Formalizing informal payments: the progress of health reform in Kyrgyzstan ANGELA BASCHIERI and JANE FALKINGHAM Introduction This paper evaluates the success of the recent ‘Single Payer Reform’ in the health sector of the Kyrgyz Republic in achieving the aim of replacing unofficial out-of-pocket payments with a transparent official co-payment and reducing the financial burden of health care spending for the poor. The paper investigates the extent of out-of-pocket payments for health care using the results of a nationally representative household survey conducted in 2004. The results are compared with those from a similar survey that took place prior to the reforms in 2001. If the reform has been successful, we should see a reduction in out-of-pocket payments, and the total level of private expenditures on an episode of health care should be no more than the level of co-payment set by the Ministry of Health. Background In common with other countries of the former Soviet Union (FSU) in the years immediately following independence in 1991, the Kyrgyz Republic experienced a major reversal in both economic and social development. The economic uphea- val accompanying transition from a planned to market-led economy, the disrup- tion of traditional trading partnerships and the withdrawal of subsidies from Moscow following the break-up of the FSU resulted in a dramatic drop in GDP and central government expenditures. GDP fell by over 50% during the first five years of transition. Although there was a return to positive economic growth in the late 1990s, recovery has been slow and, in 2004, GDP per capita was US$1935 PPP. 1 On the United Nations Development Programme (UNDP) Human Development Index (a composite measure of life expectancy, adult literacy and educational attainment and per capita GDP), at 0.705 Kyrgyzstan is Central Asian Survey (December 2006) 25(4), 441–460 Correspondence should be addressed to Jane Falkingham, Professor of Demography and International Social Policy, Deputy Head of School (Research), School of Social Sciences, Southampton University, Highfield, South- ampton SO17 1BJ, UK (Tel: þ44 (0)23 8059 3192; Fax: þ44 (0)23 8059 3846; School Email: j.c.falkingham@soton.ac.uk). 0263-4937 print=1465-3354 online=06=04=0441-20 # 2006 Central Asian Survey DOI: 10.1080=02634930701210435