How Free-Market Ideologues Dismantled Health Care in Post-Soviet Georgia
After the fall of the Soviet Union, the Georgian health care system became a testing ground for shock-therapy privatizations. The result: soaring morbidity, the return of long-suppressed diseases, and the sidelining of preventive care.
A patient waits at a hospital for an examination in Tbilisi, Georgia. (Jonas Gratzer / LightRocket via Getty Images)
No sooner was the Soviet state created at the end of 1922 than its authorities had to deal with a series of epidemics. Reports at the time indicated seven million cases of typhus and 2.8 million cases of tuberculosis or syphilis — not to mention cholera, malaria, smallpox, scarlet fever, and typhoid.
These plagues all had severe biological consequences. But the Soviet government also recognized that poverty was the cause of many illnesses. Its representatives believed that to treat and prevent disease, a new society must address social and biological ills in combination, and the collective should bear responsibility for health outcomes.
Soviet authorities could see how modern industry was spreading illnesses in new ways. In Georgia, in the Russian Empire’s southern reaches, workers suffered appalling conditions in factories, while the main river in its biggest city, Tbilisi, was polluted from the dumping of toxic waste from manufacturing. Workers slept outside in mining towns during summer — and in the mines themselves during winter.
The first architect of Soviet health care and the commissariat of health was Nikolai Aleksandrovich Semashko. He, along with others, worked tirelessly to first halt the epidemics and then put in place a policy of preventive medicine. More broadly, health care was seen as something that could never be a source of revenue but a social necessity.
This preventive Semashko model was implemented through a multitiered health care system that included a referral system of service providers — ranging from district physicians providing primary care to regional and federal hospitals providing specialized care. It also emphasized occupational diseases, with factories integrated into the health care system. Workers received regular compulsory checks in the factory, and their health information was also sent to occupational illness specialists, who tracked which occupations caused which diseases. At every level, there was access to health care, which meant diseases, infections, cancer, and so on could be caught early.
Physical therapy, exercise, and diet were given notable emphasis, while diagnostic lab and X-ray examinations received less attention. The state also built a large network of short-stay rest homes for people who needed a break from work, as well as spas and similar resorts for short stays. The focus on facilities and stays in hospitals, sanatoriums, and rest homes was based on giving a lot of time and space for recovery — and indeed, the presupposition that the private home might not provide all these things.
The Semashko model, built a full century ago in a war-ravaged Soviet Union, is surely not the last word on community health care models. But what’s not debatable is the need for a holistic approach that includes social determinants, an emphasis on prevention, and collective responsibility without regard to the need to make money off health care.
The Semashko model enabled the integration of activities from other medical services and provided an economically efficient solution in the Soviet Union, especially in periods when it was fully funded, a low-cost, universal health care coverage that was made available to everyone at no cost. The results of this approach were a significant increase in life expectancy, a decrease in mortality, a decrease in morbidity, an increase in health care workers per population, an increase in hospital beds, an increase in the utilization of health care, the establishment of labor medicine, and the prevention of occupational diseases.
The Neoliberals in Power
So, what happened in Georgia after the demise of the Soviet Union, when the country gained its independence? For all the hopes raised in this period, the results for health care were dismal.
Within just a few years, Georgia experienced a drop to almost zero financial support for public and animal health infrastructure, limiting its ability to control illness. If in 1990, the equivalent of $130 a year was spent on health care per person, in 1994 this had fallen to $1. Almost 90 percent of health care costs had to be covered by citizens out of pocket. Instead of the Semashko model’s integrated view of social determinants, free and universal health care delivery, and collective responsibility, the Georgian government got a revolving door of experts operating under sets of policies known as the “Washington Consensus” at a time when people in Georgia needed health care the most due to declining social and economic conditions and disease outbreaks. Individual responsibility took the place of collective responsibility, and the social determinants of health were separated from health care.
Many general indicators show the rate of decline. As of 2019, the number of hospital beds in Georgia stood at only 43 percent of 1990 levels. While this number is today again growing, at the current rate it will only return to Soviet-era levels in the year 2045. The average number of qualified health care workers by population — which increased from 26 per 10,000 in 1940 to 82.4 in 1965 and 115 in the early 1980s — would fall by half over the course of the 1990s.
This isn’t just about provision, but the outcomes. The post-Soviet decades have seen a 1.5 percent increase in the average death rate and a 2.3-fold increase in morbidity levels. In 2017–19, the rate of tuberculosis morbidity was 1.98 times higher than the rate in 1988–99.
Not only did the health care system suffer, but many social determinants were made worse by the lack of electricity, hot water, heating, access to food, and the use of dangerous heating substitutes. This led to outbreaks of diseases like tuberculosis, diphtheria, hepatitis, and so on.
In Georgia, the neoliberal state now bore only limited responsibility for communicable diseases, while noncommunicable diseases were left to the responsibility of individuals. The assumption that health care should not be profitable was replaced by a total commitment to profit-oriented health care and privatization. This ideology was neatly summed up by Kakha Bendukidze, an oligarch who made his millions in Russia and a major architect of Georgian neoliberalism in his 2000s roles in the finance and economic reforms ministries. For him, “To ask the government for help is like trusting a drunk to do surgery on your brain.”
This offloading of government responsibilities has had severe consequences. Hospital care has been replaced with an emphasis on outpatient care, which has only increased the burden on women’s unpaid care work; sanatoriums and spas have either been left to rot, given to refugees from separatist Abkhazia, as temporary housing, or else sold to corporations, making hotels completely out of reach for most people. Universal free access was replaced by out-of-pocket expenses for most, with limited subsidies to “targeted” groups. On top of that, the World Bank “reformers” exported the terms “optimization” and “rationalization,” which refer to reducing the health care infrastructure to fit better with a free-market system.
Georgia was one of the first countries in the former Soviet Union to receive technical and financial support from Western donors for health sector reforms and other infrastructure and civil-society development programs. The international organizations proposed an immediate transition from a planned economy to a market economy. Yet, due to the nature of public health services, where pandemics are always a possibility, liberalizing mechanisms were moderated in order to maintain the government’s role in public health. Uncontrolled diseases like tuberculosis, HIV, and other communicable diseases could put the country, region, and even the wider world at risk. Thus, the World Bank and the World Health Organization collaborated to reform the Soviet Georgian health system into a market one with little room for public health.
Disintegrated Health Care
There are many reasons for these undoubtedly negative trends, but one of the main ones is the almost ninefold fall in the number of preventive examinations, which ensure the detection of diseases at an early stage and relatively easy treatment. Going to the doctor is now associated with high costs and navigating a complex and predatory web of health care providers.
Most health workers also lost out from the changes over the past three decades, and real income decreased. Before 1990, there were 2.2-2.3 nurses for every doctor, and accordingly, 30 percent of the medical staff were doctors, and 70 percent were nurses and other specialists with secondary qualifications. As of 2019, there are an average of 0.6 nurses per doctor. This would demand that the number of nurses be increased by at least 3.6 times to restore the optimal proportion of medical staff with high- and mid-level qualifications.
The reason for this problem is very simple: the education system also works on market principles. Doctoral diplomas are in demand in society, and the education system supplies the appropriate products to the “market.” However, despite the fact that training doctors alone does not ensure the full functioning of the health care system, there is no market demand for a nursing degree. On top of the lack of demand, the worsening economic conditions drive many nurses to migrate to the European Union or elsewhere; some are even recruited by foreign agencies, which further destabilizes Georgian health care and puts it at risk.
In a recent study, “Social Consequences of Privatization of Healthcare,” we divided the government approaches since independence into three stages: The first stage is “Toying with neoliberalism,” where the international experts were in the driver’s seat since the governments had no knowledge of how markets worked and put their fate in the hands of international financial organizations.
This was followed by a second phase, militant neoliberalism, with the government of Mikheil Saakashvili taking the lead and frequently going above and beyond international recommendations and directives for austerity and liberalization.
The current Georgian government, which we have categorized as “neoliberal without conviction” (the third stage) continued the legacy of total deregulation albeit without having committed ideologues within its ranks. It came to power and won people’s support because it promised single-payer insurance.
In 2013, it implemented universal insurance, but this was quickly reformed to targeted insurance, as the costs of financing an unregulated health care market in which virtually all hospitals and clinics are private were deemed too high for the state. Last year, the government also implemented a minimum wage for health care workers — the only minimum wage that exists in the whole country — and started to discuss the need for public clinics to “compete with private ones.” Even if this is a huge step compared to early 2000s militant neoliberalism, it’s a drop in the ocean considering the needs of the population.
Waiting for the Lights to Come Back On
The future of the few remaining public hospitals remains in jeopardy. In the 1990s, during the first stage of collapse, Georgians would not go to the neighborhood outpatient center (polyclinic) for preventive health care because they did not have the money to do so — they only went to the hospital in an emergency. Then as privatization increased, preventive health care was considered unprofitable and was thus sidelined, as it remains to this day. Without the guidance of the polyclinic, the individual Georgian is now left to confront the oversaturated clinic health care system, which profits from their sickness and relies on asymmetrical information.
While most outside observers marvel how doctors and nurses continued to work in the hospitals without pay during the worst times in the 1990s when there was barely any power and gas, many of these selfless and devoted health workers were often “repaid” with being laid off and fired. When the lights came back on, their hospitals closed. Just when the people of Georgia needed help the most after experiencing the shock of the collapse of their social structure, they were subjected to unimaginable austerity imposed by international organizations’ experts and fanatical domestic reformers. The current government has offered only little relief.