Kela taxi fares set to push Finnish drivers out of service

Taxi operators in Finland say fares for Kela-reimbursed rides will be too low to cover their costs in 2027, Yle reports. Some are considering ending their Kela services, while others may leave the taxi business altogether.

The Social Insurance Institution Kela has put health insurance-reimbursed taxi journeys out to tender. As a result, the kilometre rate paid to operators will fall to a level with purchasing power equivalent to around 20 years ago.

Heikki Luoma-aho, a taxi operator in Jyväskylä, said the change was so severe that he would not drive Kela rides next year.

“There is nothing left for the entrepreneur but the joy of doing the work, and at worst you may even have to pay if you employ someone. It makes no sense,” Luoma-aho said.

Discounts from the maximum fare

A Kela ride is a taxi journey reimbursed by Kela. Passengers may use one when travelling to healthcare if their health does not allow them to use public transport, or if public transport is unavailable.

The tender selected two dispatching companies, or service providers, for each of Finland’s 17 regions. Some companies operate in several regions. The companies offered discounts from the maximum fare set by the government, known as the social fare.

The discount is around 23 per cent this year and will rise to 32 per cent in 2027. Luoma-aho said the social fare should be used as the kilometre rate because it is the level at which driving would remain profitable for operators.

The Finnish Taxi Association has received numerous contacts from concerned operators. Its chair, Tuomo Heino, said the kilometre rate had never fallen so sharply before.

“All costs have risen, including cars, fuel, insurance and wages, but fares keep falling,” Heino said.

Heino said the lower rates could bring forward operators’ retirements. He also warned that the situation could eventually affect the availability of drivers, although customers should not notice an immediate change because dispatching companies are required to arrange Kela rides when they are ordered.

Dispatching companies also under pressure

Keski-Suomen matkojenyhdistelykeskus, or KSMYK, will dispatch Kela rides in Central Finland and four other regions next year. Its chief executive, Petri Palviainen, said operators and dispatching companies shared the strain caused by the prices.

Palviainen said competing solely on price was not a sensible approach and questioned whether enough drivers would be available in the future to provide essential rides if taxi operations were no longer profitable.

“The social fare was set for a reason and should be used. Service providers should compete through efficiency, not price,” he said.

Otto Talvitie, who specialises in Kela ride planning, said Kela had also examined other tendering models but had found the current one functional. Market discussions were held during the preparation process.

“There are several eligibility and quality requirements for entering the tender, but it is true that ultimately the price decides,” Talvitie said.

Kela has tendered health insurance-reimbursed taxi journeys for 2027 to 2030, with the possibility of one additional option year at Kela’s decision. The government will confirm the maximum fare for 2027 in December. The kilometre rate paid to taxi operators will be about 32 per cent below that maximum.