20 years under Putin: a timeline

In early November, a number of health care professionals gathered in Moscow to protest the large-scale layoffs and closure of many health care centers that were triggered by the recent health care reform. According to political analyst Tatiana Stanovaya, this social unrest has the potential to spiral into a political crisis and become a domestic threat to the current regime.


Some 6,000 medical workers went to the November 2 protest against the Moscow authorities’ plan to shut down medical facilities and lay off personnel. Photo: Alexei Nasedkin / nasedkin.livejournal.com


Health care reform has been a popular topic of debate in Russia for almost 20 years. After the collapse of the Soviet Union, Russia did not undertake any serious health care overhaul, which sent the field into a trajectory of continuous decline, with medical equipment becoming increasingly dated and rare modern devices being unavailable to the majority of the Russian people. Under the health framework of the National Priority Project outlined in the early 2000s, hospitals and medical centers were supposed to receive a steady supply of modern equipment, however this initiative did not last. However, no funds were allocated to the service and repair of equipment or to the training of qualified personnel. In the meantime, the availability and quality of health care services, as well as the people’s trust in these services, continued their downward spiral. Salaries for health care professionals in Russia have remained quite low, while the workload has remained high. Eventually, many medical centers began offering specialized fee-based professional services. As a result, patients faced a two- to three-month wait for a free doctor’s appointment, while fee-based appointments were usually available the next day.

The lack of either a clearly defined reform strategy or an understanding of the type of health care system the country needed, coupled with the political nature of the decision-making and implementation processes, stymied any economic potential that had emerged in Russia as a result of the oil price spike of the 2000s.

Over the past few years, the problems facing the health care system have gradually reached catastrophic proportions. After President Putin was elected to his third term, he signed the so-called “May decrees,” a string of reforms that included the health care overhaul. According to the reform provisions, the salaries of health care professionals were set to double by 2018.

Interestingly, the Russian mass media did not closely follow the implementation of these reforms. This October, however, the Russian Medical Server (rusmedserver.com) made public a plan that described in detail the set of measures designed to overhaul the health care system in Moscow. According to this plan, during the next few months, the medical personnel of 28 medical facilities, including 15 hospitals, will be laid off, the premises will be vacated, and the medical equipment will be assigned to other centers. Over 7,000 employees will be presented with notice of their impending layoff by February 1; the entire layoff process will last until June 1, 2015. The government will also cease managerial oversight of the groups of buildings where the hospitals are stationed.

The release of this plan had a cataclysmic effect on the mass media. To date, the most in-depth investigation of the situation has been carried out by RBC Information Systems, one of the largest media groups in Russia. According to their report, the overhaul is designed to move the Moscow hospital system under the funding umbrella of the Mandatory Health Insurance system (MHI), which receives a certain percentage of employees’ salaries, deducted by their employer. However, many professionals say that the MHI rates are underestimated by four to five times. For instance, using the rates set by MHI, the cost of a simple blood test runs between 29 and 72 rubles, which does not reflect the real cost of the test tubes and services provided by a lab professional and nurse. This is why the bottom-line costs of medical services will hardly be covered without local subsidies.

The Moscow health care reform is being overseen by Leonid Pechatnikov, the deputy mayor of Moscow in charge of social development, who has had firsthand health care experience in France. In an interview with Kommersant, he admitted that the health care overhaul will be a difficult process, but he expressed certainty that no other solutions exist. “In many other countries in the world, highly specialized doctors carry out 30 percent of the workload, while in Russia they do 80 percent. In France, for example, if a general practice physician (or ‘neighborhood doctors,’ as they are called there) sends too many patients to specialized doctors, he or she will soon have to face regulatory agencies,” said Pechatnikov.

According to expert findings published by the Association of Professional Health Care Providers, the Russian health care budget for 2015–2017 requires cuts in current health care spending, which will eventually lead to a decline in the quality of medical services and a rise in mortality rates. Over these years, mortality may exceed half a million people, according to the Association of Medical Societies for Quality.

The May decrees were designed to reinforce the “contract between the authorities and society,” but in reality, they have produced quite a different effect. As a result, the country may be heading toward a quagmire, in which the condition of the health care system remains dismal and social unrest continues to simmer.

RBC Information Systems maintains that one possible reason for the large-scale layoffs is the need to carry out these decrees. Their report quotes Larisa Popovich, director of the Institute for Health Economics at the Higher School of Economics, as saying, “The salary increase for health care professionals will also entail drastic cuts in other expenses for the hospitals because the switch to the single-channel type of funding [under the MHI] will leave them no room for maneuvering.”

The May decrees signed by Putin in 2012 in the wake of his election were aimed at reinforcing social ties in the country. One of the key social priorities pursued by Putin over the course of his presidency has been increasing the retirement benefits and salaries of public sector employees. This population has grown accustomed to the regular increase in income, which accounts for Putin’s high approval ratings. In 2008, Putin’s successor Dmitry Medvedev was elected president on a heavily promoted platform of national reforms in health care, agriculture, education, and demographic growth. The May decrees were intended to be the centerpiece of Putin’s social policies; however, their successful implementation depended on favorable microeconomic conditions. Unfortunately, the slump in oil prices has caused depreciation of the Russian ruble and has decreased capital and foreign investment outflow, thus throwing Russia into deeper isolation and making it increasingly difficult to maintain higher-than-anticipated income growth. In other words, the May decrees have ended up having the opposite effect of that expected.

However, it is one thing when salary rates do not grow at the previous pace and another thing when thousands of doctors and medical personnel are being laid off. Since the Soviet era, public sector employees in Russia, who include those representing scientific communities, educational establishments, health care centers, and the army, have enjoyed a special sense of solidarity. So far, the Putin regime has not encountered any serious social turmoil with this group. The exception was in 2005, when a reform involving benefit monetization (the exchange of employee benefits for monetary compensation) precipitated protests from retirees across the country and caused Putin’s approval ratings to plummet from 84 percent in early 2004 to 48 percent in early 2005. After that debacle, the Kremlin revised its strategy and adopted a more moderate approach.

The most recent rumbles of discontent were heard on November 2, when health care workers gathered in Suvorov Square in Moscow to protest the health care reform. According to rally organizers, about 6,000 people came to voice their protest against the Moscow authorities’ plan to shut down medical facilities and lay off personnel. The protesters marched in the rally carrying banners that read, “It Is Time to Treat Authorities,” “By Laying Off Doctors, You Lay Off Life,” and “No to Health Care Collapse.” Rally participants accused the Moscow authorities of involvement in schemes to grab expensive land plots in Moscow to adapt them to commercial purposes. “The government cuts medical spending by 34 percent, but it has enough money to organize the Olympic Games, boost funding for the security agencies, and finance a war,” one of the eyewitnesses was quoted as saying.

The ballooning of this public rally into more widespread political unrest signifies the most dangerous scenario the Kremlin faces. This is exactly why Health Care Minister Veronika Skvortsova made a hasty move to appease the protesters by stating that the opinions of many Moscow health care professionals will be taken into consideration and by asking them “not to make the situation into a political issue but rather debate it in professional communities.” The crisis in the health care system, however, will undoubtedly have political repercussions for both federal and local authorities. The Kremlin is demanding the impossible by enacting such reforms while expecting to enjoy nationwide political and social stability. Major reshufflings in the job market and growing public indignation are already evident.

By basing the “vertical power structure” on the public sector, Putin has effectively limited the range of political levers and policy manoeuvres available in the country. This means that the long-overdue health care overhaul will be carried out only to such an extent that it minimizes the risks of any social unrest that might have a detrimental effect on the government’s reputation. Such reform, however, is bound to create new risks by keeping the efficiency of the health care system dismally low, thus making social turmoil inevitable. In trying to kill two birds with one stone, the Putin regime, therefore, has exposed its Achilles heel.