The Russian Health Care Reform - What Led to the Institutional Trap During the 1990s, and are Recent Changes in Health Policy Likely to Help?

Posted: 21 Jun 2007

See all articles by Benoit Mathivet

Benoit Mathivet

University College London - School of Slavonic and East European Studies

Date Written: June 2007

Abstract

This article analyses why, fifteen years after the introduction of reformed financing mechanisms, the Russian health care system is unable to cope with public health issues brought by the economic transition as well as inherited from the Soviet era.

This reform was dual and consisted first in the decentralization of the former budgetary financed system to the regional and local authorities. The second aspect of the reform was to introduce the Mandatory Health Insurance System. This new system was relying on a different source of financing (payroll) and new pooling and purchasing arrangements, introducing market based regulation through the establishment of private mandatory health insurance companies as key actors. This system was supposed to quickly supply a significant share of resources. Self interest of those private companies was also supposed to bring, through the purchasing process, very profound changes in health care provision leading to quality improvements as well as better cost-control.

The confrontation of the mechanisms introduced by the Russian Law with initial conditions (main characteristics of the former system, and socio-economic conditions at the date of introduction of the new system) is analyzed, in order to show that it inevitably led to a perverse situation. Effects of the presumably desired coexistence of both financing systems are also investigated. Main result of the reform seems to have been a lack of incentives for actors to behave accordingly to the original plans which inevitably led to poor effects on the resources available and few sanitary improvements. Moreover, there are presently very important regional disparities in the application of the reformed health care financing and provision mechanisms. Depending on regions, population does not benefit equal quality of care, and this first inequality is reinforced by the all pervasive development of informal payments within the system. The large variety of arrangements between actors of the system at individual, local and regional levels, weather they are informal payments for treatment or bargaining concerning the divestiture of social assets of firms for example, generated a relative stability within the perverse functioning of the system, thus creating the institutional trap.

Recent measures taken at federal level, such as the Federal Priority Project - Health, a massive federal intervention for years 2006-2007, might paradoxically bring weak results as they tend to repeat mistakes of the past.

Keywords: Health Care System Financing, Institutionnal Trap, Russia

JEL Classification: I18, P21

Suggested Citation

Mathivet, Benoit, The Russian Health Care Reform - What Led to the Institutional Trap During the 1990s, and are Recent Changes in Health Policy Likely to Help? (June 2007). iHEA 2007 6th World Congress: Explorations in Health Economics Paper, Available at SSRN: https://ssrn.com/abstract=994827

Benoit Mathivet (Contact Author)

University College London - School of Slavonic and East European Studies ( email )

Malet Street
London WC1E 7HU
United Kingdom

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