Channels of social sphere financing in Russia: a comparison of theoretical content, scale, and social outcomes

Abstract

The financing of the social sphere in Russia is distributed among several autonomous channels – mandatory social insurance, mandatory medical insurance, direct budget appropriations, and non-state sources – which are usually described separately, without comparing their theoretical foundations, scale, and the social outcomes they deliver. The inconsistency of these three dimensions makes it difficult to assess which channel, and under which conditions, yields an increment in social effect. The aim of the work is to compare the leading financing channels by theoretical content, actual scale, and the sensitivity of the social outcome to an additional unit of resource. The comparison is performed using the author’s computational model reconciled with the official reporting of the Ministry of Finance of Russia, the Social Fund of Russia, and the Federal Compulsory Medical Insurance Fund for 2024-2026. It is found that the aggregate financing of the four channels rose from 19.45 trillion rubles in 2021 to 29.21 trillion rubles in 2025, yet almost two-thirds of the increment was generated by the insurance channel, whereas the share of direct budget expenditures fell from 30.0 to 23.6%. The sensitivity of the social outcome to an additional ruble declines as the scale of the channel grows: the large insurance contour ensures the stability of payments at a low marginal return, while the small non-state segment provides the highest increase in outcome per unit of resource under limited coverage. The divergence between scale and marginal effectiveness means that the equalization of social effect is achieved not by expanding the dominant channel, but by reallocating incremental resources toward channels with high targeting.