2.3. Organization

The main actors responsible for providing or financing health services are defined in Act CLIV of 1997 on Health (1997/20). The most important of these are the National Assembly, the central government, the State Secretariat for Healthcare (within the Ministry of National Resources), the NPHMOS and, in general, the owners of health facilities, who since 1990 have been mainly country and municipal governments (1990/3).

2.3.1. The National Assembly

The National Assembly is Hungary’s unicameral parliament and a key actor in decision-making at the national level for all areas of public policy, including health. The final size of the HIF budget (and of its more than 30 sub-budgets), for example, is legislated by the Assembly, as are provider payment methods (see section 3.4.3 and subsection Provider payment methods in section 6.1.2). The Assembly also sets the HIF contribution rate on an annual basis. Although most of the Assembly’s decisions need only a simple majority, the constitution requires a two-thirds majority to pass legislation related to fundamental democratic institutions, such as local governments. This provision limits the discretion of the government in enacting health care reform.

2.3.2. Central government

The central government formulates, evaluates and implements health policy and is also the most important regulator of the health sector. Indeed, it is the chief regulator of health services, exercises statutory supervision over the HIF, and has direct control over the NHIFA, including its purchasing decisions. In addition, the central government provides conditional and matching grants to local governments for renovating health care facilities. The central government also delivers public health and some tertiary care services.

Since 1990 the central government has no longer been the main source of funding or main supplier of health services. Together with the National Assembly, it is responsible for administering health financing, resource allocation and provider payment methods through its direct control of the NHIFA (see section 2.3.7). This does not mean, however, that the central government does not play an important role in directly financing the health sector. Indeed, it is responsible for:

• financing high-cost, high-tech interventions, public health, prevention of communicable diseases, emergency ambulance and blood supply services, health sciences education and research (1997/20, 1998/4);
• partially covering capital expenditure by providing country and municipal governments with conditional and matching grants for renovating health care facilities, for replacing equipment and for new investment via the so-called earmarked and target subsidies (1992/9);
• transferring revenue from the hypothecated health care tax to the HIF to compensate for non-contributing groups (1997/8, 1998/19);
• paying the HIF contribution for certain non-contributing social groups (2005/5);
• covering the HIF deficit (upon approval of the National Assembly) (1992/6, 1997/8);
• covering co-payments for certain pharmaceuticals, medical aids and prostheses for residents with low incomes (as determined by means testing) (1993/1);
• giving tax rebates on the purchase of voluntary, non-profit health insurance and savings accounts (1995/14).

Although counties and municipalities have provided the majority of health services since 1990, the national government is involved in service delivery in several ways by:

• directly providing public health services through the NPHMOS, emergency services through the National Emergency Ambulance Service, and blood products through the National Blood Supply Service;
• supplying mainly tertiary health care through medical universities and the National Institutes of Health;
• providing undergraduate and postgraduate health sciences education, and some continuing education and research at the various academic medical centres and at the Institute for Basic and Continuing Education of Health Professionals, which is run by the State Secretariat for Healthcare.

Responsibility for this wide variety of tasks is divided among ministries according to various governmental decrees and these responsibilities were recently redefined (2010/7, 8). The primary responsibility for stewardship and financing in the health system remains with the State Secretariat for Healthcare (2010/8), but other ministries are also involved in service delivery and health care financing.

2.3.3. State Secretariat for Healthcare

In 2010 the government created the Ministry of National Resources by merging the five ministries previously responsible for social, family and youth affairs; health care; education; culture; and sport (2010/7). These former ministries have since been reclassified as State Secretariats, each of which is led by a Minister of State. The aim of this change was to reduce the cost of public administration and create effective platforms for intersectoral cooperation.

Within the Ministry of National Resources, the State Secretariat for Healthcare is responsible for preparing legislation related to the direction of health care provision at the national level and at institutions of higher education, and for regulating national public health care tasks at the national level. The State Secretariat for Healthcare shares responsibility with the Ministry for National Economy and the Ministry of Interior for health care financing.

The main functions of health policy formulation, coordination and regulation are carried out by a number of institutions under the direct control of the State Secretariat. In addition to these administrative functions, some of these institutions provide health services themselves, including public health, emergency ambulance services, blood supply, tertiary care services and rehabilitation; they also help prepare health policy initiatives. Since January 2001, the State Secretariat has also exercised direct control over the NHIFA.

One of the most important agencies of the State Secretariat for Healthcare, the NPHMOS provides public health services, including the traditional public hygiene and infectious disease control, disease prevention and health promotion. It is the central authority responsible for implementing, monitoring and enforcing regulations, including the registration and licensing of health care providers. The NPHMOS is also responsible for monitoring the quality of health services and plays an important role in capacity planning (see sections 2.8.2, and 5.1 – 5.3).

The NPHMOS was formed in 1991 on the basis of the State Supervisory Agency for Public Hygiene and Infectious Diseases and is headed by the National Chief Medical Officer, who is appointed by the Minister of State for Health (1991/1, 2006/22). The NPHMOS is organized on a territorial basis at three different levels: central, regional and subregional (kistérség). Subregions in Hungary are equivalent to level 1 of the local administrative units (LAU) that are part of the of Nomenclature of Territorial Units for Statistics (NUTS) system developed and used by the EU for statistical and other purposes. In Hungary there are 175 subregions with a population between 6000 and 300 000 inhabitants, with the exception of Budapest, which has a larger population and is considered both a county and a subregion. In 2007 the NPHMOS was reorganized, resulting in its current territorial division: the county offices, of which there used to be 19, were merged into 7 regional offices, and the municipal offices were reorganized into subregional offices (2006/22).

At the central level, the NPHMOS is headed by the National Chief Medical Officer, who is appointed by the Minister of National Resources based on the recommendation of the State Secretariat for Healthcare. The Office of the Chief Medical Officer directs, supervises and coordinates the work of the territorial units of the NPHMOS and the nine National Institutes of Health, each of which is responsible for a special area of public health, such as epidemiology, radiation biology, chemical safety, environmental health and nutrition science (see section 5.1 for more details on the NPHMOS and public health).

The middle level of administration consists of seven regional offices, each covering the population of two to three counties. At the lowest level, subregional offices cover the population of 1 to 5 subregions, while Budapest has 12 district offices. The organizational structure of NPHMOS before 2007 is depicted in the 2004 HiT profile for Hungary (Gaál, 2004).

The State Secretariat for Healthcare also runs state hospitals, most of which are sanatoria for medical rehabilitation. They accept patients from throughout the country and are partly financed through the HIF.

The State Secretariat for Healthcare is responsible for coordinating and supervising the education and training of medical and non-medical health professionals; the responsibility for providing secondary and higher education in the health sciences, however, falls within the remit of the State Secretariat for Education. The State Secretariat for Healthcare plays only a limited role in providing education and training, offering professional educational programmes for nurses and other paramedical health workers through its own training institute.

2.3.4. Ministry for National Economy and the Tax Office

In 2010 the government created the Ministry for National Economy by merging the former Ministry of Finance with policy units in economy and labour; industry and commerce; foreign trade; and research and innovation from other ministries (2010/5). The Ministry for National Economy is responsible for fiscal policy and plays a central role in planning and approving budgets of the central government, local governments and the HIF. The Ministry is concerned primarily with the macroeconomic implications of health care financing and, in particular, with the impact of any deficit of the HIF, on fiscal balance, because the government is obliged to cover any such deficit. The Ministry is able to apply a very strict cost-containment policy by setting the budget objective for the HIF, but it has generally done so without taking into account the real needs of the HIF with regard to health care provision and financial balance.

The Tax Office, which is a governmental office under the supervision of the Ministry for National Economy, took on the function of collecting social insurance contributions (that is, HIF and PIF contributions) from the NHIFA in January 1999 and has been performing this function ever since.

2.3.5. State Secretariat for Education

The State Secretariat for Education and the State Secretariat for Healthcare jointly supervise higher education institutions in health. Before 1993 the Ministry of Health was responsible for medical universities and their health services (1993/8, 2005/7). Subsequently, the Ministry of Education took over this responsibility, except for the supervision of the specialist training and the supervision and provision of professional educational programmes for nurses and other paramedical health workers. The division of responsibilities was further clarified in 1996, when the Ministry of Health was designated as the main financier, coordinator and supervisor of health research and development. Notably, neither of the State Secretariats may interfere with or restrict the autonomy that institutions of higher education in Hungary enjoy in education and research.

2.3.6. Other ministries

Three large ministries have retained their health care facilities and are thus involved in the provision of care. The origin of these parallel systems dates back to the first half of the 20th century, when several private and public insurance funds employed physicians and owned health care institutions. The Ministry for National Economy, which among its many responsibilities runs the Hungarian State Railways, has its own comprehensive system of health service delivery within which railway workers and their dependants are given priority (1994/3). The number of providers and their capacities, however, were significantly reduced in 2007 (2007/4). The Ministry of Defence has its own inpatient and outpatient services, which are open to the general public, although special rules give priority to its employees. According to the general principles applied in health care financing, both ministries cover the capital costs of services, whereas recurrent costs are financed through the HIF. The Ministry of Public Administration and Justice provides health services to prisoners; this is entirely separate from the main system of provision.

Finally, the Ministry of the Interior deals with issues for local governments, which are the owners of most primary and secondary care facilities. Among other duties, the Ministry administers the allocation of capital grants for health care equipment and buildings to local governments (1992/9).

2.3.7. HIF and the NHIFA

The HIF is the most important financing agent for the recurrent costs of health services, and finances certain cash benefits, such as sick pay. The HIF is separate from the government budget in so far as any surplus it generates cannot be used by the government for other purposes. The government is obliged to cover any shortfall in the HIF (1997/8), and shortfalls in the HIF appear in the government budget deficit. The HIF is divided into more than 30 sub-budgets according to type of service (e.g. acute inpatient care, chronic inpatient care and outpatient specialist care). Most of these sub-budgets are capped, and the provider payment mechanisms help to ensure that the caps are, in fact, observed.

The NHIFA is a government office and thus under the direct control of the state. It administers the HIF and is the sole payer in the Hungarian health insurance system. It has no discretion over revenue collection or budget setting, however, and has only very limited discretion over purchasing decisions (see sections 2.3.2 and 3.4.3). The NHIFA has territorial units and subunits at the regional and county levels, respectively. These units manage administrative work and other tasks delegated by the NHIFA central office, but have no autonomy in contracting and paying local health providers. Moreover, the budget of the NHIFA has remained centralized since its inception.

HIF contributions are not collected by the NHIFA but by the Tax Office. The responsibility for administering cash benefits financed through the HIF lies with the Ministry of Public Administration and Justice, although various details of the benefits are determined by the NHIFA and Ministry of National Resources.

2.3.8. Professional Colleges and the National Institutes of Health

Various institutes and professional bodies assist the State Secretariat for Healthcare. Some of them, such as the professional colleges (Szakmai Kollégiumok) and the National Institutes of Health, provide expert input on particular medical specialties (1989/2, 1999/11, 2008/6), while others, such as the Health Care Scientific Council (1989/3, 2003/3) or the Health Care Professional Training and Continuing Education Council (1998/21, 2010/1), deal with more general areas, including science and policy issues or education. The members of the professional colleges consist of the leading consultants from particular medical specialties, and are elected by delegates from the Hungarian Medical Chamber, medical schools and the relevant scientific associations. Currently there are 49 professional colleges for specialists in fields ranging from internal medicine to neurosurgery and health informatics, and for pharmacists and nurses (1999/11, 2008/6).

The National Institutes of Health are the centres of excellence for particular medical specialties (1997/20). They supervise and support clinical work across the country, provide continuing education, conduct scientific research, and in certain cases engage in prevention activities and provide patient care, especially highly specialized, tertiary care services for the entire population. The National Institutes of Health issue clinical guidelines, setting out protocols and standards, and some are attached to university departments. Their clinical work is financed by the HIF, whereas their other activities are covered by the central government.

Some of the National Institutes carry out special administrative duties. For instance, the Information Centre for Health Care – a department of the NHIFA since 2004 – runs a system of provider output reports, which are used as the basis for determining hospital payment (1987/1) (for details see section 3.7.1). Another example is the National Institute for Strategic Health Research (NISHR), which is the policy research institute of the State Secretariat for Healthcare and was created, in part, from the National Institute and Library for Health Information (MEDINFO), and has conducted policy research in health informatics, health economics, health systems sciences and technology assessment since 2004. The Institute also helps inform health policy-making at the national level.

The National Institute of Pharmacy is responsible for registering and licensing pharmaceuticals (1982/1, 2006/22). The Authority for Medical Devices, which is an office of the State Secretariat for Healthcare, runs a similar system for medical equipment, including medical aids and prostheses (2000/5). The Authority replaced the Institute of Hospital and Medical Engineering, which was renamed and serves as one of several organizations responsible for quality control and audit in this area (1990/2).

On the basis of the provisions of Act CLIV of 1997 on Health a new body, the National Health Council, was established in 1999 to advise the government on health policy and promote consensus on health priorities, thereby facilitating their implementation. The members, with a four-year mandate, are representatives of the relevant stakeholders such as professional and patient organizations, unions and local government representatives (1997/20, 1998/28)[5].

2.3.9. Local governments and the regional health councils

A two-tiered system of local government – that is, at the county and municipal levels – was established in 1990, replacing the council system (tanácsrendszer) in place previously. Since then, local governments have become key actors in the health sector in Hungary. Although central government policy determines the broad local policy framework, the Hungarian constitution guarantees the right of local governments to take decisions on local affairs; disputes regarding authority between the central and local governments can be settled by the Constitutional Court (1989/4).

Act LXV of 1990 on Local Government defined the basic structure, rights and duties of local governments, as well as their sources of funds. Local governments share responsibilities based on the principle of subsidiarity. This means that county governments take over only those public services that municipal governments cannot undertake and are willing to transfer to the county level (1990/3). The Act also assigned responsibility for planning and providing local health services to local governments. The responsibility for primary care rests with municipalities and that for secondary care with counties, but both tiers of local government are allowed to contract out service delivery to private providers. A large proportion of primary care has been contracted out to private practice family doctors under the functional privatization scheme (for more details see section 2.8.2). Similar arrangements have grown increasingly common in secondary care since the late 1990s.

The same Act transferred the ownership of most primary care facilities, polyclinics and hospitals from the national government to the local governments (1990/3). As a result, local governments have become the main health care providers in the Hungarian health care system. Municipalities usually own primary care facilities and, in the case of larger municipalities, may own and run outpatient clinics and municipal hospitals. County governments usually own large county hospitals, which provide secondary and tertiary care.

As the owners of health care facilities, local governments are responsible for funding the capital costs of the health services they provide. Since these costs are usually higher than the revenue of local governments, the central government provides conditional and matching capital grants through the system of earmarked and target subsidies (1992/9). It has often been argued, however, that even local and central funds together are not sufficient to cover capital costs over the long term, thus threatening the sustainability of the system.

In 2004 the National Assembly formed regional health councils to support the creation of regional health policies and development projects; to facilitate cooperation among the stakeholders, especially regarding negotiations on the distribution of regional capacities within secondary and tertiary care; and to conduct evaluations of patient satisfaction and access to care and draw up appropriate recommendations. The council members consist of representatives of the counties, churches, medical universities, health care providers, the State Secretariat for Healthcare, the NHIFA and patient associations.

2.3.10. Professional organizations, associations and unions

The work of voluntary associations and trade unions was kept under tight control until the second half of the 1980s. In the late 1980s, when the health sector trade union of the communist regime lost its monopoly, several new unions were established, the largest being the Health Workers’ Democratic Union. A notable feature since the mid-1990s has been the rapid growth in the number of other voluntary organizations, some of which are not just simple interest groups, but have been delegated regulatory functions that were formerly under direct governmental control.

Abolished by the communist regime, the Hungarian Medical Chamber began to function again in 1988, initially on a voluntary basis. Act XXVIII of 1994 on the Hungarian Medical Chamber made membership compulsory for practising physicians and dentists, and defined the structure, tasks and responsibilities of the Medical Chamber, including issuing a code of ethics for medical practice (1994/2). The Chamber can discipline those who violate its rules, and it has the right to voice opinion on a range of medical issues and to veto contract conditions between medical doctors and the NHIFA. The Hungarian Chamber of Pharmacists was also established in 1994 (1994/5).

In 2003 the government decided to extend professional self-regulation to other qualified health care workers by establishing the Chamber of Non-Medical Health Professionals (2003/18). Compulsory membership in the professional chambers was eliminated and the regulatory rights of the Chamber of Pharmacists were curtailed along with the liberalization of the pharmaceutical retail market in 2006 (2006/8, effective 2007).

There are many other professional and scientific associations in Hungary. Examples include the Hungarian Hospital Association, the Association of Health Care Financial Directors, the Association of Nursing Directors, the Hungarian Nursing Association, the Hungarian Pharmacists’ Association and the Hungarian Dental Association. The largest professional organization in Hungary is the Federation of Hungarian Medical Societies.

Patient associations in Hungary are growing in number and influence. Their participation has been institutionalized in waiting list committees, in the National Health Council, regional health councils and in hospital supervisory councils (1997/20, 1998/24, 1998/25, 1998/28).