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Introduction
Denmark, Finland and Sweden have experienced two major recessions during the last 25 years. While their reactions to the global economic crisis after 2008 seem to be based on somewhat milder austerity policies, their adjustments to the earlier crisis in the late 1980s (Denmark) and early 1990s (Finland and Sweden) resembled the policies in many European countries now.
Welfare states have generally proven to be resilient to changes in both substance and institutional structure (Pierson, 2000). This is true for welfare states in general and not least in highly institutionalised and technical sectors with strong professional groups such as health care (Wilsford, 1994; Oliver and Mossialos, 2005). However, external shocks (such as the economic crisis of 2008) may lead to disruptions in societal and political conceptions of appropriate policies and to changes in institutionalised values, structures and processes in the sector (Selznick, 1957; Suchman, 1995; Alink et al., 2001). Political support for such radical solutions is linked to the general perception of crisis (Stone, 1999). An economic crisis can be communicated as a 'burning platform' for change where key actors come to share the understanding that the status quo is unsustainable given external contingencies. The phrase 'never waste a good crisis' captures this logic whereby a crisis is used to facilitate changes.
The health policy response to an economic shock can take different forms. On the one hand, there may be a countercyclical bias in the response, as governments attempt to shelter important welfare sectors and maintain economic activity (Armingeon, 2012). This may lead to expansion or at least status quo in the expenditure level in particular sectors. Alternatively, crisis responses may include more or less radical reductions in expenditure levels. This policy path is most likely if the crisis is perceived to be severe or the economy is weak at the outset. Crisis reactions can also be influenced by political/ideological preferences, which may translate into different attitudes towards pro- or counter-cyclical policies. Finally, policy responses are likely to be influenced by the capacity of the government to get adjustments through the parliamentary process. Weak governments may want to pursue expenditure reactions but find that they are unable to obtain sufficient support for such crisis reactions.