Health Systems in Transition - Hungary - World Health Organization ...

Health systems in transition Hungary 67
3.2 Sources of revenue and financial flows
Public expenditure on health in Hungary is financed mainly through a
combination of SHI contributions and general tax revenue transfers to the SHI
scheme. In addition, revenue from general and local taxation plays a significant
role in financing capital costs, public health services and some expensive
health technologies. Private sources of revenue include charities, NGOs and
corporations, voluntary health insurance as well as a considerable share of
OOP payments (see Fig. 3.4). In 2009, 58.8% of total expenditure on health
was covered by the HIF (OECD, 2011). The revenue of the HIF is derived
mainly from (a) SHI contributions, which, for employees, take the form of a
proportional payroll tax that is split with employers; (b) general tax revenue
transfers from the central budget; (c) direct payments from pharmaceutical
companies (see sections 2.8.4 and 6.1.2); and (d) the hypothecated health care
tax. This hypothecated health care tax was introduced in 1997 and consisted
of two components: a lump-sum tax and a proportional tax. The proportional
tax is levied only on income that is not subject to the SHI contribution (see
also section 3.3.2). The lump-sum tax was eliminated at the beginning of 2010.
The share of total health expenditure financed through central and local
governments in 2009 was 10.9% (Fig. 3.5), but this does not capture (a) the
tax revenue transferred from the central budget to counter HIF imbalance (see
section 3.3.3) and (b) the hypothecated health care tax, which is also transferred
to the HIF. If, however, we consider the real sources of revenue and not the
agents through which the spending is administered, then the share of total
health expenditure financed through general and local taxes in 2009 rises to
35%, while the share financed through SHI contributions would be 32.5%
(Fig. 3.5). Interestingly if this latter approach is used when looking at earlier
expenditure data, the share of total health expenditure financed from general
and local taxes in 2002 and 2003 turns out to be even higher than that financed
from SHI contributions. Although this might seem a rather peculiar way to
pool resources in an SHI system, it is very much in line with recent trends in
Europe – that is, to move away from exclusive reliance on labour-related social
insurance contributions and use a mix of revenue sources for financing the
health insurance system. This development, however, did not follow an explicit
taxation policy strategy in Hungary until the recent financial crisis, when the
government decided to radically reduce the SHI contributions and compensated
this loss of revenue by increased general tax revenue transfers to the HIF (see
section 3.3.2).