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Since 1999 the Hungarian health care system has experienced resolute costcontainment measures and various initiativesfor organisational reform. The country implemented one of the earliest decentralisation reforms in the region by establishing a universal mandatory social health insurance system and a predominantly local government-owned delivery system which began in 1990. However, towards the end of the 1990s, Hungary became perceived as a rather ‘cautious reformer’, mainly due to its reluctance to further decentralise service provision and financing. Currently, the single national health insurance fund (HIF) provides comprehensive health care coverage to Hungary’s 10 million residents and constitutes the main source of finance (63% of total health expenditure in 2000). The HIF’s administration (NHIFA) contracts with all providers accredited by municipal and county (local) governments. Except for most pharmacists and family practitioners, almost all health care workers are public salaried employees – and they are among the lowest paid employees in the Hungarian economy. Family physicians (c. 20% of the physician workforce) are usually paid by weighted capitation and function as gatekeepers. Local government- owned provider institutions of outpatient specialist services receive fee-for-service points, acute hospitals are paid by uniform national DRG base fees and hospitals for the chronically ill receive per-diem charges. Reimbursement does not include depreciation of investments since the NHIFA only finances recurrent expenditures. The financing of investments and the planning of capacities is mainly left to local and national government, both in ambulatory as well as inpatient care.