Putin puts Hospitals in the Crosshairs

With the Russian economy in tatters, Vladimir Putin needs a source of ready cash to continue his cold-war aggression.  The Moscow Times reports on his latest source:

While Washington plans to pump unprecedented sums into what critics call a government takeover of health care, Moscow is moving in the opposite direction by backing legislation that could force hospitals and other public institutions to go commercial or close.

A bill scheduled to be approved by the State Duma in a third and final reading Friday aims to overhaul the financing for medical, educational, cultural and scientific institutions by giving them for the first time a free hand in how they spend state subsidies.

But opponents warn that the “anti-socialist” reform also could lead to a drop in state subsidies, forcing hospitals, schools and even libraries to increase their numbers of paid services or reduce work hours so as to make ends meet. They say this free-market approach could ultimately hurt the population, especially in poor rural areas.

The current system of funding public institutions is based on cost sheets — detailed lists of planned expenses that the institutions submit to the authorities each year. The funding rules, which are rigid and have been unchanged for years, earmark similar funding for similar institutions regardless of the quality of their work. Leftover funds are confiscated at the end of the year — a practice that leads to wasteful spending.

“The bill is aimed at making public institutions spend state money efficiently, instead of exaggerating expenses,” said Vitaly Shuba, first deputy head of the Duma’s Budget and Taxes Committee and a United Russia member.

United Russia, the pro-Kremlin party that dominates the Duma, is the only parliamentary faction backing the bill; the other three factions have denounced it.

The bill, a copy of which was obtained by The Moscow Times, adopts a laissez-faire approach instead of a micromanagement one. Subsidies for each public institution would be defined by a single line in the state budget. Leftover funds would no longer be confiscated.

Better services will lead to bigger subsidies, said Alexei Lavrov, a department head at the Finance Ministry, which drafted the bill.

Lavrov brushed off concerns that public institutions might be caught in a catch-22 of needing to boost the quality of their services to get more money, while at the same time needing more money to boost the quality of their services.

“The quality can be boosted through organizational efforts,” he said.

But critics pointed out that the bill also frees the authorities fr om bearing any responsibility if a public institution goes bankrupt.

Opponents said they found it ironic that Russia was adopting the bill at a time when the United States, its capitalist foe during the Cold War, was increasing the government’s presence in health care.

In March, U.S. lawmakers approved a seminal health care reform that will see the government spend almost $1 trillion over the next 10 years to broaden health care coverage. The reform, a hallmark of Barack Obama’s presidency, has been widely panned by its critics as “socialist.”

“France, Germany and the United States have more socialism than Russia, while even our Constitution implies that the country has to be socialist,” Duma Deputy Sergei Obukhov, a Communist, told The Moscow Times.

The Russian Constitution defines Russia as a “social state.”

The Duma bill, which was passed in a first reading in mid-February and a second reading on Wednesday, does not cover institutions prohibited from doing commercial business, such as defense agencies and psychiatric hospitals, nor so-called autonomous institutions that use little state money and enjoy broad freedoms.

The bill also does not specify how much money will be distributed to public institutions.

The size of the subsidies — not the new funding mechanism — is the key issue, said Lev Yakobson, a senior official with the Higher School of Economics. What the government needs to do is figure out a method for calculating the size of the subsidies, he said, adding that the method would determine whether public institutions stand to benefit from the proposed reform.

“The bill is a framework,” Yakobson said.

The ambiguity, however, is stoking worries. The new rules are to be implemented nationwide by mid-2012.

A senior Just Russia deputy, Oksana Dmitriyeva, said the bill was unacceptable because public institutions should not have to face free-market pressures.

“A subsidy means partial financing, which implies a possible reduction of financing from the state budget and partial commercialization,” Dmitriyeva said in a telephone interview.

Commercialization might have dire consequences in rural areas if hospitals and schools are forced to close for lack of funds, said Sergei Shtogrin, deputy head of the Duma’s Budget and Taxes Committee and a member of the Communist Party.

“The country’s population will die out and the quality of national education will go down,” Shtogrin said in an interview in his Duma office.

He suggested guaranteeing a list of free public services for citizens.

The legislation allows the state to shrink its responsibilities and obtain a new way to pressure public institutions, said Irina Gorkova, a Duma deputy with the Liberal Democratic Party.

She explained that the bill makes legal a situation in which an institution does not receive enough money to fulfill assignments given by the state. In that case, the head of an institution would be held responsible and therefore be subject to pressure from authorities.

Insufficient funding also could result in a lack of medical equipment and cause doctors to shun jobs in public institutions, leaving hospitals understaffed, Gorkova said.

Workers in the cultural sector are equally pessimistic. With the bill’s enactment, authorities would be able to get rid of their obligation to finance many museums and theaters, Russian State Library head librarian Alexander Visly said by phone.

Russian libraries are not allowed to perform commercial operations, which makes self-financing, even to lim ited degree, all but impossible, he said.

Cutting salaries is not an option because pay is already very low, so the only alternative would be to reduce working hours to save some money on electricity bills, he said.

8 responses to “Putin puts Hospitals in the Crosshairs

  1. Dear author,

    I’ve been reading your very interesting resource for two days now. It has been a wonderful time, and I admire the work you’ve done to collect all those facts you did.

    Still, I can’t keep but wonder why virtually every article I read here contradicts statistics. For example, here you say Putin does bad for Russian healthcare system.

    But the Wikipedia says the opposite: http://en.wikipedia.org/wiki/File:Russian_male_and_female_life_expectancy.PNG

    It says the Russian life expectancy raised dramatically – not as high as a level of Gorbatchov anti-alcohol campain (do you remember that man, dear author?), but still much higher, compared to Yeltsin years.

    So now I do not know what to think. Perhaps it’s Wikipedia struck by some weird web-brigade of pro-Putin hackers, like the ones you’ve mentioned in one of your articles lately? What if they’ve gone so far as to change all the statistical data in Europe? In the USA? One thought about it gives me the creeps down my spine…

    I start to think it over, and I can’t find a place for myself. Sometimes I even start to fear: what if you are one of them pro-Putin web-brigadeers? And all this blog is just an another futile provocative attempt to make us think that those anti-Putin arguments are all false?

    But then I understand that your pathos, your ardour are real after all. For no FSB-former-KGB officer, even the most high ranking ones, could ever play such. Must be those damned Kremlin web-brigadiers altering the honest Wikipedia content.

    And then I go to bed with a great relief. I remember someone, somewhere there’s une femme brave fighting for my freedom and prosperity against this bloody anti-people Putin-Medvedev regime.

    For this, thank you so much, dear author!

    We are all Russophobes these days,


    You’re rather deeply confused. The recent uptick in Russian lifespan is (a) only data provided by a Kremlin ruled by a proud KGB spy (i.e. trained liar) and (b) is acknowledged by Russians themselves as soon to reverse. You ought to read our blog more (or something at least) before you speak.

    It’s right here:



    • Dude, why are you changing the subject, the article talks about one specific bill which potentially could end free health care in Russia as we know it and that in a situation where a large proportion of the population simply couldn’t afford to pay for health care and you start citing some life expectancy statistics. As Mark Twain once said there’s lies, damn lies and then there’s statistics. And you have to be very careful indeed with statistics originating with the official sources in Russia, essentially if you don’t know the methods they used to collect their data, those statistics are pretty much meaningless especially in light of the fact that the official Russian statistics bureau, has been known in the past to come up with the exact figures the government asked of them.

      The recent uptick in Russian lifespan is (a) only data provided by a Kremlin ruled by a proud KGB spy (i.e. trained liar) and (b) is acknowledged by Russians themselves as soon to reverse.”

      But are we talking about beleifs here? Then I, of course, have no further questions. You are, without doubt, absolutely correct with any your beleifs, these are your beleifs, after all.

      Take care, dear Knucklehead!

      Kind regards,

      • It’s not our beliefs we linked to, it’s the beliefs of RUSSIAN GOVERNMENT OFFICIALS.


      • Dear author,

        Yes, I perfectly understand we are talking about RUSSIAN GOVERNMENT OFFICIAL (S?) beleifs. But then I have absolutely no objections to their beleifs, and they are absolutely correct with any their beleifs, these are their beleifs, after all!

        What I can not agree with, is YOUR interpretation of the words “the birthrate will fall whatever we do”. Somehow you make them sound “Russian lifespan data […] is acknowledged by Russians themselves as soon to reverse”.

        Of course, I have some ideas on what’s happening – in Russia and Europe, and the US. And if fertility has any connection to the income level, or quality of medicine in the country. But who cares?

        In the beginning of this little discussion, we were talking about life expectancy. Let’s return to it from high matters like fertility. Life expectancy is something directly reflecting quality of medicine, the theme of your article.

        And it is rising, getting to reality from beleifs. It may be in no way explained through fertility, or any reasons behind rising fertility.

        Just want to add something that may facilitate our communication: your repeating change of names confuses me. La Russophobe, then Knucklehead, and now it’s Nincompoop. May I just combine them all within the word “Duffer” from now on – I beleive it describes exactly what you like to be called?

        Best regards,

  2. Dude, before you get me serious, answer the three questions, please:

    1) Do you live in Russia?

    2) Did you read the article?

    3) Did you read the bill project?

    If the answer is “no” for any of them, may I just keep on having fun, instead of entering any serious discussions?

    I mean, your ears would be better off without my Russian agitprop, right?:D

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