The paper uses the Russia Longitudinal Monitoring Survey 2003 database to study the types of official and shadow out-of-pocket health care expenditures by consumers with high and low health status. The analysis shows that the inability of less healthy people to pay unofficially for more effective outpatient care results in their higher demand for official inpatient and outpatient treatment. This pattern creates the need to sustain excessive inpatient facilities and slows down health care restructuring. Yet, since the state is incapable of fulfilling its obligations for providing free health care and meet the current demand, in inpatient institutions all consumers, and less healthy ones in particular, spend considerable sums on drugs, even though the latter are guaranteed to be free. Consequently, the current Russian health system itself leads to replacing outpatient with inpatient care, which is more costly both for the patients and for the state.