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Interesting article in WSJ this morning

Discussion in 'Topics in Healthcare' started by Institute, May 10, 2007.

  1. Institute

    2+ Year Member

    Apr 14, 2007
    Likes Received:
    Medical Student
    I found this articel quite interesting. It describes the slowing of economic growth in one of the healthiest nations in the worlds. Perhaps this is something to take into consideration when trying to create a system similar to other nations. It's unfortunate that we really only see this issue on a macro level and not really on micro level. Hopefully this article can put some points into perspective.

    Note: the read is long, but it is well worth it.

    Sweden Clamps Down
    On Sick and Disability Pay

    [FONT=Times New Roman,Times,Serif]Once Freely Dispensed,
    Benefits Face Scrutiny;
    Ms. Lanström Is Cut Off

    [FONT=times new roman,times,serif][FONT=times new roman,times,serif]By MARCUS WALKER
    May 9, 2007; Page A1

    LULEA, Sweden -- Lotta Landström is allergic to electricity -- so says her doctor. Along with hundreds of other Swedes diagnosed with the condition in recent years, she came to rely on state-funded sick pay.

    But last year, Sweden's famously generous welfare system cut off Ms. Landström, a 35-year-old former teacher. Electro-hypersensitivity isn't widely recognized elsewhere in the world as a medical diagnosis. The decision to end her two years of benefits was part of a broad effort to crack down on sickness and disability benefits, according to Swedish welfare officials.

    Swedes are among the healthiest people in the world according to the World Health Organization. And yet 13% of working-age Swedes live on some type of disability benefit -- the highest proportion on the globe. To explain this, many Swedish policy makers, doctors and economists blame a welfare system that is too lax and does little to verify individual claims.

    [​IMG] At a time when low-cost competition from Asia is clobbering Europe's markets and straining its generous welfare states, governments from Finland to Portugal are trying to cut back and get more people to work. Sweden's bloated sick bay, which includes roughly 744,000 people on extended leave, has caused soul-searching about whether the system coddles Swedes and encourages them to feel sick.
    "If we don't look out, we will end up with only two-thirds [of the labor force] in work, and one-third out, living on different kinds of subsidies," said Sweden's new prime minister, Fredrik Reinfeldt, in an interview earlier this year.

    Sweden offers two kinds of benefits for those unable to work for health reasons: sick pay for those who expect to return to their jobs when they recover, and disability pensions for those who aren't expected to re-enter the work force. Both types of benefits pay recipients 80% of their previous salary, up to a maximum of 25,183 Swedish kronor, or $3,735 a month. Even Swedes eligible for sick pay can collect benefits from the government for many years. Last year, costs for these programs totaled 114 billion kronor, or $16.9 billion. The payments consumed 8% of Sweden's budget, or 4% of the country's gross domestic product.

    Mr. Reinfeldt's government has introduced a range of measures designed to get people off benefits and back into work. But it's slow going. Part of the problem is cheating and a system that still relies heavily on trust.


    • The Issue: After years of providing generous subsidies to sick and disabled workers, Sweden has decided it can no longer support such a costly system.

    • Changes Ahead: Benefit recipients will be screened more closely and the government is likely to demand that they return to work more quickly.

    • Bottom Line: High benefit dependency in Sweden and elsewhere in Europe hurts economic growth.

    During the 2002 monthlong World Cup soccer finals, short-term sick leave among Swedish men suspiciously rose by 55%. Earlier this year, police in Sweden's capital city Stockholm investigated the local chapter of the Hell's Angels biker gang for suspected benefit fraud, because 70% of the gang were on extended sickness benefits. The same doctor had certified them all as suffering from depression. Police have closed the investigation while welfare authorities deliberate whether to press charges.

    In Europe, roughly 20% of the working-age population -- or 60 million people -- depend on various government benefits as their sole or main income, compared with 13% in the U.S. That's a major economic handicap.

    Program costs aside, high benefit dependency means fewer workers and less production. It also means lower tax revenues and added spending burdens for European governments, already struggling to finance the pensions of a burgeoning elderly population. That fiscal pressure pushes up taxes on people who do work, and on employers already paying much higher wages than their competitors in China and other emerging economies.

    Most mainstream politicians in Europe stress they don't want to pare down welfare to U.S. levels -- which voters would reject -- but to make Europe's preferred "social model" of capitalism more viable. "I'm reshaping part of Sweden, I'm not tearing it down," says Mr. Reinfeldt. Still, change is under way.

    Sweden's new government has beefed up programs to get some people receiving sick benefits back into the work force. In Lulea, a windblown steel town on the frozen Baltic Sea coast 67 miles from the Arctic Circle, four caseworkers at the local employment service have been selecting people from the long-term sick list for intensive personal coaching. Some have been home so long they've become reclusive, the case workers say.
    "Some people shake and sweat just to meet us," says Stefan Granberg, a caseworker. He and his colleagues find local employers willing to give their candidates work experience, with the state paying their wages at first. With luck, the employer likes them and takes them on. So far this year, the team has eased 40 people into paid jobs, out of 160 cases they have tackled.

    One of them is 39-year-old Eva Eriksson, who had been on sick leave for six years. After she was diagnosed with depression, welfare authorities sent her a monthly check.

    She didn't want to go back to her former job in a lighting store. She couldn't deal with always having to be nice to customers, she says. Even driving past the store made her tremble. She told the employment service she'd rather work with horses.

    So the caseworkers, who knew the stable owner, arranged a subsidized job placement. When a vacancy arose, the stable hired her.

    In the 1990s, the United Kingdom became one of Europe's first governments to require people receiving unemployment benefits to actively pursue work or training. It borrowed some ideas from the U.S., where welfare-to-work programs have weaned many people off benefits and into the labor market, helping to raise employment especially among single mothers. More recently, the Netherlands has cut back on generous early pensions that led many people to retire at 55. Germany, meanwhile, has slashed benefits for the long-term unemployed in an attempt to push the able-bodied back to work.

    [​IMG] Mr. Reinfeldt has introduced a new policy in Sweden, waiving the usual 32% payroll tax if employers hire a person who has been out of work for over a year. Since the perk was introduced in January, employers have used it to hire more than 5,000 people. Most of those, however, were from the ranks of the unemployed. Just 1% were from Sweden's sick rolls, which the Organization for Economic Cooperation and Development, a Paris-based intergovernment think tank, calls "Sweden's single biggest economic problem."
    Lulea loses 40 days a year per worker to sickness or disability, compared with Canada which loses 7.5 days per worker, according to Swedish and Canadian authorities. Local employers here complain that labor shortages are holding them back from fully exploiting an economic boom in the region. Yet thousands are on prolonged sick leave.

    Ms. Landström left her teaching job four years ago after she deduced that electro-magnetic radiation from lights, computers and cellphones was causing her nausea and skin irritations. After examining her in an unlit trailer, a doctor certified that she was hypersensitive to electricity. The World Health Organization says the symptoms of this controversial condition, which has also been reported in countries such as Denmark and Germany, are real and can be severely disabling. But, it notes, there is no scientific proof they are caused by electricity. For some sufferers, the cause may be psychological, the WHO says.

    Welfare authorities awarded Ms. Landström benefits worth 80% of her salary. She stripped the electric lights and appliances from her red, wood-clad house in a forest outside Lulea. Social workers delivered food and other supplies to her home.

    The terse letter informing Ms. Landström that her benefits wouldn't be renewed described her as having a "completely normal medical status." Other Swedes who had lost their benefits for electrical allergies advised her to say she was depressed, but she refused on principle. "I'm not depressed, I'm electro-hypersensitive," she said recently, sitting at her kitchen table beneath a pair of oil lamps.

    Now she receives regular unemployment benefits, but those are limited to a total of 300 days. She says she plans to work during the summer as a churchyard gardener. But once the snow returns in the fall, there's little outdoor work away from electrical sources in Lulea.

    "Swedish people walk around believing someone will take care of them if everything breaks down. I guess I don't trust that any more," said Ms. Landström. "We're gradually copying the American system."

    Sweden's last Social Democrat government began the clampdown, pushing the welfare authorities to annul sickness benefits if they had doubts. Mr. Reinfeldt's new government, elected last September, is going further. It's lowering the ceiling for benefits, expanding projects to rehabilitate some of the people on long-term sick or disability benefits, as well as offering employers tax breaks and wage subsidies to hire them.
    [​IMG] Most of Sweden's boom in sickness absenteeism since the late 1990s is about more than simple fraud. Sick leave for psychological conditions such as depression, burnout or panic attacks has rocketed. Over 20% of the population complain of anxiety syndromes. "We are actually the safest country in the world," says David Eberhard, chief psychiatrist at St. Göran's hospital in Stockholm. But "people are feeling psychologically worse and worse."

    Assar Lindbeck, one of Sweden's best-known economists, says the lenient welfare state has changed the country over the past generation. In place of the old Protestant work ethic, it has become acceptable to feel unable to work and to live on benefits, he says. "I would not call it cheating," Prof. Lindbeck says. "I would call it a drift in attitudes and social norms."
    By being so accommodating, the Swedish system has encouraged Swedes to treat life's tribulations as clinical issues requiring sick leave, posits Anna Hedborg, a former Social Democrat cabinet minister: "As time has passed, we have medicalized all sorts of problems."

    Stockholm general practitioner Pär Säberg recently saw a patient who wanted sick leave for double vision, headaches and amnesia. But after scans revealed no neurological cause, Dr. Säberg began chatting with the man. It turned out that his wife wanted a divorce, his business partner was an alcoholic and his company was going downhill.

    Dr. Säberg counseled the man to sort out his life, figuring his symptoms were due to stress. In the end the wife stayed, the business partner left, and the man felt better. "I have to be a kind of life coach with this kind of patient," says Dr. Säberg. Until recently, he says, Swedish doctors including himself were too fast to sign a sick note to authorize benefits. Welfare officials rarely questioned them.

    In Sweden's remote northern reaches, controls were especially lax. From the late 1990s, the Swedish Social Insurance Agency branch in Lulea began receiving a deluge of sick notes. "Everyone who said they were sick was getting money. We didn't demand anything," says Ingrid Nilsson, the local agency's director. "I guess that was the wrong way to go."

    The upsurge began at a time of high unemployment in the area, after companies and the public sector laid off workers. Those left with jobs had to work harder and many complained to their doctors about stress.
    "We tried to take care of people too much," says Ms. Nilsson. Her staff has since become more rigorous. "We don't question that you are sick, but maybe you can work anyway," she says.

    Truck driver Henrik, who lives near Lulea and would only give his middle name, says he relied on state support for four years after suffering a slipped disc. The pain didn't stop the big, brawny invalid from moonlighting as a nightclub bouncer on weekends, though. "There were no controls," he scoffs, admitting that it was easy to scam the government.

    He tried returning to full-time work as a driving instructor, but his back pain returned. This time, despite getting a sick note, the welfare authorities said "no." Today he's back driving trucks, and takes painkillers. "We pay a lot of taxes, but now we don't get any help," he says.

    Benefit applicants used to hearing "yes" don't always take kindly to the new approach. Earlier this month a client threatened to break a welfare officer's fingers. Lulea's social-insurance agency installed heavy security doors and keypad locks after receiving a bomb threat and other scares.

    Catarina Lindgren was on sick leave for 11 years. She was 24 when she first suffered panic attacks, and her doctor prescribed extended leave.

    Therapy eventually cured the panic attacks. But while on leave she became depressed and afraid of meeting people. "Looking back over all these years, maybe being at home made it worse," she says.

    Last year the welfare authorities finally pressed her to take a job and in January she began working for her parents' window-fitting business.

    "I thought it was going to be much harder, but it isn't," she says.

    Write to Marcus Walker at [email protected]
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