The Perilous Road From Centralism to Federalism

1
The Perilous Road From Centralism to Federalism

• The Case of the Russian Health Care System
• by
• Dov Chernichovsky -- HNP

2
The Challenge

• Transition from a highly centralized and failed
  system (at the end), to a decentralized
  functional federal system

3
The Risk

• Atomization and fragmentation of the health
  system with potentially worst consequences than
  the centralized system

4
The Basic Issue (Especially in Health Care)

• Not the states involvement in the system, but
  the nature of this involvement

5
The General Context

• Goals of the Health System
• Health
• Equity
• Macro-economic efficiency contain
  uncontrolled rising cost of care
• Micro-economic efficiency efficiency in the
  production of quality care
• Client satisfaction, mainly through
  accountability
• Systemic Functions --subject to devolution and
  decentralization
• Policymaking
• Financing
• Organization and Management of Care Consumptions
• Provision of Care
• Training and medical education
• Research and development

6
The Soviet Record

• Health
• Eradication of communicable diseases
• Missing the epidemiological transition to
  non-communicable diseases that eventually led to
  inferior health outcomes
• Equity
• Fairly equitable system with relatively wide
  access to care
• Efficiency
• In spite of low levels of spending, inefficient
  especially when quality of care is considered
• Client satisfaction
• Dismal, not a concern

7
The Soviet Failure - Ineffective Government
(ala Weaver and Rockman 1993)

• Not setting and maintaining the right priorities
  over time
• Ineffective targeting of resources
• Not promoting innovation
• (Of course, to a substantial extent by not
  eliminating market forces)

8
Structural Antecedents of Soviet Failure -
Centralism

• Amalgamation of responsibilities under the
  Federal Ministry of Health Medical care Medical
  industry, including pharmaceutical and Training
• Issues
• limited span of control
• Priority give to industry, not to care
• Medical training a vocation rather than a science
• Vertical Integration of all systemic functions
• Issues
• No checks and balances
• No scope for internal or any market mechanisms
  for efficiency and responsiveness to clients

9
The Antecedent of Soviet Failure Centralism
(Contin.)

• Rigid top-down allocation of resources and
  management
• Issues
• A lack of analysis of local information for
  policy making
• No attention to local concerns and aspirations
• Depression of local initiatives
• Accountability upward to authorities rather
  than downward to clients and patients
• Political vacuum at the top detachment from
  realities

10
The Risky and Unstructured Transition Major
Steps (since 1991-2)

• Separation of health promotion and education from
  Federal MOH (1991), while
• Medical Care responsibilities, including
  financing, delegated to local government
• 1991 (aborted) legislation tries to base
  financing on private insurance
• 1993 legislation establishes a social health
  insurance system with a federal and state pools

11
Structure of System in 1996Dysfunctional Blend
of Old and New
12
Intended Structure
13
Consequences

• Weakening policy making - leadership
• Federal MOH stripped of practical powers
• Local ministries lack policy making capacity
• Undesirable decentralization of finance, with
  weak equalization mechanisms
• Failed devolution and decentralization of care
  provision highly centralized local systems with
  little policymaking and management capacity, and
  limited accountability to anybody
• Failed development of internal markets
• Lopsided reform decentralization of finance and
  a lack of decentralization of provision

14
One Outcome Worsening Regional Distribution of
Health Resources
 
  Figure 1   Lorentz Curves of for Regional
Health Exepnditure and Product per Capita
Legend a - simulated 'need-based' local health
expenditures, 1992 b - local health
expenditures, 1990 c - local health
expenditures, 1992 d - GDP estimate, 1992.  
15
Reasons

• A lack of leadership and resolve weak Federal
  MOH
• Strategy of change not clear to, and owned by,
  at least local authorities
• Resistance of those authorities to relinquish
  control over medical facilities
• No real plan for denationalization of these
  facilities

16
Risks

• Growing regional inequalities
• Undermining universal access to care
• No mechanisms for system stabilization and long
  term reform through innovation
• Growing inefficiencies due to weak mechanisms to
  deal with externalities and economies of scale

17
Conclusion Tasks to Complete

• Clarify the concept of functional federalism
• Re-define the roles of different levels of
  government and institutions, mainly government as
  a non-provider of care
• Build policy making, regulatory, and management
  of mainly local government
• Devolve the provision of care to non-state
  institutions
• Provide financial and regulatory measures for a
  federal system