Established in 1990 by six independent economists, the Lithuanian Free Market Institute (LFMI) was one of the first think tanks not only in Lithuania but in the entire post-Soviet space. Initially created to promote what was then revolutionary free market solutions to the problems of newly independent Lithuania.
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Over its 17-year history, the institute has become known throughout the region as a strong proponent and often main driver of liberal economic reform. By working closely with (although often against) government ministries and agencies, civil society organisations and international institutions, the LFMI has established itself over the years as an authoritative voice in societal debates on political and economic matters and has been central in achieving progressive policy change on issues such as taxation, privatisation, deregulation, budget policy and public spending – all crucial for a healthy market economy.
Healthcare policy and reform have been important areas of work for the LFMI for more than ten years. Strikingly, Lithuania’s healthcare system today remains virtually untouched by the large-scale reform programmes that were launched in the 1990s to liberalize the economy and create conditions for post-Soviet growth. The health sector is still subject to central planning and management, and market prices and competition are found only in very small segments of the system. Many of these structural problems are certainly similar to those affecting the healthcare systems in other European countries, however, the Lithuanian system continues to suffer from an unusually large and complex catalogue of ailments: it is poor in terms of quality and resources, overshadowed by informal (direct patient-doctor) payments, and plagued by low salaries and bad working conditions for service providers, inadequate attention to the needs and preference of patients, and long waiting lists for medical examination and treatment. Furthermore, people are still used to depending on the government for their health matters, and the existing legal, organisational and financial structures support this tradition.
The lack of reform of the costly and ineffective social security system inherited from Soviet times depletes enormous resources from Lithuania’s economy, and the underlying problems of the healthcare system are inherently programmed in the system and cannot be solved without structural changes. The main obstacle to fixing the system remains policy makers’ reluctance to embark on structural reform of the ailing sector. Instead, short-term, superficial and inefficient quick-fix solutions to complicated deep-seated problems are offered – like putting band aids on broken bones – to continue with the hospital analogies.
The LFMI team has presented independent analysis of the problems plaguing the healthcare system, and drafted specific reform proposals for a viable healthcare system in Lithuania. In order to press for change in the system, the LFMI has focused on three interrelated set of issues:
Firstly, and most fundamentally, we have tried to show policy makers and ordinary people why the existing healthcare system fails both the patients and medical staff. This is an essential task since the badly needed structural reform only will be feasible if there is a high public awareness of the roots of the problems and an agreement on the need for change. One step in the right direction was the 2007 Framework for Healthcare System Development 2007-2015, initiated by the President of Lithuania and
supported by the LFMI. This policy document sets out the current problems in healthcare policy, organisation and delivery of services and the public perceptions, and gives suggestions for ways to achieve a dynamic and competitive healthcare system.
Secondly, we have also tried to help by avoiding projects that look, seem and sound as if they are going to improve the system, but instead are only short-term solutions or, even worse, real obstacles to structural change. Private health insurance, for instance, is undoubtedly a necessary element of a well functioning healthcare system, however, in Lithuania it is currently being pushed in various (even state-run) forms in an environment where that alone will definitely not heal the system. Instead of making different good or bad insurance concepts work within a badly functioning system, the aim should be to establish a competitive healthcare system, based on legal payments within which individual insurance models could then succeed.
Our third main objective has thus been to present concrete ways to encourage a competitive healthcare system. The premise of LFMI’s reform proposals is that the expansion of the number of private alternatives is essential, that all healthcare services have market prices (which are known to the patient
in advance), that compensations from the mandatory health insurance fund follow the patient (now only true in theory), and that healthcare providers, regardless of their form of ownership, compete for patients, and patients are therefore able to freely choose their service provider. Today informal payments dominate the officially free healthcare system, while the rare semi legal payments are often not clearly stated and not known to the patient in advance. For the system to function transparently, all healthcare institutions would have to calculate and announce the real prices of their services.
Looking to the next few years, we believe that two things need to happen for reform to succeed (or, rather, to be started): first, there is a need for a political leadership at the Ministry for Health who would want to strategically move forward instead of tactically staying in the same place. And, second, there is a need for a crucial mass of people to understand the need for, and push for, reform. While the system is running, however badly, many are happier with letting things be rather than undertaking a messy, hard and potentially unpopular task of fixing the substance of things.
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But reform is necessary, and in order to make it happen, the LFMI will continue to treat healthcare reform as an urgent priority in the coming years.
