The Economist has a profile on how the Nordic welfare states have adopted market-based solutions for the provision of social services:
The Swedish state now allows private companies to compete with government bodies for public contracts. The majority of new health clinics and kindergartens are being built by private companies, frequently using private money. The state also allows citizens to shop around for the best services and take the money with them.
The Swedes have done more than anyone else in the world to embrace Milton Friedman’s idea of educational vouchers—allowing parents to send their children to whatever school they choose and inviting private companies or voluntary groups to establish “free” schools. Almost half the country’s schoolchildren choose not to go to their local schools. More than 10% of students under 16 and more than 20% of those over 16 attend “free” schools, two-thirds of which are run by private companies.
Denmark has added a useful twist to the voucher idea. It not only allows parents to take their public funds to private schools with them but also to top them up (within limits) with their own money. This is creating a flourishing market, particularly in Copenhagen, ranging from academic schools for traditionalists via religious ones for Muslims to experimental ones for ageing hippies. “One of the most popular entertainments in Denmark”, says Mr Mogensen, the historian, “is to spot the latest left-wing politicians to send their children to private school.”
A thoughtful contrarian take on the future of the welfare state. You can read about it here.