The development of market approaches in Russia

In the late 1980s, it became clear that poor outcomes of the Russian health system were caused not only by underfunding but also by inadequate management of health care. Some features of the system led to great inefficiency in medical care provision and an irrational structure of medical care. The recognition of this fact has intensified the search for new methods of finance and management. The underlying idea of health care reforms in Russia is to weaken providers' dominance, to make them more responsive to consumer preferences, and to change the structure of medical care. The main developments of the reform parallel the reforms in Western countries. These are primarily the separation of finance and provision of medical care, with the shift from an integrated to a contractual model of relationships between payers and providers. But the specific characteristics of the health care situation, primarily the great underfunding and the absolute dominance of state-owned medical facilities, make the reform in the Russian health sector more radical. This paper highlights the issues of the current and planned developments in the Russian health sector. After presenting the main characteristics of the current health systems, it addresses economic experiments which are underway in several regions of the new Russian Federation. They are designed to introduce elements of market relations into a highly bureaucratic system. The main features and the impact of the experiments are discussed. Then the new model of finance, which is based on a transition from tax-financed to the health insurance system, is presented.