Russia's Headache

Article 41 of Russia's Constitution guarantees its citizens the right to receive free medical care in federal and municipal state healthcare institutions. In addition to this article, the law "On Medical Insurance for Citizens of the Russian Federation" was passed in 1993, abolishing the exclusively state-funded budget financing for healthcare and prescribing the creation of federal and territorial Funds for Mandatory Medical Insurance (FOMS). This law, with minor amendments, is still in effect today.

The largest portion of the territorial FOMS budgets is made up of tax revenue, including part of the Integrated Social Tax (ESN), as well as the tax fees paid by the state for its unemployed citizens. This does not look too bad on paper. Data from the Ministry of Healthcare and Social Development shows that both parameters were noted to have increased in 2007, as compared to the year the before, by an average of 25 percent. However, in practice the percentage of deductions turns out to be insufficient, primarily because of the lowering of the ESN rate and the difference between "gray" and official salaries (when the latter is used to calculate tax fees), as well as due to incomplete financing provided by the regional authorities to cover the unemployed population. It should be noted that inflation in 2007 reached 11.9 percent, while the corresponding decree of Russia's government set the norm for providing healthcare services covered by OMS (Mandatory Medical Insurance) funds at 1936.3 rubles (about ^52) per person.


Of course, the whole system is in urgent need of restructuring. Even during the relative prosperity of the last few years, the federal budget assigned no more than 2.7 to 3.1 percent of the GDP to healthcare. The healthcare sector remains deprived not only in small towns and villages, but also in large cities: inaccessibility to free services even in state-owned institutions, long waiting lists, a low professional level of medical staff, poor condition of equipment and supplies, insufficient amount of medicines in hospitals and drugstores, substandard facilities and conditions for treatment and stays in clinics-this is far from a complete list of the problems patients have to deal with at their places of residence.

On the other hand, the measly wages paid at state-run hospitals compel medical staff to transfer to privately-owned clinics, leading to a lack of highly professional personnel in local state health centers. The notorious 2006 increase in wages for physicians, district doctors and pediatricians left their colleagues beyond their means, and led to a new wave of resignations of medical specialists, who chose to join the ranks of general practice physicians.

The Unpopular Reform

Despite the fact that the healthcare reform was always considered one of the most important and anticipated reorganization projects, it always turned out to be one of the most difficult for the socially vulnerable groups of the population. This is why neither in the 1990s nor during Vladimir Putin's first term as president did the authorities dare to make any major changes. Essentially, the first step in this direction was the program of benefits monetization-the replacement of "natural benefits" in transportation, medical expenses and other costs with monetary compensation. This program has been in progress since 2005, as provided for by Federal Law number 122, passed on August 22, 2004, and has affected the largest category of benefits recipients-senior citizens and the disabled.

Aversion to this law reached its climax when the law came into force in January 2005. About half a million protestors took part in demonstrations across the nation's regions. The government was pressured into increasing the program's budget by 100 billion rubles, which were used to increase pensions, in addition to the 280 billion already granted for this purpose.

Rather paradoxically, the section on the healthcare reform that caused the most resentment in 2005 was the clause on additional medication provision (DLO). This was something that Mikhail Zurabov, who then headed the Ministry of Healthcare and Social Development, took pride in, as it announced the possibility of receiving high-quality and free medication within an acceptable timeframe. Formally speaking, eligible benefits recipients had this right before, but the system wasn't stable enough for this right to be recognized: drugstores often lacked vital medicines, and people had to pay with their own money for different brand-name alternatives. "The main problem is not that there are not enough laws. There are laws, but they are not being observed," said Vladimir Bondarenko, a Chernobyl liquidator with 2nd degree disability. The January confusion, however, happened for a different reason. It happened because the authorities wanted to start the reform as soon as possible, in the following year: there was not enough time left to hold a tender for suppliers, and the selected pharmaceutical companies did not have time to sign contracts with all the consumers.

After the aforementioned obstacles were overcome, the state was able to win back the trust of benefits recipients and the protests stopped. In fact, the regularly renewed lists of subsidized medications now included not only inexpensive brands, but also medicines that were previously unavailable to the public, including foreign-made brands; an efficient supply chain was established, delivering medications from the manufacturer to the drugstores through distributors; finally, the government made DLO part of the "social package," which also included health spa treatment, along with a number of benefits from adjacent fields. At the same time, every year citizens were free to choose between the "social benefits package" and monetary compensation.

Although by October 1, 2005, as many as 46 percent of benefits recipients (about 6.4 million people) agreed to receive monetary compensation, the next year the overall number of social package recipients increased by 1.5 million people, to 9 million. This is where the shortsightedness of the ministry officials became obvious. After the results of the first year of the reform, the already insignificant DLO budget (50.8 billion rubles for more than 12 million citizens) was reduced by the same 46 percent, i.e., the program turned out to be unprepared for the possibility of further refusal of monetary compensations, which had been included in the program.

Moreover, doctors themselves acted against the instigators of the reform- supported by both the drugstores and the distributors, they began prescribing expensive medications. In order to stop increasing the debt to the suppliers, the program had to be urgently reshaped and a number of drugs removed from the list: at the end of 2004 the program included 1,861 drug names; in November 2005 it was 2,347, and in October of 2006-only 1,623. However, the suppliers also became frustrated at operating without being able to compensate their own expenses, and some medications disappeared from the drugstores completely, while others stopped being covered by the benefits program. It all ended in a large-scale corruption scandal-in November of 2006, a few key FOMS officials were arrested, and others were removed from their posts.

As a consequence, the situation concerning the supply of medicines was now similar to what existed before the reform. Russia's Accounting Chamber established that the portion of filled prescriptions was reduced from 94.8 percent in 2006 to 88.3 percent in 2007, with the overwhelming majority of provided drugs originating from foreign manufacturers. "A prescription is valid for three months. If the prescribed medication is not available in a drugstore, the law says that it has to be provided for me within ten days," said Bondarenko, who has survived two severe heart attacks. "But in reality, the medication does not appear in ten days, and not even after that. In the end, I spend my own money to buy an alternative brand name."

Nationalizing the project

The painful experience surrounding the monetization of benefits forced the authorities to look for the fastest possible way of getting out of the crisis. On January 19, 2006, the government passed a program for Russia's social and economic development for the mid-term perspective (for the years 2006-2008). The most important part of this program was a complex of measures aimed at improving medical care. In the same year, healthcare received the status of a "national project," which, along with three other top-priority fields, was monitored and supervised by Dmitry Medvedev, who was then first deputy prime minister.

According to the plan of operation for the Ministry of Healthcare and Social Development for the year 2008, the realization of the "Health" project has been noted for significant progress in the system of medical care, taking into consideration the time of the project's inception: the salaries of "first-echelon" doctors have been increased, along with funds allocated for their professional development and further education; some tens of thousands of outdated equipment units have been replaced; 70 percent of the ambulance fleet has been revamped; polyclinics and hospitals, including federal institutions and large medical centers in the federal districts of the Russian Federation, are continuously provided with new X-ray, ultrasound, laboratory and endoscopic equipment; the waiting time for various examination procedures in ambulatory and polyclinic organizations has been reduced to just a few days.

In her report at the government session on March 27, 2008, Minister of Healthcare and Social Development Tatiana Golikova made it clear that it would be wrong to become complacent. Among the health ministry's main goals under Golikova in 2008 is the training of new doctors in the fields of general medical practice (family medicine), internal medicine and pediatrics. Other priorities include the construction of eleven new federal centers for high medical technologies; provision of high-technology medical care; introduction of new medical technologies in federal medical institutions and provision of high-technology medical equipment for these institutions. Moreover, a project aimed at improving the quality of medical services is due to conclude in nineteen regions of Russia. The results and outcomes of this project will be used to develop a general concept for the medical profession and industry, which, assuming the outcome is successful, will spread to other subjects of the federation and will underlie the strategy of healthcare development for the years 2009-2019.

The state authorities have also turned their attention back to the unsatisfactory situation with regard to the OMS. In June of this year, when surveying the products of the "Farmstandart" factory in Kursk, Prime Minister Vladimir Putin suggested adding provision of vital medicines to the list of services covered by the OMS: free of charge for sections of the population that are eligible to receive benefits, and as part of the cost of medications prescribed by a doctor for others. At the same time, a decision was made to support local drug manufacturers.

Partnering with business

Currently, an OMS policy only partially covers a patient's treatment expenses; this is why voluntary medical insurance (DMS) is becoming more and more popular in Russia. In this area, a real battle to secure clients is being fought out between different insurance companies; part of this competition's strategy is providing additional medical care privileges and benefits.

"One of our advantages is the fact that we have our own `Mir' (`World') medical center," said Yulia Lavrova, director of the insurance company "Russky Mir" ("Russian World") Center for Medical Insurance. "At our medical center, we have personal doctor services and medical house call services; highly qualified medical specialists see patients at the center, test samples are collected and various physiotherapy services are provided." A network of MedSwiss clinics operates under the aegis of the "RESO-Garantiya" insurance company. "Based on the clients' needs, we have introduced weekend opening hours and house call services in Moscow, including up to 50 kilometers from the Moscow Ring Highway (MKAD)," said Marina Chernomorova, manager of the "Medicine" department in RESO. "In addition, we invite experts on rare medical conditions to provide consultations, and, when necessary, we invite renowned doctors."

Of course, the DMS, especially when it comes to private clinics owned by insurance companies, is a reasonable alternative to the state healthcare system, with its long waiting times, defective equipment and constant perturbations in medical institutions. Nevertheless, despite the fact that competition has recently driven down the price for a DMS policy, on average an amount equal to two-three monthly pensions must be paid for a year of services, which makes this service still inaccessible for the elderly and the disabled. The insurers also confirm this. "Since DMS is not a social program with financial support from the state, we cannot give any discounts to senior citizens and pensioners," said Chernomorova. "However, we do have programs designed specifically for the elderly that cover the main medical needs of this category of our population."

On the whole, businesses are ready to invest in refining the healthcare infrastructure, but such enterprises believe that help from the state is still necessary. "Serious projects that involve expensive, high-technology medical services are being implemented today, and they allow many members of the public to receive the necessary care free of charge," admitted Lavrova. "At the same time, in order to provide DMS for a wider section of the population, it is necessary to increase the tax benefits that come with signing DMS contracts, both for legal entities and for the general public."

Similar ideas were expressed in connection with the drugstore industry by Ilya Milevich, Director General for Pharmacor CJS. The company also owns a drugstore chain under the same name, with an inter-regional program of support for the elderly: "A commercial structure can only realize a limited amount of social programs if it receives no support from the state. It is essential to provide certain privileges and benefits for companies that implement social programs."

However, another rather significant component is required to ensure the success of the healthcare reform. "A Chernobyl veteran was receiving treatment in a federal medical institution. All of the services were supposed to be covered by state funds, but he was asked to pay 130,000 rubles (about 3,500 euros), and he agreed," said Bondarenko. "Only after he came to our organization was he told that the request for this money was unlawful, and he was able to get it back." Therefore, while reasonably setting hopes on the fruits of a mutually beneficial partnership between the state authorities and private businesses, citizens should know their rights and learn how to stand up for them.

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