Systems that rely more heavily on public funding tend to do better at attaining health system objectives such as financial protection, equity in finance, and equity in utilization (WHO/EURO 2006). The share of public healthcare financing, including both social health insurance and general revenues, in total healthcare revenues is substantial in at least some countries of the subregion, and in 2005 was equivalent to around 70% in Macedonia as well as in Serbia and Montenegro. Still, this was less than the share of public resources in the comparator countries of Croatia and Slovenia (81% and 77% respectively). Almost all remaining healthcare expenditure is in the form of private out-of-pocket expenditures. In Albania and in Bosnia and Herzegovina, more than half of total healthcare financing is in the form of out-of-pocket payments made by households (see Figure 1), potentially rendering the health systems in these countries less accessible to the poor.

**Figure 1 Sources of health care financing, 2005**

<!-- Start of picture text --> 100%<br>80%<br>60%<br>40%<br>20%<br>0%<br>Albania Bosnia and Macedonia, Serbia and Kosovo Croatia Slovenia<br>Herzegovina FYR of Montenegro<br>SHI General revenues OOP Private insurance NGOs<br><!-- End of picture text --> Source: WHO NHA database<sup>9</sup> , Note: Exact figures are provided in Appendix III; the definition of “private insurance” includes all prepaid, private riskpooling plans; Kosovo data are for 2004 and the figure does not show the 2.1% of donor funding received in that year.

In all the countries of the former Yugoslavia, payroll taxation is a major source of financing and most public expenditure on health flows through the health insurance funds (see Table 1). This includes both monies collected as payroll contributions to the health insurance funds, as well as transfers to the health insurance funds from extra-budgetary funds, e.g. from pension and unemployment funds to cover the health insurance contributions of the pensioners and the unemployed. In 2005, according to WHO National Health Accounts data, this was equivalent to about 96% of public health sector resources in both the FYR of Macedonia and in Bosnia and Herzegovina. In Serbia and Montenegro, the share was a little lower at 76%<sup>10</sup> . These percentages are in the same range as the share of social health insurance in public revenues in Croatia and Slovenia, the two republics of ex-Yugoslavia that have made most progress in health sector financing reform. In Albania, despite a mandatory contributory health insurance scheme, social health insurance funded only 25% of public health sector expenditure with the rest coming from general revenues. While Kosovo has drafted a health insurance law, there is not yet a health insurance fund in the country and all health expenditure is financed from the general budget and

> 9 Note that these are estimates and, with the exception of Serbia, none of the countries in the sub-region have developed and institutionalized a National Health Accounts system.

> 10 According to World Bank estimates, 90 percent of public health expenditure in Serbia in 2005 was in the form of payroll contributions paid to the HIF.

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