UNIVERSAL DECLARATION OF HUMAN RIGHTS, Article 25.1

At the beginning of Chapter Two we mentioned that the life expectancy and education components of Georgia’s Human Development Index are marked highly, counterbalancing the low figure of GDP/capita. In fact, Georgia’s life expectancy and education indices are comparable to those of countries located much higher in the HDI rank. We will now turn our attention to the degree of access to health care services enjoyed by different categories of Georgian households.

How good or bad is the state of Georgia’s overall health care system? This is a question that has inspired numerous reports, and debates. Although the answer varies according to the particular method applied to assess the health care system’s performance, there is a general agreement that the system is in trouble and leaves much scope for improvement. In contributing to this debate, the World Health Organization (WHO), a specialized UN agency, has elaborated a new approach to evaluate the health care system’s overall performance and to rank it according to a unified index (World Health Report, Washington DC, 2000 (released in Internet on June 21, 2000)). This index is based on a combined evaluation of a number of factors, including goal attainment and performance, disability-adjusted life expectancy (DALE), child survival, responsiveness level, responsiveness distribution, and fairness of financial contribution (C.J.L. Murray and J. Frank AWHO framework for health system performance assessment. Bull. of the World Health organization, v. 78, No 6, 2000).

One of the components of the WHO unified index, the introduction of the DALE concept, is a particularly innovative approach to measuring life expectancy and merits a brief explanation. In previous assessments, life expectancy estimates were based on the overall length of life calculated solely with reference to mortality data. This year, and for the first time, in calculating life expectancy the WHO has "adjusted" this figure to reflect the importance of living one’s life in good health. The underlying logic is the following: suppose that people in country A and country B have the same life expectancy, lets say 75 years. In country A, people live on average to the age of 70 in good health (and are sick for the remaining five) while in country B people, on average, reach the age of 65 in good health (and live the remaining ten in poor health). The DALE index records this difference in quality of life, weights the years of ill health according to their severity, and subtracts them from the expected overall life expectancy to give the equivalent years of healthy life.

Table 3.1 provides the resulting ranking of countries according to the WHO’s new unified index. We have included the indices for former Soviet republics and Eastern European countries, as well as for the top country (Japan) and the worst (Sierra Leone). According to the WHO’s unified index, Georgia is not among the worst offenders but neither does it have much to celebrate. Out of the former Soviet republics, the performance of the Georgian health care system ranks not only behind those of the Eastern European countries but also behind that of Kazakhstan, Ukraine, and Belarus. The WHO study included 191 countries.

Table 3.1: Overall Health System Performance in Georgia

Source: WHO

As we mentioned above, the new index developed by the WHO is an aggregation of different measures in the same way as the HDI is an aggregation of indices for life expectancy, education, and income per capita. Dividing the WHO index into its different components reveals some interesting results. Figure 3.1 dissects Georgia’s unified index for overall health care system performance according to the index’s different components (or sub-indices): the disability-adjusted life expectancy (DALE), responsiveness level, fairness in financial contribution, overall goal attainment, health expenditure per capita, performance of health level, and overall health system performance. Out of all the factors considered, Georgia ranks best (44^th) in the DALE index. Note, however, that the difference in Georgia’s DALE index and the other indices is significant. While the DALE index ranks Georgia 44^th out of 191 countries (Table 3.2), the index for the "responsiveness" of the health care system ranks Georgia way back at almost the end of the list in 166^th position. The index for "health expenditure" per capita ranks the country 125^th while the index of "fairness" in health care financing improves things a little, ranking Georgia 105^th.

Source: WHO

The difference between the DALE index and the unadjusted index for life expectancy is substantial. The average Georgian’s life expectancy at birth is 72.9 years; when adjusted in terms of the number of years of ill health (DALE index), the figure drops to 66.3. The difference between the DALEs of males and females is also noticeable. Females have a DALE of 69.4 in contrast to 63.1 for men. These numbers show that Georgian males live for a relatively long time but that they also suffer from bad health for a number of years. No surprise if one considers the level of alcohol and cigarette consumption in Georgia. In fact, Georgians spend, on average, as much on cigarettes as they do on health care.

Table 3.2: Ranking of Selected Countries by DALE Index

The disparities between Georgia’s good score on the DALE index and its bad scores on all other indices appears to suggest that the relatively good health of Georgians results from something other than the quality of services provided by the health care system. Responsiveness, expenditures per capita, and overall performance of the health care system ranked way behind the figure for the DALE index. This is not surprising if one looks at public expenditures on health care as a percentage of GDP, which are low by any standard.

Fig. 3.2. Expenditures on Health Care as % of GDP in Georgia

Source: Women and Children in Georgia, UNICEF Report, Tbilisi, 1999; The 1999 State Budget of Georgia, Prepared by Barents Group; Report on Execution of the 1999 State Budget of Georgia, by Government of Georgia, 2000; Report on execution of the 1999 State Budget, Budgetary Office of Parliament, Tbilisi, 2000.

Yet more money should have been spent on the health care system. According to the Strategic Plan of Development of the Georgian Health Care System, in 1999, public expenditure on health care should have increased to 1.3% of GDP. The "Law on the 1999 State Budget" was approved with this increase in mind (Strategic Plan of development of the georgian Health Care in Georgia, Tbilisi, 1999, 65 p. (in georgian). In reality, however, health care spending fell from 0.70 percent in 1998 down to 0.59 percent in 1999 (Fig. 3.2). The results have been a health care system that continues to crumble. Georgia, which has been classified as falling within the lower group of middle-income countries (Knowledge for development. World Development report. World Bank, Oxford University Press, NY, 1999) shows public expenditure levels on health care well below those seen in North Africa. On average, even low-income countries fare better (Fig. 3.3).

Source: World Bank; UNICEF; Barents Group; Report on Execution of the 1999 State Budget of Georgia, by Government of Georgia, 2000; Budgetary Office of Parliament.

The problems related to the health care system’s low level of financing are anything but new and not even the impressive array of plans developed for the sector have managed to find a solution. The health care system shows ample room for savings in terms of increased efficiency and private sector participation but these measures are no substitute for providing a minimum and basic level of public financing, something that is not happening. Figure 3.2 shows the execution level of public expenditures on health care from the 1995-1999 State budgets as a percentage of the planned target. Both total expenditures and expenditures on the health care system have suffered because of the government’s inability to collect sufficient revenues. The health care sector, however, has suffered more than others. In Figure 3.4 it can be seen that the execution of the health care budget is significantly lower than the execution rate of the whole State budget. In 1997, the overall budget had an execution of 85.6 percent, yet the health care system received funds for only 62.4 percent of its financial needs. In 1998, the execution of the overall State budget decreased to 84.8 percent but the execution of the health care budget went down to 59.2 percent. In 1999, the tendency worsens and while the State budget was 73.5 percent fulfilled, the health care system received only 45.3 percent of the resources it needed. The results of this policy are visible to anybody who has visited a public hospital. Maintenance is almost non-existent and supplies are minimal: the overall state of hospitals is appalling.

Source: Strategic Plan of Development of the Georgian Health Care System (2000-2009), Tbilisi, 1999 (in Georgian); National politics of health care in Georgia, Tbilisi, 1999, 65 p. (in Georgian).

The financing of the State Medical Insurance Company (SMIC) has been equally low. SMIC was founded in 1995 for the obligatory medical insurance of: (i) 0-3 year olds, (ii) disabled persons, and (iii) persons subject to treatment from special medical programs like those for tuberculosis, oncological and cardiovascular diseases. In theory, medical insurance should cover between 50-100 percent of each patient’s expenses. For financing, SMIC relies on central budget transfers and obligatory insurance charges from both employers and employees.

Table 3.3 shows planned and executed spending on SMIC medical programs as well as year 2000 targets. Mirroring the differences in execution between the overall State budget and the health care budget, SMIC’s different categories of spending have also suffered from the budgetary cuts with differing degrees of severity. Medical aid to children and the provision of medical services to the rural population have been hit much harder than other programs, such as those involving the purchase of specific drugs. The situation for the year 2000 looks no better. In fact, this year’s targets appear to have been set based on the execution rate of 1999. If spending on a particular medical program was relatively high, then planned expenditures have been left approximately the same. Otherwise, they have been decreased.

Table 3.3 indicates that the average citizen has a slim chance of receiving adequate services from the SMIC medical program even if he/she belongs to the very limited group that State medical insurance covers. For instance, only about 2 million GEL were allocated for treating oncological diseases in a country where a surgical operation plus the three obligatory cycles of chemotherapy treatment and the four obligatory screenings per year cost 2,500-3,000 GEL per patient. Given these rates, the SMIC can only cover the medical expenses of about 670 patients. Demand is at least three times greater than this.

Source: Report on Execution of the 1999 State Budget of Georgia, by the Government of Georgia, 2000

Given the limited coverage and protection the health care system provides, the Georgian population is de facto paying almost all health-care related expenses directly from its own pocket rather than making payments to the government in exchange for public health care services. The whole system has a high degree of informality. Staff supplement their meager salaries via under-the-table payments and patients buy almost all the medical supplies they require from the black market, leaving the government largely just to supply the buildings, water, electricity (irregularly) and limited amounts for some medical programs.

Figure 3.5 shows the distribution of households according to the total amount of out-of-pocket health care expenses they have per month. The data shows that in 2000 the average household was spending around 14.15 GEL per month on healthcare; however, more than 75 percent of Georgian households will have spent less than 10 GEL/month or less than 3 GEL per person.

Source: GORBI

Health care spending is distributed highly unequally. The cost of medicines and the need to make informal payments at public hospitals deter about 30 percent of the population from seeking treatment. Consequently, these people have almost no access to health care services. About half of the population can afford only 8 percent of the medical expenses they require. In contrast, 10 percent of the population account for 45 percent of all medical spending and a tiny 2.5 percent of Georgians are responsible for 40 percent of total spending (Fig. 3.6). Not all of this highly biased distribution of expenses can be explained by lack of income. Most of the rural and about 50 percent of the urban population prefer treating themselves and visit physicians only in an emergency or when in serious pain.

The quality of services provided at public hospitals does little to encourage the population to visit doctors more regularly: some 50 percent of patients leave hospitals unsatisfied with the sanitary conditions and doubtful as to the quality of medical attention received. The combination of low levels of disposable income, poor services, and cultural attitudes means that 95.8 percent of the population often avoid visiting a doctor and treat themselves instead, which in 81.1 percent of cases involves the use of prescription drugs. A quarter of these self-practitioners (25.5 percent) have minimal knowledge of medicine and often waste their money and risk their health when resorting to self-prescribed treatments with antibiotics or specific drugs.

Fig. 3.6. Contribution to Total Expenditures on Health Care by Different Population Groups

Source: Based on data from the State Department of Statistics, the Ministry of Health and Social Welfare, GORBI Agency, UNICEF and the World Bank.

 

Preventative health care has been almost abandoned as a strategy to minimize overall health care costs in the medium run. More than 87.7 percent of citizens say they have never had a thorough medical check-up and more than 98 percent have never been screened for cancer. A surprising 50 percent has never visited a doctor while 14 percent has never visited a dentist (Table 3.4). Yet postponing a visit to a doctor until the pain is unbearable or until the patient is very sick is a strategy that does not pay off in the medium and long run. In most cases, preventative medicine is a cost-effective strategy for both the state and the private individual. Once the situation becomes serious, the cost of treatment is usually high.

Source: GORBI

That 87 percent of respondents said that they have never undergone a thorough medical check-up is a surprising finding and appears to contradict the common belief that the Soviet health care system provided widely available preventative medical services. While it is reasonable to expect that patients have not been able to have these check-ups for the past ten years, these services were said to be widely available before 1990. If true, one could expect a larger percentage of respondents to have had at least one thorough check-up in their lifetime. This is partly explicable by the fact that a large percentage of GORBI respondents surveyed were still young when the Soviet Union collapsed and may not remember their last thorough hospital check-up. For those respondents above 35 years of age, the lack of regular thorough medical check-ups might reflect what in the last decades of the Soviet regime turned into just a "formality" required for certain positions or jobs. The same can be said with regard to visits to doctors. Yet the percentage of those that have never made such a visit is high, even if one takes into account the number that may have been too young at the time of the Soviet meltdown to remember a visit to the public hospital or a visit to the district doctor. Again, the effectiveness of the Soviet health system in the regime’s final decades appears to have been less than common perceptions indicate.

But while the quality of services rendered in Soviet hospitals may have been less than perfect, the situation today is much worse and negatively influences mortality rates in public medical institutions. Figure 3.7 demonstrates maternal and infant mortality rates between 1993-1999. There is a clear tendency for maternal mortality to increase between 1994-1996 and to decrease slightly thereafter. We will have to wait for the figures for the year 2000 before concluding whether the decrease in maternal mortality constitutes a trend or has reached a plateau.

Fig. 3.7. Maternal and Infant Mortality in Georgia

Source: Strategic Plan of Development of the Georgian Health Care System (2000-2009), Tbilisi, 1999 (in Georgian)

If the figures for maternal mortality are disturbing, the ones for child mortality are even worse. Official data shows that an infant’s delivery in a public maternity ward can pose a serious health hazard for the child. Overall, however, infant mortality in Georgia is not high compared to other developing countries (World Health Report, Washington DC, 2000, released in Internet on June 21, 2000;Knowledge for development. World Development Report. WB, Oxford University Press, NY, 1999; World Development Indicators 2000; CD-ROM, World Bank). What is dramatic, is the degree to which public hospitals contribute to overall infant mortality rates. Figure 3.8 shows child mortality during the first 12 months of life in towns and villages. The figures have been adjusted to reflect the different numbers of children born in villages and towns. It can be seen that of those children that die in the first week of their lives, 82.4 percent (of the total for the year) are in towns and only 11.9 percent are in villages. One of the main differences between towns and villages is that in towns children usually spend their first week of life at a maternity hospital, whereas in villages, mothers usually give birth at home according to ancient Georgian traditions. After the second week of life, child mortality in towns decreases significantly and this coincides with the time when the mother usually leaves the hospital and goes home. The appalling state of hospitals (lack of medical supplies, other equipment, and poor hygiene) and the professional services provided appear to be responsible for this difference in child mortality rates during the first week of life. Otherwise, we could have expected the figures for infant mortality in towns and villages to move together more harmoniously.

Fig. 3.8. Child Mortality Rates in the First Year of Their Lives

Source: Strategic Plan of Development of the Georgian Health Care System (2000-2009), Tbilisi, 1999 (in Georgian)

Figure 3.8 shows one of the saddest and most unfair aspects of the Georgian socio-economic transformation process. We hope that the current health care system reforms will reverse this situation. The alarming mortality rate of children in public hospitals reflects the state’s inability to protect those that are most vulnerable and is a violation of Article 25 of the Universal Declaration of Human Rights: "Mothers and children are entitled to special care and assistance."

The turmoil in the health care system results from of a combination of two factors. The first is the existence of an oversized and inefficient system of health care that was already crumbling in the last period of the Soviet system. The health care system developed according to the Soviet model, characterized by a centralized approach to management, finance, and distribution, which lead to gross inefficiencies. Georgia, like most of the former Soviet republics, inherited a system with a great deal of excess capacity. From 1997-1999 there was one physician for every 245 people compared to an average of one per 400 members of the population in European Union countries.

The second factor behind the collapse of the health care system has been the breakneck speed with which budgetary allocations were reduced to less than minimal levels. The system never stood a chance of adjusting to the new rules of the game, with predictable results. The quality of services provided by has hospitals plunged and is now so bad that they are to blame for increasing the mortality rate of vulnerable groups such as children.

The most far-reaching reforms in the health care sector are directed towards increasing the efficiency of budgetary allocations and towards the privatization of heath care services. In the last five years, 448 health care institutions have been privatized. In addition, since 1991, the number of hospital beds has decreased from 57,300 to 24,481, or 4.5 beds per 1,000 population. Yet, even with more than a 50 percent reduction, the number of hospital beds still appears to be high. In Tbilisi alone there are about 11,000 beds in 51 hospitals serving a population of 1.38 million. In the United States, a similar population would have to make do with approximately 1,200 beds (Health & nutrition adjustment project ID GEPE40555, World Bank. Prepared on December 16, 1999).

Savings from the consolidation in the health care sector can be substantial. Today, Georgia has 285 hospitals, almost all of which need to be seriously rehabilitated and re-equipped. According to the World Bank, their rehabilitation (without re-equipment) would cost as much as 100 million USD. On the other hand, patient enrollment in these institutions does not exceed 28 percent of their capacity. Further consolidation in the health care system is called for (Table 3.5).

Further consolidation, however, is not free from political and social costs. The decrease in the number of hospitals means a reduction in the number of medical personnel, which will leave thousands unemployed. Consolidation will be an unpopular policy and, on the whole, neither the public nor the medical staff supports the planned reforms. The World Bank reports that less than half (44.8 percent) of citizens familiar with the reform plans back them. Most of those respondents against the reforms (83.1 percent) said they were afraid that health care costs could go up, which would further restrict their already limited capacity to afford treatment. At the same time, 42.5 percent of respondents believe that the decision to reduce the number of medical personnel is both necessary and appropriately timed. Most of the respondents said that the establishment of a solid medical insurance system should accompany the continuing privatization of health care services (Health care reform in Georgia, GORBI Survey, Final Document, Tbilisi, 1999).

Forced to carefully maneuver itself given these difficult conditions, the Ministry of Health Care and Social Welfare has chosen to reduce the excessive number of medical staff gradually and to provide a cushion for those personnel affected. The Ministry has established a system of accreditation for health care facilities and licenses for medical staff. Some of those lacking acceptable professional qualifications and some of those who have found themselves unemployed are receiving reorientation training. But, unfortunately, the opening of more than 50 private medical schools since 1995 is offsetting these efforts. Such schools are likely to funnel additional doctors and medical staff into the labor market, for whom employment opportunities will be restricted.

We would like to emphasize that it would be a mistake of the highest degree to see consolidation and privatization as objectives in themselves because they are merely the necessary tools (among others) for improving the quality and availability of health care services. Consolidation and privatization per se will not allow vulnerable and poor members of society to access health care services. The private sector is likely to fill only the most profitable niches and to provide services to only that segment of the population that can pay. It would be naïve to expect otherwise. In turn, consolidation of capacity in public hospitals will not ensure that sufficient money is available to provide adequate services but rather that budgetary allocations have a greater impact per unit of dollar spent. Adequate services will require greater budgetary inputs; current expenditures will be insufficient regardless of how much further the privatization program is pursued or how deep the consolidation of the sector turns out to be. The state should fulfill those niches that do not interest the private sector. In filling these gaps, the state has several alternatives available. For now, the establishment of a solid medical insurance system appears to be the preferred strategy, one that can also count on the population’s support.

So far, the lack of resources at its disposal is starving the medical insurance system, as we have seen in this chapter. A fully functioning medical insurance system requires a greater state capacity to collect taxes, a full hearted effort to bring the volume of informal payments in health care into the formal economy (worth between an estimated 200 and 315 million GEL), and an equally full hearted effort to stop funds being lost between the central and regional budgets and the door of the hospitals. There will be little to celebrate if policies aimed at ensuring the 40 percent of households with incomes below the poverty line can access health care services do not accompany sector consolidation and hospital and clinic privatization. Greater budgetary allocations are needed and these should come from genuine government resources. For now, it is mainly the substantial support in the form of World Bank loans that allows Georgia to direct at least some resources into the health care system over and above those needed to cover salaries, provide less than minimal maintenance to hospitals and a scattered provision of under-funded medical programs.

According to criteria developed by the WHO, public health care systems are incapable of performing basic functions when public expenditures on health fall to less than 60 USD per capita. In Georgia, the figure is about 7 USD/per capita (World Health Report, Washington DC, 2000, released in Internet on 21^th of June, 2000). The population has objective reasons to be negative about the health care system and to believe that the sector falls outside the government’s top priorities. The growing differences between the execution of the overall state budget and the health care budget do nothing but fuel these perceptions.

Access to health care services is very limited for a substantial segment of the population (50 percent) and for 30 percent it is almost out of reach. In total, 40 percent of all health care spending goes on a tiny percentage of the population (2.5 percent). The system shows a high inequality in access to its medical services. We are concerned that unless accompanied by other policies, health care privatization may, for the most part, improve only the quality of services available to the top segment of the population, because we doubt that the private sector will find the remaining segments equally attractive. Universal coverage, or at least coverage for most of the population, is likely to require government intervention. There is nothing inherently wrong with this. It is a government’s job to supply those goods and services that the private sector is least keen to provide and that are in the interests of social welfare. Privatization and consolidation are very important parts of the answer. But they are not the whole answer. The state needs a greater capacity to finance its health care policies and the growth of the shadow economy is unlikely to help towards reaching this goal.