The following OECD assessment and recommendations summarise Chapter 5 of the Economic survey of the Russian Federation 2006, published on 27 November 2006.
Healthcare reform must be part of a larger effort to address Russia’s health crisis
The deterioration in basic indicators of health and human welfare that began in the 1970s and accelerated in the 1990s has yet to be overcome. While some indicators suggest that the economic recovery and rising healthcare expenditure are having a positive impact on healthcare provision, the overall picture remains extremely grim: life expectancy at birth in 2004, at 65.3 years, was almost 5 years below its late-Soviet peak. It should be emphasised that this is a health crisis and not only a healthcare crisis: problems with access to quality healthcare are by no means the sole causes of very high rates of morbidity and mortality, which are largely a reflection of environmental degradation, poor living conditions and lifestyles, high levels of road deaths, and, increasingly, the spread of HIV-AIDS. Indeed, the success of healthcare reform will depend to a great extent on the success of policies aimed at tackling these larger problems. Nevertheless, healthcare reform must play a role in addressing this health crisis. It is clear that Russia needs to spend more on healthcare than at present and that it needs to spend more efficiently. Healthcare reform will be critical if planned increases in healthcare spending are to achieve the intended results.
The government has identified the main health-care reform priorities but much remains to be done
The Russian healthcare system today is the product of an unfinished reform. A number of early reforms were launched in 1991–93, but little was done in the decade that followed to bring them to completion, and many of the problems that afflict Russia’s healthcare system today are a product of its half-reformed state. The government has recently been working to press ahead with healthcare reform, but progress has been slow and many of the measures required will meet considerable resistance from stakeholders. The major reform priorities include:
• Bringing formal commitments to the population into line with available resources. This will require both increased public healthcare spending and some revision of the package of medical services guaranteed to the population free of charge. If package reform is to establish a real guarantee of care, the government will need not only to limit coverage to what is feasible but also to enable citizens to take action if the commitments in the revised package are not met. Regular, transparent review and revision of the guaranteed package will also be needed in order to take account of medical, technological and economic change.
Households account for a rising share of health expenditure
Source: Federal Service fo State Statistics; Shishkin (2006).
• Shifting the structure of provision away from over-reliance on specialist/hospital care and towards more integrated primary care. The current push to increase spending on primary care is welcome, but it is unlikely to achieve much unless the quantity, quality and reputation of primary-care providers improve. There needs to be a long-term, coordinated effort to strengthen the training of primary care physicians and to provide them with practice settings which favour the provision of integrated primary care.
• Adopting payment schemes that encourage cost-effective therapeutic choices. There is a need to shift away from cost-reimbursement or capacity-based methods of paying hospitals in favour of more efficient methods, such as cost-and-volume contracts. Fundholding and other methods of remuneration for primary care providers should also be explored in an effort to enhance their incentives to keep patients healthy or to treat them on an outpatient basis. Incentives for uneconomic hospitalisation could be further reduced by eliminating the inpatient–outpatient distinction in determining eligibility for free medicines.
Regions employ a wide range of methods to pay providers of in-patient care
Note: Different methods may be used for different providers in the same region.
Source: IISSP (2005).
The authorities need to complete the reform of the system of mandatory medical insurance
Russia’s system of mandatory medical insurance (OMS) is intended to allow patients to benefit from competition among participating private insurers. However, there is little real competition among insurers, and creating such competition will be require substantial up-front investment in rules, institutions and information. It will make significant demands on the state’s still limited administrative and regulatory capacities – a fact which underscores the broader importance of reforming public administration – and it will require sustained high-level commitment. If competition turns out to be weak, the benefits may be correspondingly limited, and the costs may then outweigh the benefits. It is critical, therefore, that the regulatory framework governing the activities of medical insurers in the OMS system be strengthened, imposing greater demands on insurers to play an active purchasing role, while simultaneously expanding their freedom to compete with one another. The authoritis also need to develop mechanisms that will make it easier for individuals to assess the performance of medical insurers and to choose their own insurers. Given variations in regional conditions and in the administrative capacities of regional administrations, there is a good case for experimentation in different regions and a degree of regional differentiation with respect to OMS reform. Some regions may prefer to opt for a less complex, single-payer model, at least as an interim solution. In any case, steps to foster greater competition among healthcare providers could increase the efficiency of resource use and the quality of care regardless of the specific model of financing adopted.
How to obtain this publication
The Policy Brief (pdf format) can be downloaded. It contains the OECD assessment and recommendations but not all of the charts included on the above pages.
The complete edition of the Economic survey of the Russian Federation 2006 is available from:
For further information please contact the Russia Desk at the OECD Economics Department at email@example.com. The OECD Secretariat's report was prepared by William Tompson and Christian Gianella under the supervision of Andreas Wörgötter.