Executive summary

The care reform that entered into force on 1 July 2023 changed the financing of the 24-hour general care service provided outside the home (ÜHT). Local governments (KOVs) began contributing to the care costs of all people whose need for the service had been established, and an additional benefit was introduced for service users with lower incomes. The immediate objective of the reform was to reduce the financial burden on service users and their relatives and to improve access to ÜHT. Its broader objectives included improving service quality, reducing the care burden on relatives, and enabling local governments to develop services that support people in living at home. The study assesses the outcomes of the reform primarily over the period 2021–2025 and draws on register and administrative reporting data, local government financial data, the financial indicators of service providers, surveys and interviews, and projections of population and ÜHT expenditure up to 2050.

The care reform achieved its immediate objective and improved the financial accessibility of ÜHT. The share of total service costs borne by service users and their relatives decreased. According to data from the online environment for aggregating social welfare statistics reports (H-veeb), the share of total ÜHT costs borne by service users and their relatives fell from approximately 78% in 2021 to 53% in 2025. Post-reform STAR and SKAIS data show that, on average, a service user’s pension was sufficient to cover the amount remaining payable by the service user, but differences between individuals were large: for 23% of service users, their pension did not fully cover the amount payable by them in any month in which they received the service during 2023–2025. The part of the ÜHT care-home place fee remaining payable by the service user depends on the fee set by the service provider, the local government’s care-cost payment cap, the lower-income benefit and any additional financial assistance provided by the local government, as well as on the price at which a suitable and available service place is actually accessible to the person and which service place they choose.

Alongside the improvement in financial accessibility, the use and supply of the service increased. According to H-veeb data, 12,037 people were receiving ÜHT at the end of 2025, and according to the 2025 extract from the Register of Economic Activities (MTR), there were 12,548 service places. Before the reform (2019–2021), the number of service places grew faster than the number of service users, whereas around the entry into force of the reform the number of service users grew faster, which raised the occupancy rate of service places to approximately 95% by 2024. In the post-reform period, use and supply grew by a similar magnitude, although the number of service users continued to grow somewhat faster than the number of service places. In general, a place can be found quickly for a person with standard care needs, particularly if the person is willing to accept a place in a care home farther away, but suitable service places are not equally accessible to people with greater or specific care needs. This is particularly evident for ÜHT places for people with dementia, people with very high care needs and other more complex target groups.

The reform increased local governments’ responsibility for financing ÜHT and their administrative burden. Local governments’ net ÜHT expenditure as reflected in their budgets increased from €29.7 million in 2022 to €103.1 million in 2025. To finance the growth in expenditure, the state allocated €66.1 million in reform-related additional funding to local governments in 2025. The growth in ÜHT expenditure was uneven across local governments: the share of ÜHT in local governments’ operating expenditure changed by between −1.3 and +10.8 percentage points, with a median increase of 2.9 percentage points.

Assessing people’s need for assistance was already a local government responsibility before the reform, but the reform systematically linked local government financing to an established need for ÜHT and increased the workload associated with financing decisions, invoicing and data exchange. Practices vary between local governments, and no uniform invoicing and data-exchange solution was established. At the same time, local governments gained a better overview of their residents’ need for and use of ÜHT. The reform did not turn local governments into collective purchasers of the service. Their ability to influence the choice of service place, the price of the service and its content is limited when the service is purchased on the market, although it is greater in care homes owned by the local government itself.

The development of services supporting people in living at home did not accelerate as a result of the care reform. The additional funding allocated to local governments through the reform could also be used to develop services that support living at home, but no separate implementation mechanism or earmarked funding was created for developing these services. Based on the local government survey and focus groups, the reform did not generate spare financial or staff-time resources that could have been redirected to the development of other services. In the two full post-reform years, local government expenditure on home care did not increase, and by 2025 the volume of the service in hours was smaller than before the reform. The study does not indicate that there are large numbers of people receiving ÜHT whose care needs could be fully met through the existing home-care service or another less intensive measure.

After the reform, service prices, the number of service places and the number of care and assistant care workers increased, while the financial performance of service providers operating as companies improved. The median minimum care-home place fee increased by 18.6% between the end of 2023 and the end of 2025. During the same period, labour and other input costs increased, more extensive staffing and quality requirements were implemented, the share of service users with greater care needs rose, and effective demand increased as the reform improved the financial accessibility of the service. The analysis of financial indicators points to post-reform adjustment: profitability increased sharply immediately after the reform, but by the second year the share of profit in turnover growth had decreased and most of the growth had shifted to increases in service volume, labour and other costs. In a competitive market, it can be expected that as supply adjusts further, the effect of the one-off demand and financing shock associated with the reform will diminish, exceptional profitability will subside, and price growth resulting from the shock will slow. Comparing service prices and what they include is complicated by different pricing models and additional charges, which may either be included in the price of a service place or added separately to the care-home place fee.

The reform improved the conditions for providing high-quality services, but the study does not allow a nationwide assessment of changes in the substantive quality of the service. Requirements concerning service content, care plans, staff numbers and staff qualifications were specified in greater detail, and the number of care and assistant care workers increased. According to the experiences of service users and their relatives, service quality depends not only on safety and the provision of necessary care but also on staff attitudes, individual attention, and opportunities for activities and social interaction. The study did not include a standard nationwide outcome indicator for service quality or service users’ quality of life.

The state’s additional funding covered almost all of local governments’ estimated reform-related additional cost in 2025, but the financing needs of ÜHT will increase in the long term. In assessing the sufficiency of the additional funding, the analysis takes into account that local governments would have financed ÜHT even without the reform. The comparison scenario assumes that, without the reform, local governments’ actual net ÜHT expenditure in 2022 would have increased in line with price increases and the 1% annual growth in service volume projected in the explanatory memorandum to the care reform. On this basis, the difference in 2025 between actual net ÜHT expenditure and the estimated ÜHT expenditure without the reform was €66.8 million, while the state’s €66.1 million in reform-related additional funding covered approximately 99% of this difference.

In 2025, reform-related additional funding to local governments amounted nationally to 63% of local governments’ net ÜHT expenditure including depreciation, with a median of 64% across local governments. Thus, approximately two thirds of local governments’ net ÜHT expenditure was covered by the state’s additional funding, while one third had to be financed from local governments’ other budgetary resources.

ÜHT expenditure grew faster than the additional funding in 2025, and the effect of the service unit price on expenditure growth was greater than the effect of service volume, although both contributed to the increase. Population ageing will continue to increase financing needs: if the 2025 utilisation rates by local government and age group remain unchanged, the average monthly number of ÜHT service users aged 65 and over based on service-months recorded in STAR will increase from 10,886 in 2025 to 14,745 by 2050, or by 35.4%. The share of the minimum care cost calculated on the basis of the statutory staffing requirement and the average labour cost of care staff in local governments’ personal income tax revenue would increase nationally from 3.6% to 5.0%. This is an estimated lower bound for the minimum cost, not a projection of local governments’ actual ÜHT expenditure. The resulting burden would be distributed very unevenly across local governments. Even under a service structure with the lower rate of residential care use observed in Finland, local governments’ ÜHT budget burden in 2050 would be higher than at present.

The study’s recommendations are based on the current principles of ÜHT organisation: responsibility for organising ÜHT remains with local governments, a local government contributes to financing the service for a person whose need for ÜHT has been established, and the service is provided by service providers operating in the market.

To develop long-term care financing and the service structure, the study recommends increasing the overall volume of funding for long-term care and ensuring that it adjusts to changes in care needs and service cost levels; developing and financing services that support living at home and in the community as a separate policy objective; and supporting earlier access to local government counselling, needs assessment and service organisation.

To streamline the ÜHT support system, the study recommends introducing a uniform nationwide base support based on estimated care costs, providing higher support for people with greater care needs, and simplifying the support system by abolishing the separate lower-income benefit while retaining, where necessary, additional local government assistance based on the person’s ability to pay.

To improve the organisation and implementation of ÜHT, the study recommends harmonising the documentation of assessment results for ÜHT need and greater care need, financing decisions, invoicing and data exchange, and developing STAR into the main person-level dataset for ÜHT. To improve the functioning of the service market, it recommends making price and service information comparable and creating a nationwide digital waiting-list solution. To improve service quality, it recommends making the application of staffing requirements more flexible and strengthening person-centred care in care homes that supports quality of life.