Analysis of sources of financing of medical care in the Russian Federation

Balynin Igor' Viktorovich PhD in Economics Associate Professor, Department of Public Finance, Faculty of Finance, Financial University under the Government of the Russian Federation 125468, Russia, Moscow, Leningradsky ave., 49 igorbalynin@mail.ru Other publications by this author     Ragozin Andrei Vasil'evich PhD in Medicine Director of the Center for Problems of Organization, Financing and Interterritorial Relations in Health Care of the Institute of Regional Economics and Interbudgetary Relations, Financial University under the Government of the Russian Federation 125468, Russia, Moscow, Leningradsky ave., 49 AVRagozin@fa.ru Other publications by this author     Grishin Vladimir Vadimovich Doctor of Economics Chief Researcher at the Center for Problems of Organization, Financing and Interterritorial Relations in Health Care, Institute of Regional Economics and Intergovernmental Relations, Financial University under the Government of the Russian Federation 125468, Russia, Moscow, Leningradsky ave., 49 VVGrishin@fa.ru Other publications by this author

Safonov Aleksandr L'vovich Doctor of Economics Professor, Deputy Director of the Institute of Interbudgetary Relations and Regional Economics, Department of Psychology and Human Capital Development, Financial University under the Government of the Russian Federation 125468, Russia, Moscow, Leningradsky ave., 49 ALSafonov@fa.ru Other publications by this author

Introduction

The relevance of the study of issues related to the financial provision of medical care in the Russian Federation is beyond doubt for several reasons.  Firstly, the duration and quality of life of Russians depends on it: in the conditions of a developed healthcare system, citizens receive high-quality medical care. Secondly, the achievement of the national development goals of our state depends on solving the problems related to the financial provision of medical care in the Russian Federation. Thirdly, it also contributes to economic development due to a higher level of economic activity of the population.  

In recent years, the issues of financial support of the healthcare system have been raised repeatedly in the scientific literature. Of course, the increased interest in these issues was especially evident against the background of the coronavirus pandemic ^[5]. First of all, the authors consider the models of healthcare financing used in Russia and abroad ^[4,15,16], which make it possible to determine recommendations for improving Russian practice.  It is valuable that the authors focus on the importance of more active use of financial control tools ^[18], as well as improving the administration of budget revenues of the budgetary system of the Russian Federation ^[11], which will expand the state's financial support capabilities for the healthcare system. It should be noted that despite the fact that scientific research on the modernization of the compulsory health insurance system ^{[1,7, 12,13,14]} raises issues of its improvement, focusing on a number of important problems (for example, in terms of the specifics of the formation of sources of financial support for state guarantees of free medical care to citizens for the unemployed population, with reduced rates of insurance premiums, informal employment, etc.) is not produced.

Research results

The existing program of state guarantees of free medical care to the population in Russia involves the implementation of a large list of measures, the financial support of which is carried out from several sources. Thus, Table 1 presents data on the composition and structure of sources of financial support for the implementation of the program of state guarantees of free medical care to citizens of the Russian Federation.

Table 1 – Composition and structure of sources of financial support for the implementation of the program of state guarantees of free medical care to citizens of the Russian Federation  

Source: compiled and calculated by the authors on the basis of reports of the FOMS and the Accounts Chamber of the Russian Federation [electronic resources: 4,5,6,8,10].

As you know, in the Russian Federation, there is mandatory medical insurance, which involves the payment of insurance premiums: for working citizens – by employers, for non–working - by the executive authorities of the subjects of the Russian Federation. On the one hand, the total amount of insurance premiums in the FOMS budget is more than 60%. However, if we take into account the fact that these insurance premiums for non-working citizens imply the implementation of expenditures of regional budgets, then their insurance nature becomes controversial. Thus, the share of insurance premiums for the working population throughout the study period is in the region of 37-40%%. This suggests that the financial mechanism mainly used in the financial support of the implementation of state guarantees of free medical care to citizens in Russia is more budgetary than insurance.  The authors believe that the situation in which the insurance financial mechanism is formally declared, but in fact the budget mechanism is used, is a source of problems for management. This does not allow it to be adequately filled with "general taxes", nor to receive the benefits of insurance management, avoiding the problem of political vulnerability of the redistribution of funds in the budget.  At the same time, unlike developed OECD countries, where the transition to general taxes as the main source of health care income is usually caused by a purposeful state policy due to the benefits of this approach, the predominantly "budgetary" nature of healthcare financing in the Russian Federation is not a political choice: adherence to insurance principles is regularly proclaimed.  It seems that such inconsistency of the Russian healthcare financing system does not allow taking advantage of insurance or budgetary financial mechanisms. At the same time, this regularly causes problems associated with the accumulation of shortcomings of both financial mechanisms. In other words, the historically established system of financing the Program of state guarantees of free medical care to citizens in the Russian Federation does not have the advantages of insurance management and cannot be filled with more efficiently collected "general taxes", but at the same time it faces the political vulnerability of the tax system and the vulnerability of the insurance system to economic risks.

It seems that such an overestimated share of "general taxes" in the formal insurance financing of the Program of state guarantees of free medical care to citizens of the Russian Federation and the predominantly "budgetary" nature of its financing are due to the shortcomings of the MHI income system.

Firstly, this is due to the non–solidary nature of the compulsory health insurance system - exemption from payment of compulsory health insurance contributions of individuals' income from capital and rent. Unlike the OECD countries with an insurance model, where medical insurance premiums are usually withheld at the same rate not only from the salaries of the formally employed, but also from the income of individual entrepreneurs and self-employed, as well as from income from capital and rent, in Russia, capital owners and rent recipients are exempt from contributions to compulsory health insurance. Meanwhile, profit and rent account for about 40% of the GDP of the Russian Federation – which reduces the base of contributions of the compulsory medical insurance by about 40%. The exemption of income of capital owners and rent recipients from participation in the joint financing of compulsory medical insurance is one of the reasons why compulsory medical insurance in Russia can hardly be called social insurance.

Secondly, it should be noted the "stowaway problem" caused by the large-scale shadow economy, high informal employment and the shortcomings of the historically established system of compulsory health insurance of the so-called unemployed population.

According to the FOMS, there are significantly more so-called unemployed citizens in the Russian Federation than working: in 2021, out of 145 million, only 63.8 million were formally employed. Meanwhile, a significant part of the so-called "unemployed" today are workers of the shadow economy, living on criminal income and income from capital and rent, informally employed (including those registered as unemployed), as well as non-working family members of formally employed workers, who in OECD countries with an insurance model are insured by contributions from the working head of the family. Therefore, the compulsory medical insurance of all these citizens – formally not employed, but often with high incomes – is paid for at the expense of the budgets of the constituent entities of the Russian Federation (in fact, at the expense of "general taxes").

Thirdly, the tariff of the insurance premium for the compulsory health insurance for an employee is underestimated for a country with an insurance model, which does not allow insuring his non-working members together with him, transferring them to the status of "self-employed".

Fourth, the rate of contribution to the compulsory health insurance or its fixed size for individual entrepreneurs and self-employed in the Russian Federation is underestimated for a country with an insurance model. In developed OECD countries, this tariff is calculated as a percentage of the income of an individual entrepreneur and self-employed and is usually equal or comparable to the tariff of contributions from an employee for hire.

Fifthly, the process of providing benefits and special tax regimes for the payment of compulsory health insurance contributions to a wide range of employers by industry and territory is impersonal - not tied to a specific employee. Benefits for the payment of social health insurance contributions are infrequently provided in developed OECD countries and are often of an individual nature - tied to a specific employee – which ensures a full-fledged planned and managed replenishment of the decrease in insurers' income (the exact amount of the required budget transfer) and thereby limits the presentation of benefits.

On the contrary, in the Russian Federation, the provision of benefits is carried out in an impersonal form on an industry and territorial basis, which does not allow us to accurately calculate the required size of the inter-budget transfer to the FOMS budget to compensate for these benefits and thus does not place significant restrictions on their provision.  

The analysis of available sources suggests that the development and adoption of draft laws on the provision of preferential payment regimes by employers for compulsory health insurance contributions to entire industries and territories often does not provide for the calculation of the losses of the FOMS budget and the amount of the inter-budget transfer necessary for their compensation. 

Table 2 presents an estimate of the potential amount of income of the FOMS budget from the payment of insurance premiums 

Table 2 – Estimation of the potential volume of the FOMS budget revenues from the payment of insurance premiums  

Compiled by the authors on the basis of Rosstat data, FOMS reports and Federal Treasury data [electronic resources: 1-3,6-11].  

Analysis of data from open official sources suggests that the budget of the Federal Migration Service may annually receive up to 50% of insurance premiums from employers for the working population annually.

Conclusion

Thus, based on the results of the study, it is possible to draw the following conclusions.

1.                 The existing approaches to financial support for the implementation of state guarantees of free medical care are quite contradictory and have great potential for their improvement.

2. These studies show a significant untapped potential for increasing the effectiveness of the CHI system and financing the Program of state guarantees of free medical care to citizens of the Russian Federation as a whole.

3.                 The most effective measures are:

- collection of insurance premiums for compulsory health insurance from income from capital and rent, including from financial transactions to offshore companies;

- revision of the system of benefits and special tax regimes for the payment of compulsory health insurance premiums with the unification of the tariff and payment regime;

- defragmentation and centralization of the system: consolidation of numerous channels of financing the Program of state guarantees of free medical care to citizens of the Russian Federation into a centralized system of a single payer.

Source of funding.

The article is based on the results of research carried out at the expense of budgetary funds under the state assignment of the Financial University under the Government of the Russian Federation.

Electronic resources: 

1. Unified portal of the budget system of the Russian Federation. URL: https://budget.gov.ru/Главная-страница (accessed: 11.09.2023)

2. Federal State Statistics Service. URL: https://rosstat.gov.ru / (accessed: 11.09.2023)

3. Federal Tax Service. URL: https://www.nalog.gov.ru/rn77 / (accessed: 08/23/2023)

4. Analysis of the sources (structure) and dynamics of the volume of financial support for territorial compulsory medical insurance programs (including in terms of the basic compulsory medical insurance program), as well as changes in the volume and structure of medical care paid for at the expense of subventions for 2015-2019 and the expired period of 2020. URL:  https://ach.gov.ru/upload/iblock/fa4/fa412e5db73d7355f85a2c05de4eb4a3.pdf (accessed: 08/31/2023)

5. Report on the activities of the FOMS in 2015. URL: https://www.ffoms.gov.ru/upload/iblock/91b/91b96b3174f25702b769e8ced881ab2e.pdf (accessed: 08/29/2023)

6. Report on the activities of the FOMS in 2017. URL:https://www.ffoms.gov.ru/upload/iblock/636/6363feb19b121cc76865461aa67512b4.pdf (accessed: 08/29/2023)

7. Report on the activities of the FOMS in 2018. URL: https://www.ffoms.gov.ru/upload/medialibrary/6a0/6a027028c1820b87bc18a3f8d280b029.pdf (accessed: 08/29/2023)

8. Report on the activities of the FOMS in 2019. URL: https://www.ffoms.gov.ru/upload/iblock/3c0/3c0366b4c5a490209ba93c22922c8701.pdf (accessed: 08/29/2023)

9. Report on the activities of the FOMS in 2020. URL:https://www.ffoms.gov.ru/system-oms/about-fund/fund-activities/1_ОТЧЕТ_о_результатах_деятельности_ФОМС_за_2020_год.pdf (accessed: 08/29/2023)

10. Report on the activities of the FOMS in 2021. URL: https://www.ffoms.gov.ru/system-oms/about-fund/fund-activities/ОТЧЕТ_ФОМС_за_2021_год_28.11.2022.pdf (accessed: 11.09.2023)

11. Report on the activities of the FOMS in 2022. URL: https://www.ffoms.gov.ru/upload/docs/2023/ОТЧЕТ_2022_18.05._2023.pdf (accessed: 11.09.2023)

 Electronic recsources:

1.Unified portal of the budget system of the Russian Federation. [Electronic resource]. Retrieved from https://budget.gov.ru/Home page (access date: 09.11.2023)

2.Federal State Statistics Service. [Electronic resource]. Retrieved from https://rosstat.gov.ru/ (access date: 09/11/2023)

3.Federal Tax Service. [Electronic resource]. Retrieved from https://www.nalog.gov.ru/rn77/ (access date: 08/23/2023)

4. Analysis of the sources (structure) and dynamics of the volume of financial support for territorial compulsory health insurance programs (including the basic compulsory health insurance program), as well as changes in the volume and structure of medical care paid for using subvention funds for 2015-2019 and the expired period of 2020. [Electronic resource]. Retrieved from https://ach.gov.ru/upload/iblock/fa4/fa412e5db73d7355f85a2c05de4eb4a3.pdf (access date: 08/31/2023)

5. Report on the activities of the Compulsory Medical Insurance Fund in 2015. [Electronic resource]. Retrieved from https://www.ffoms.gov.ru/upload/iblock/91b/91b96b3174f25702b769e8ced881ab2e.pdf (access date: 08.29.2023)

6. Report on the activities of the Compulsory Medical Insurance Fund in 2017. [Electronic resource]. Retrieved from https://www.ffoms.gov.ru/upload/iblock/636/6363feb19b121cc76865461aa67512b4.pdf (date of access: 08/29/2023)

7. Report on the activities of the Compulsory Medical Insurance Fund in 2018. [Electronic resource]. Retrieved from https://www.ffoms.gov.ru/upload/medialibrary/6a0/6a027028c1820b87bc18a3f8d280b029.pdf (access date: 08.29.2023)

8. Report on the activities of the Compulsory Medical Insurance Fund in 2019. [Electronic resource]. Retrieved from https://www.ffoms.gov.ru/upload/iblock/3c0/3c0366b4c5a490209ba93c22922c8701.pdf (access date: 08.29.2023)

9. Report on the activities of the Compulsory Medical Insurance Fund in 2020. [Electronic resource]. Retrieved from https://www.ffoms.gov.ru/system-oms/about-fund/fund-activities/1_REPORT_on_the_results_of_the_MHIF_activities_for_2020_year.pdf (date of access: 08/29/2023)

10. Report on the activities of the Compulsory Medical Insurance Fund in 2021. [Electronic resource]. Retrieved from https://www.ffoms.gov.ru/system-oms/about-fund/fund-activities/FOMS_REPORT_for_2021_28.11.2022.pdf (date of access: 09.11.2023)

11. Report on the activities of the Compulsory Medical Insurance Fund in 2022. [Electronic resource]. Retrieved from https://www.ffoms.gov.ru/upload/docs/2023/REPORT_2022_18.05._2023.pdf (access date: 09/11/2023)