This report shows the differences between welfare states in Spain and Sweden with regard to ideological basis and model, coverage offered to citizens and relative public expenditure. This report briefly analyses the welfare system model that applies to both countries, taking the typology designed by Gøsta Esping-Andersen as a reference. The report also pays attention to two components of the welfare state: the health care system and the expenditure on social benefits and its effectiveness on reducing at-risk poverty, as an appropriate measure to assess performance of both welfare systems.

Key words

Welfare state – public expenditure – Spain – Sweden – welfare system model – social benefits – health care system

Carlos Palomo Lariocarlosp.l.91@gmail.comwww.linkedin.com/in/carlospalomolario E-magazine: www.scoop.it/t/welfare-states-spain-aand-sweden

How different are the Swedish and Spanish welfare states?

HOW DIFFERENT ARE THE SWEDISH AND SPANISH WELFARE STATES? By Carlos Palomo

This report has been prepared for

This article will be useful for the client because it offers an overview of the welfare system in Spain and Sweden that enables to know some of the most important features of both cases, particularly in the area of social benefits, where important data on public expenditure are provided. Moreover, data on the effectiveness of social transfers at reducing at-risk poverty, which can be considered one of the most accurate measures to assess the quality of a welfare state, are included. In addition, the client can also find qualitative information referred to which model of welfare regime each country corresponds to and referred to the health care system of both countries. In brief, this article tries to offer a short but comprehensive introduction to some of the most important elements that comprise any welfare state.

Ideological basis and welfare system model

According to Gøsta Esping Andersen’s (1993 citated in Pérez Nieto, 2005: 22) classic typologies of welfare state, the Swedish one belongs to the «social democratic» or «Scandinavian» model. The underlying aim of this model is to build a universal network of services with regard to citizenship (universal coverage by the public system), with standards tending to optimum quality rather than minimum and trying to avoid state-markets conflicts and tensions between social classes. The focus is on providing high-quality public equalitarian services to every person, within a supportive and redistributive system. Moreover, the Swedish welfare state shows commitment to sustained full employment for men and women (Esping-Andersen, 1993: 285). However, the idea of the Swedish state as universal provider can be challenged due to reforms in the last two decades.

Spain was not included in Esping-Andersen’s original typologies, but in the mid-90s scholars started to pay more attention to it and considered this country as part of a new model: the Mediterranean welfare state. Countries belonging to this model are considered an underdeveloped form of the conservative-corporatist model, whose aim is at reducing social differences up to an acceptable minimum but not trying to eliminate them (Pérez Nieto, 2005: 22). Spain has a model that combines universal services (education and health care) with social insurance-based services together with a great importance given to the family as services provider as a result of the believe that they are self-sufficient to take care of their members (Moreno and Bruquetas, 2011: 26-27) and as result of the underfunding of social services.

Health care

The Swedish health care system has a «cradle to grave approach» (Hort, 2008: 435): health attention covers children before they are born and old people until their death. For mothers or future mothers, the public system offers sexual health guidance, prevention centres, parental education and regular check-ups of expectant mothers. All these services are free of charge during the whole pregnancy (Hort, 2008: 435). For children and youngsters up to twenty years old, full public medical attention is provided at no direct cost. Every adult has the right of free dentist and general practitioner choice, notwithstanding the limited choice in sparsely populated areas. For adults, the system is also heavily subsidised with public funds. However, they have to pay a fee to use all services. Managed by the county councils with a high degree of independence, hospitals have among them a competition-cooperation relation. Together

[2]

HOW DIFFERENT ARE THE SWEDISH AND SPANISH WELFARE STATES? By Carlos Palomo

with the public system, there are also publicly subsidised private practitioners (Hort, 2008: 436). Swedish citizens, EU citizens and people from countries with agreements with Sweden are entitled to use the Swedish public health care system.

In the case of Spain, universal health care is paid with funds taken from taxes and no direct co-payment is required for users except for medicines, prostheses and other services, but the general idea is that health care is free. The coverage used to be almost universal for residents in Spain in equal conditions, but recent reforms have limited this situation. Since the 90s and mainly in the 2000s, private management has increased in public services and «mercantilisation» has grown due to the withdrawal of medicines from the public health system. Both strategies were aimed at reducing the high structural deficit of the health care system (Villota Gil-Escoin and Vázquez, 2008: 176). These strategies have also been implemented «to balance the universal right to health with the economic interests of the private sector» (Villota Gil-Escoin and Vázquez, 2008: 178).

In the EU15 context, Spain and Sweden are in the ends when talking about copayment in health care public services. In Spain, there is copayment mainly in medicines, whereas general practice, consultancy attention, hospital attention and emergencies are free of direct charge: they are paid through taxes. On the opposite, Sweden has the copayment system in all the health care services, regardless of the voluntary decision of the patient to use the services (general practice, emergencies, and medicines) or not (hospital attention and consultancy attention). So, Swedish system aims at collecting money and discouraging potential patients to use health services, whereas the Spanish one offers an open and almost free attention (Cirera, Mas and Viñolas, 2011).

If we look at total expenditure on health care as percentage of GDP (OCDE, 2012), Spain expended an average of 8.9% of its GDP in health care between 2004 and 2010, whereas Sweden expended an average of 9.3 %. There is a slight difference, but the underlying trend is much more interesting, as in 2004 Spain expended 8.2% and Sweden 9.1% of their respective GDP in health. Six years later, in 2010, both countries expended the same: 9.6 % of their GDP. Therefore, Spain has made a bigger effort to equalise expenditure on health. However, with regard to the percentage of public expenditure over total expenditure on health (OCDE, 2012), between 2004 and 2010 the average of the analysed years is 72.4 % in the case of Spain, whereas the Swedish one is higher: 81.3 %. These percentages of public expenditure are translated into an average public per capita expenditure between 2004 and 2010 (OCDE, 2012) of US$ 1,952.6 expressed in purchasing power parity (PPP) in the case of Spain and US$ PPP 2,748.8 in the case of Sweden. Figures are clear: Sweden invested in public health care roughly US$ PPP 800 per person on average more than Spain in the analysed years.

Social benefits

Spain expended an average of 21.82 % of its GDP on social protection (Eurostat, 2012) between 2005 and 2009 and Sweden expended an average percentage of 30.43 in the same years. If we look at which functions expenditure on social benefits is dedicated to1 (Eurostat, 2012), we see that Spain, between 2005 and 2009, expended an average of 7.4% in disability whereas Sweden expended more than double: 14.9%. In both cases, respective expenditure is roughly constant in all the years. In old age, Spain expended in the same years

1Social benefits consist of transfers, in cash or in kind, by social protection schemes to households and individuals to relieve them of the burden of a defined set of risks or needs. The functions (or risks) are: sickness/healthcare, disability, old age, survivors, family/children, unemployment, housing, social exclusion not elsewhere classified (n.e.c). Within social protection, apart from social benefits, administration costs and miscellaneous expenditure by social protection schemes (payment of property income and other) are included.

[3]

HOW DIFFERENT ARE THE SWEDISH AND SPANISH WELFARE STATES? By Carlos Palomo

an average of 32.2% of social benefits, whereas Sweden expended an average of 38.7% of social benefits. The percentage of social benefits dedicated to families and children between 2005 and 2009 ranged between an average of 6.1% in Spain to an average of 10% in Sweden. This small difference must be highlighted, as Sweden is considered a much more family-supportive country. With regard to housing, Spain invested an average of 0.86% of social benefits; Sweden invested an average of 1.6%, two times more than Spain. In social exclusion, the Mediterranean country invested between 2005 and 2009 an average of 0.9% of social benefits, whereas Sweden invested, on average, 2.1% of social benefits.

The average share of people at-risk poverty2 before social transfers between 2005 and 2011 was 25.45% in Spain and 27.8% in Sweden. As we can see, surprisingly, in Sweden the share is bigger although the country is richer. However, the situation changes considerably after social transfers, as they reduce poverty in Spain by 17.75% on average, which represents an average of 20.1% of people below the threshold of poverty, whereas Sweden reduces the share of people at-risk poverty by an average of 56.48%, which represents 12,1% of its inhabitants under the poverty threshold, a great difference with the situation prior to social transfers. To sum up, social transfers effectiveness is much higher in Sweden and, therefore, more efficient. Although the Nordic country continues to be one of the countries in the world with the lowest income inequality (the Gini coefficient is 0.24, lower than the rich world average of 0.31), this indicator has increased over the last few years3. With regard to Spain, the Gini coefficient in the late 2000s was 0.3174.

Conclusions

Given the previous exposition, I conclude that the hypothesis is partly verified. The welfare regime models are considered by scholars very different with regard to their ideological basis and their focus on services to citizens. Hence, the hypothesis related to this aspect is verified.

When talking about health care, qualitative differences are not so easy to see in the presented information. The only one I consider is clear enough to remark is the difference in co-payment: access to attention is easier in Spain and, hence, better for users. However, there is not sufficient information in this work to verify or refute the hypothesis. Further research is necessary. Regarding public expenditure on health care, the situation is the opposite: I consider that public expenditure is quite different in both countries in terms of percentage of public expenditure and per capita public expenditure. So, the hypothesis related to this concrete variable is verified.

Finally, data from expenditure on social benefits also show an important gap in the percentage dedicated to this matter. However, it is not as big as initially expected. Moreover, there is a greater difference in social transfer effectiveness in reducing at-risk poverty: Sweden is much more effective. Therefore, with regard to this aspect, the hypothesis is clearly verified. However, no qualitative differences related to coverage can be concluded.

Overall, it is important to note that, in order to have a more detailed picture of both welfare systems, further research is necessary, and this work can be useful as a starting point for that aim.

2 Eurostat describes this at-risk poverty rate as the share of persons with an equivalised disposable income below the risk-of-poverty threshold, which is set at 60 % of the national median equivalised disposable income.3 The new model, The Economist, October 13th 2012 (online): http://www.economist.com/node/21564412?fsrc=scn/tw_ec/the_new_model [check: 4th November 2012].4 Income distribution-inequality, OECD (online): http://stats.oecd.org/Index.aspx?DataSetCode=INEQUALITY [consultation: 24th November 2012].

[4]

HOW DIFFERENT ARE THE SWEDISH AND SPANISH WELFARE STATES? By Carlos Palomo

References

Hort, S. (2009), «The Swedish welfare state: A model in constant flux» in The Handbook of European Welfare States, eds. Klaus Schubert, Simon Hegelich and Ursula Bazant, London, New York: Routledge

Villota Gil-Escoin. P. and Vázquez, S. (2009), «The welfare state in Spain: Unfinished business» in The Handbook of European Welfare States, eds. Klaus Schubert, Simon Hegelich and Ursula Bazant, London, New York: Routledge

Mas, N., Cirera, L. and Viñolas, G. (2011), «Los sistemas de copago en Europa, Estados Unidos y Canadá: implicaciones para el caso español», Documento de Investigación DI-939, Public-Private Research Center, IESE Business School, 1-22 (online): http://www.iese.edu/research/pdfs/DI-0939.pdf [last check: 24th November 2012].

Pérez Nieto, E. (2005), «El estado del bienestar y las políticas públicas» in Análisis de Políticas Públicas, ed. Margarita Pérez Sánchez, Granada: Editorial Universidad de Granada.

Moreno Fuentes, F. J. and Bruquetas Callejo, M. (2011), Inmigración y Estado de bienestar en España, Barcelona: Obra Social “la Caixa”.

Esping-Andersen, G. (1993), Los tres mundos del Estado del bienestar, Valencia: Edicions Alfons el Magnànim.

«Sweden: The new model», The Economist, 13th October 2012 (online): http://www.economist.com/node/21564412?fsrc=scn/tw_ec/the_new_model [consultation: 4th

November 2012].

Eurostat [last check: 29th November 2012].

- Expenditure on social protection (% of the GDP) (online): http://ow.ly/fHdwX- Social benefits by function (% of social benefits): http://ow.ly/fHdCL - At-risk-poverty rate before social transfers by sex: http://alturl.com/vuqpf - At-risk poverty rate after social transfers by sex: http://alturl.com/gju8p

OECD Health Data 2012 – Frequently Requested Data (online): http://ow.ly/fHf1H [last check: 29th November 2012].

- Total expenditure on health, % gross domestic product.- Public expenditure on health/capita, US$ purchasing power parity.- Public expenditure on health, % total expenditure on health.

OECD, Income distribution-inequality, (online): http://stats.oecd.org/Index.aspx?DataSetCode=INEQUALITY [last check: 24th November 2012].

[5]