Who is Paying for Health Care in Eastern Europe and Central Asia?

Abstract

Informal payments in the health sector in Eastern Europe and Central Asia are emerging as a fundamental aspect of health care financing and a serious impediment to health care reform. Informal payments are payments to individuals or institutions in cash or in kind made outside official payment channels for services that are meant to be covered by the public health care system. Such private payments to public personnel have created an informal market for health care within the confines of the public health care service network, and are a form of corruption. Unlike gratuity payments to providers, informal payments are required, not discretionary. Part of the problem can be traced to declining revenues without commensurate downsizing of buildings, hospital beds and health personnel, which has meant reductions in salaries and in some countries chronic arrears. Informal payments compensate for lost earnings. Reforms to modernize the Region’s health systems must compete with the personal revenues from informal payments, making change difficult. The frequency of informal payments exceeds 60 percent in the CIS countries for which there are data, reaching 91 percent in Armenia, and are reported in all but a handful of Eastern European countries. Inpatient care carries the highest costs, but pharmaceuticals are the most frequently purchased health service that public providers do not finance. Informal payments have become a major impediment to health care access leading to both reduced consumption due to unaffordable cost and the selling of personal assets to finance care. Systematic reports of delayed care in Poland, 37 percent reduction in prenatal care in Tajikistan and the fact that 45 percent of rural patients sold assets to finance health care in the Kyrgyz Republic suggest rising inaccessibility and declines in equity. Options for addressing the problem include comprehensive anti-corruption policies, downsizing of the public system, paring back the set of services subsidized by government, encouraging cost sharing for those who can afford it, improving accountability, and promoting private alternatives.

Keywords: health economics, health care institutions, health care financing, governance and corruption, Eastern Europe and Central Asia

JEL Classification: O15 , H51, I11