Micro data assessment of Russian drug benefit monetization

Abstract

The drug benefit reform implemented in Russia in 2005 allowed benefit groups to choose between the fixed monetary compensation or the in-kind benefits. This paper seeks to study the efficiency of the in-kind drug benefit system before and after the reform by comparing mandated groups of monetary savings within each of the schemes. Pair-wise correlation analysis using the Federal Social Insurance Fund benefit groups database (85 regions in 2005-2006) and two representative consumer expenditure surveys: the National Assessment of Population Welfare and Participation in Social Programs: NOBUS (47 regions, over 40,000 households, 2003) and the Russia Longitudinal Monitoring Survey: RLMS (32 regions, over 4000 households, 2003). The paper finds that giving the mandated population a choice between the two schemes led to an increase in demand for drugs and adverse selection within the in-kind drug provision system. The Federal Social Insurance Fund aggregated data allow one to make post-reform estimations only for an average representative of a certain benefit group. Employing micro data on both pre- and post-reform consumer behavior would become a tool for more precise econometric analysis. The results of the correlation analysis demonstrate an imbalance in the solidarity principle and the need for introducing health and drug insurance mechanisms in the Russian drug benefit programme. The paper represents an attempt to use a large sample statistical analysis along with the Federal Social Insurance Fund data in order to assess drug benefit groups of behavior in Russian regions before and after the drug benefit reform.