This Article Abstract Free Full Text (Free PDF) Free Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Add to Saved Citations Download to citation manager Request Permissions Request Reprints Add to My Marked Citations Citing Articles Citing Articles via Google Scholar Citing Articles via Scopus Google Scholar Articles by Radin, D. Search for Related Content Social Bookmarking                         What's this?

Too Ill to Find the Cure?

Corruption, Institutions, and Health Care Sector Performance in the New Democracies of Central and Eastern Europe and Former Soviet Union

Department of Political Science and Public Administration, Mississippi State University

This article tackles the questions of why some Central and East European countries have been more successful at creating a better-performing health care sector while others left it in decay. To answer this question, the effects of corruption, institutional effectiveness, and level of democratic consolidation are considered regarding the ability of the health care sector to prevent cancer deaths. The tests of the hypotheses through an auto-regressive distributed lags model yield a mixed bag of results. First, corruption has a significant increasing short-term effect on cancer mortality in some models and a decreasing effect in models where the alternative measure of corruption is used. These same effects persist over the long term. Institutional effectiveness also has mixed results. However, effective institutions lower cancer mortality in the long term.

Key Words: health care • corruption • institutions • post-communist

References

• Jeffrey Sachs, "Sachs on Poland," the Economist, 19 January 1991; Jeffrey Sachs, Comparative Constitutional Engineering (New York: New York University Press, 1994); Jeffrey Sachs, "The Transition at Mid-Decade," American Economic Review 86:2 (1996): 128-33; Jose Marangos, "The Political Economic of Shock Therapy," Journal of Economic Surveys 16 (2002): 41-76; Peter Murrell, "What is Shock Therapy? What Did It Do in Poland and Russia," Post Soviet Affairs 9 (1993): 113-31. Adam Przeworski, Democracy and the Market (New York: Cambridge University Press, 1991).
• Transparency International, Global Corruption Report 2006, http://www.bvsde.paho.org/bvsacd/cd60/etica/global.pdf.
• Janos Kornai, "Hidden in an Envelope: Gratitude Payments to Medical Doctors in Hungary" (paper for the Festschrift in honor of George Soros, Harvard University and Collegium Budapest, 2000); Janos Kornai, "The Borderline between the Spheres of Authority of the Citizen and the State: Recommendations for the Hungarian Health Reform," in Reforming the State: Fiscal and Welfare Reform in Post Socialist Countries, ed. Janos Kornai and Robert Kaufman (Cambridge: Cambridge University Press, 2001); Janos Kornai and Karen Eggleston, Welfare, Choice and Solidarity in Transition: Reforming the Health Care Sector in Eastern Europe (New York: Cambridge University Press, 2001); Sara Allin, Konsantina Davaki, and Elias Mossailos, "Paying for `Free' Health Care: The Conundrum of Informal Payments in Post-Communist Europe," in Global Corruption Report (Transparency International, 2006) http://www.bvsde.paho.org/ bvsacd/cd60/ etica/global.pdf.
• Paolo Belli, "Formal and Informal Household Spending on Health: A Multicountry Study in Central and Eastern Europe," Central and Eastern European Health Network (International Health System Group, Harvard School of Public Health, 2002).
• Misallocation occurs because of unclear policy directives with respect to the allocation's purpose, lack of transparency in the budget allocation process, and weak service delivery characterized by lack of accountability, inefficiency, and poor quality.
• Katarina Ott, "Economic Policy and the Underground Economy in Transition," in Underground Economies in Transition: Unrecorded Activity, Tax Evasion, Corruption, and Organized Crime, ed. Edgar L. Feige and Katarina Ott ( Brookfield: Ashgate Press, 1999).
• Kornai, "The Borderline."
• Maxim Rybakov, "Shadow Cost Sharing in the Russian Healthcare" ( Central European University, Political Science Department, 2005).
• Kornai, "Hidden"; Richard Lotspeich, "Crime and Corruption in Transitional Economies: Lessons from Cuba," Policy Reforms 6 (2002): 41-76.
• Kornai, "Borderline"; Christopher Davis, "Reforms and Performance of the Medical System in Transition States of the Former Soviet Union and Eastern Europe," International Social Security Review 54 (2001): 7-56; Kornai and Eggleston, Welfare, Choice, and Solidarity.[CrossRef]
• Peter Gaal, "Gift, Fee or Bribe? Informal Payments in Hungary," Global Corruption Report 2006 (Transparency International) http://www.bvsde.paho.org/bvsacd/cd60/etica/global.pdf.
• Peter Gaal and Mark McKee, "Informal Payments for Health Care and the Theory of `INXIT,'" International Journal of Health Planning and Management 19 (2004).
• Kornai and Eggleston, Welfare, Choice, and Solidarity; Gaal and McKee, "Informal Payment."
• Kornai, "The Borderline"; Kornai, Eggleston, Welfare, Choice, and Solidarity; Davis, "Reforms and Performance."
• Indicators of low priority are low health expenditures (between 2.5 and 5.5 percent, low by Organisation for Economic Co-operation and Development [OECD] standards), lack of responsiveness of resource allocation to health problems, and below-average wages of highly educated medical staff; see Christopher Davis, "Transition, Health Production, and Medical System Effectiveness," in The Mortality Crises in Transitional Economies, ed. Giovanni Cornia and Renato Paniccia (New York: Oxford University Press, 2000).
• Davis, " Reforms and Performance," 7-56.; Gaal and McKee, "Informal Payment."
• Kornai, Eggleston, Welfare, Choice, and Solidarity.
• Richard Lotspeich, "Crime and Corruption," 41-76.
• European Observatory on Health Care Systems, Health Care Systems in Transition: Hungary (1999).
• Davis, "Reforms and Performance," 7-56.
• Sachs, "Mid-Decade," 128-33.
• Worsening of health conditions occurred almost across the board with respect to cancer deaths and tuberculosis; see Davis, "Reforms and Performance." However, deaths in some CEEC have been from other nonmedical factors; see Elizabeth Brainerd and David M. Cutler, "Autopsy of an Empire: Understanding Mortality in Russia and the Former Soviet Union," Journal of Economic Perspectives 19, no.1 (2006): 107-30; Ott, "Economic Policy," Judith Haley and Mark McKee, "Health Sector Reform in Central and Eastern Europe: The Professional Dimension," Health Policy and Planning 12 (1997): 286-95.
• There are other forms of corruption in the health care sector that can be observed, such as the misallocation of funds, including those borrowed by the International Bank for Reconstruction and Development (IBRD), or collusion (conflict of interest) where a physician may be working at a hospital but also practice somewhere else, or send in patients to friends. For example, although this is forbidden by law in Croatia, the former minister of Health, Andrija Hebrang, is holding a position in the government that precludes him from practicing medicine, but he does practice medicine in two additional institutions. The reason this study focuses on gratitude payment is because they are the most palpable form of corruption at the lowest level.
• Kornai, "Borderline."
• Ibid.
• Rybakov, "Shadow Cost Sharing."
• Helen Shahriari, Paolo Belli, and Maureen Lewis, "Institutional Issues in Informal Health Payments in Poland" (Washington, DC: World Bank, 2001).
• Guillermo O'Donnell, "Why the Rule of Law Matters," Journal of Democracy 15 (2004): 32-46.
• O'Donnell, "Rule of Law," 32-46.
• Under a democratic rule of law, O'Donnell claims, the agencies of electoral, societal and horizontal accountability function effectively without being obstructed by state actors; furthermore, he claims that insofar as such laws are endorsed by and fairly applied to all relevant institutions can these institutions be deemed democratic; O'Donnell, "Rule of Law," 32-46. At the same time the rule of law protecting citizens is one of the essential features of a liberal democracy, where not only vertical, but also horizontal accountability is assured; Larry Diamond, "Is the Third Wave Over?" Journal of Democracy 7 (1996): 20-37.
• Douglas North and Berry Weingast, "Constitutions and Commitments: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," Journal of Economic History 49 (1989): 369-404.
• Ott, "Economic Policy."
• H = f (T, M), where the production of health (H) is a function of disease (T) and medical system success (M). Thus, the relationship between H and T is negative, while that between H and M is positive; see Davis, "Transition."
• Davis, "Reforms and Performance," 7-56; Laurene A. Greig, Health of Nations: An International Perspective on U.S. Health Care Reform (Washington, DC: Congressional Quarterly 3rd edition, 1999).
• Graig, "Health of Nations"; Charles E. Phelps, Health Economics (Boston: Addison Wesley, 2002).
• Brainerd and Cutler, "Autopsy," 107-30.
• Davis, "Reforms and Performance," 7-56.
• Not every person with early cancer detection will survive, but patients whose detection of cancer occurs in early stages have a greater likelihood of recovering; see American Cancer Society 2007, http:/ www.cancer.org.
• Ellman found that problems in the medical care system in Russia and other CEEC countries account for explaining the increase in general mortality; see Michael Ellman, "Transformation, Depression, and Economics: Some Lessons," Journal of Comparative Economics 19 (1994): 1-21; Melanie Wakefield, Brian Flay, Mark Nichter, and Gary Giovino, "Effects of Anti-Smoking Advertising on Youth Smoking: A Review," Journal of Health Communication 8, no.3 (2003).
• The analyses using infant mortality have not been included in this manuscript because of space constraints, but are available to the reader on request.
• Ritva Reinikka and Jacob Svennson, "Survey Techniques to Measure and Explain Corruption," World Bank (2003).
• Some existing measures are: (1) Public Expenditure Tracking Surveys (PETS): the problem is that the number of surveys done is limited, both in terms of number of countries and the number of years; (2) Transparency International Corruption Perception Index (CPI). The issue with the CPI measure concerns its content validity. It is a multiple scores composite index that uses nine sources of data, among which are those that tap into the private sector. The result is a measure that includes some phenomenon that are not related to health care corruption and that therefore may bias the findings.
• Existing measures come from Living Standard Measurement Surveys (LSMS), and the Country Specific Surveys. The drawback is that they are limited and are not comparable across countries.
• Kornai, " Envelope"; Maureen Lewis, "Who is Paying for Health Care in Eastern Europe and Central Asia?" The International Bank for Reconstruction and Development (World Bank, 2000 ).
• Simon Johnson, Daniel Kaufmann, Andrei Shleifer, Marshall I. Goldman, and Martin L. Weitzman, "The Unofficial Economy in Transition," Brookings Papers on Economic Activity 2 (1997): 159-239.
• The measure is constructed by subtracting the percentage change in electricity consumption (total economic activity) from the percentage change in GDP growth (official economic activity). The difference between the two is an estimate of unofficial economic activity; see Johnson et al., "Unofficial Economy," 159-239). The reasoning behind this is the expectation that a change in GDP growth should be reflected in a proportionate change in electricity consumption rate. Where this is not the case, the difference is used as a proxy for the size of the unofficial economy. The resulting values may be positive or negative, but what matters is the distance from the value of 0 (which indicates no corruption). To facilitate interpretation, the numbers are then transformed to positive values and the resulting variable will vary from values of 0 (no corruption) to potentially 100 (perfect corruption).
• Brainerd and Cutler, "Autopsy," 107-30.
• Economic performance is measured by inflation (Consumer Price Index with baseline year 2000) and is used as the main indicator of regime performance. The reason this measure is used, and not another such as GDP growth, is because there would be a high degree of correlation with the first measure of corruption (given that it includes GDP growth), and because price levels were one very reliable way to assess the stability of the emerging economies during the 1990s, in light of economic liberalization. The data are taken from the World Development Indicators and the United States Development Agency data-bank.
• This is a U.S. dollar per capita measure. Since the assistance data is usually given in a package with resources intended for other sectors, the exact amount for health care was calculated by multiplying the total dollar amount of the loan by the percentage of the loan allocated to the health care sector. Then, to account for the population size, the real dollar amount is divided by the population size. The data has been collected from the International Development Agency (part of the World Bank) Web site. Christina I. Wallich, "What's Right and Wrong with World Bank Involvement in Easter Europe," Journal of Comparative Economics 20 (1995): 57-94; Josef Brada, Roland Schönfeld, and Ben Slay, "The Role of International Financial Institutions in Central and Eastern Europe," Journal of Comparative Economics 20 (1995): 49-56.
• Kosuke Imai and Jeremy Weinstein, "Measuring the Economic Impact of Civil War," Center for International Development Working Paper No. 51 (2000); James C. Murdoch and Todd Sandler, "Economic Growth, Civil Wars, and Spatial Spillovers," Journal of Conflict Resolution 46, no. 1 (2000): 91-110. Ibrahim Elbadawi and Nicholas Sambanis, "External Interventions and the Duration of Civil Wars" (unpublished manuscript, The World Bank, Washington DC, 2001); Seonjou Kang and James Meernik, "Civil War Destruction and the Prospects for Economic Growth," Journal of Politics 67 (2005): 88-109.
• An extensive debate exists in the literature about which model to use and what kind of restrictions to place on the parameters, given the nature of TSCS and panel data; see Bernhard Kittel, and Hannes Winner, "How Reliable is Pooled Analysis in Political Economy? The Globalization-Welfare State Nexus Revisited," European Journal of Political Research 44 (2005): 269-93; Nathaniel Beck and J. N. Katz, "Time-Series-Cross-Section Issues: Dynamics," Draft of 26 July 2005; Suzanna De Boef and Luke Keele, "Dynamic Specification Revisited" (presented at the 2005 annual meeting of the Society of Political Methodology, Florida State University). See Thomas Plümper, Vera Troeger, and Peter Manow, "Panel Data Analysis in Comparative Politics: Linking Method to Theory," European Journal of Political Research 44 (2005): 327-54. Most recently, authors have agreed this to be an appropriate way to deal with the possibility that observations with higher values also may have a higher error variance. Using a panel corrected standard error model corrects this violation of the OLS standard assumption for panel data; see Beck and Katz, "Time Series"; Plümper, Troeger, and Manow, "Panel Data Analysis," 327-54.
• This offers two main advantages: it increases the number of observations and the degrees of freedom, which makes it possible to estimate efficient specified models and it makes it possible to generalize the results across countries; see Plümper, Troeger, and Manow, "Panel Data Analysis," 327-54. The legged dependent variable is added to eliminate serial correlation of errors; see Beck and Katz, "Time Series."
• Plümper, Troeger, and Manow, "Panel Data Analysis," 327-54.
• Susan DeBoef and Luke Keele, "Dynamic Specification Revisited" (paper presented at the Annual Meeting of the Society of Political Methodology, Florida State University, 2005).
• DeBoef and Keele, "Dynamic."
• It can have a short-term effect, which may occur at any lag, but its effects do not persist over future time periods. In the general model this effect is given by Xt on Yt and it has no memory. The same variable may also have a long term effect on the dependent variable. That is, changes in Xt-1 affects Yt and that effect is distributed over several future time periods; DeBoef and Keele, "Dynamic Specification."
• Thomas Brambor, William Roberts Clark, and Matt Golder, "Understanding Interaction Models: Improving Empirical Analyses," Political Analysis 14 (2006): 63-83.[Abstract/Free Full Text]
• Rybakov, "Shadow Cost-Sharing."
• Kornai, "Hidden."
• The joint 2 test was performed that determined the whether βt and βt-1 are jointly insignificant (H0 = 0).
• William C. Hsiao, "Abnormal Economics in the Health Care Sector," Health Policy 32 (1995); Margaret Whitehead, "Where do We Stand? Research and Policy Issues Concerning Inequalities in Health and in Healthcare," Acta Oncologica 38, no. 1 (1999): 41-50.
• A table with the data is available from the author.
• Lant Pritchett and Lawrence H. Summers, "Wealthier is Healthier," Journal of Human Resources 31 ( 1996): 841-68.[CrossRef][Web of Science]
• DeBoef and Keele, "Dynamic."
• Average lag length: ((β1)/(β0 +β1 ) - (-1)/( 1 - 1))
• K1 multiplier: Model 3: (-12.4419 + 12.1735)/(1-0.9107) = -3.0055; Model 4: (-12.7080 + 11.1027)/(1 - 0.9172) = -19.3876.
• Average lag length: ((β1)/(β0 + β1) -(-1)/(1 - 1)) for Model 3 (12.1735/-12.4419 + 12.1735) - (0.9107/1 - 0.9107) = - 55.554.

East European Politics & Societies, Vol. 23, No. 1, 105-125 (2009)
DOI: 10.1177/0888325408327850


CiteULike    Complore    Connotea    Del.icio.us    Digg    Reddit    Technorati    Twitter    What's this?

This Article Abstract Free Full Text (Free PDF) Free Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Add to Saved Citations Download to citation manager Request Permissions Request Reprints Add to My Marked Citations Citing Articles Citing Articles via Google Scholar Citing Articles via Scopus Google Scholar Articles by Radin, D. Search for Related Content Social Bookmarking                         What's this?