralization as an opportunity or a threat.
Jan Klavus, Ilkka Vohlonen, Juha Kinnunen, Veli Koistinen · 5 authors
The Finnish health care system is financed in a highly decentralized manner. In the tax-financed Beveridge model each municipality is responseble for financing and organizing health care services for its residents. This paper examined the annual incidence and treatment costs of three cost-intensive DRG-groups, and all DRG-groups together. The objective was to estimate municipal level predictions on the incidence of new illness cases and their associated costs, and to analyze whether there was greater uncertainty in anticipated specialized health care costs in municipalities with smaller populations. The dataset comprised of longitudinal hospital utilization and discharge data from Hospital Discharge Registers. The expected annual variation of illness cases and costs was assessed with respect to 95% confidence intervals estimated for each morbidity group and municipality. The results indicated that the costs of the selected morbidity groups fluctuated in a completely uncontrollable manner in municipalities with small populations. As the median size of Finnish municipalities is less than 6000, the inability to anticipate periodic health care costs constitutes an extensive financial problem and calls for the establishment of larger regional units and funding pools.