Systematic approach to health care and system reforms?

Systematic approach to health care and system reforms?

Current state of the health care sector in BiH

Agency for Statistics of Bosnia and Herzegovina collects national NHA (National Health Accounts) data[1][2][3][4] prepared by the Working Group for National Health Accounts. The data represents aggregated dataset acquired from entity-level agencies for statistics in Federation BiH, Republika Srpska and Brčko District.

Public health care system in BiH is mostly funded from the compulsory health care insurance whereas the share of public budget funds in the public health care is very low (municipal, cantonal, entity and state budget). 

Private expenditures are almost entirely (99%) direct household expenditures and only a fragment (1%) is directed to voluntary health care insurance.  Direct household expenditures, in other words out-of-pocket payments, are formal and informal payments. Formal payments are co-pays charged for public health care services and prescription drugs, other direct payments in private medical facilities (dental care, specialist examinations, diagnostics, purchasing the glasses etc.) and payments for non-prescription drugs and medical aids.  Informal payments are the highest for hospital services and are mostly related for illegal payments for health care services.

In Table 1 is presented the data for period 2014–2017 in relation to total health care system expenditures with separate data sets for private and public expenditures.


Table 1. – Annual overview of expenditures for health care fund

Share of public and private expenditure(in .000 KM)





















Source: Agency for statistics BiH

Total expenditures in BiH health care system in 2014 were BAM 2.587 billion consisting of 71% of public expenditures and 29% private expenditures. The same ratio was maintained in 2015 but total sum of expenditures was BAM 2.669 billion. In 2015, share of health care system expenditures in BiH GDP was 9.4%. 

Total expenditures in BiH health care system in 2016 were BAM 2.759 billion and the ratio of 71% for public and 29% for private expenditures remained the same. In the same year, share of health care system expenditures in BiH GDP was 9.2%. Total expenditures in BiH health care system in 2017 were BAM 2.802 billion where 70% were public and 30% were private expenditures. In 2017, share of health care system expenditures in BiH GDP was 8.9%. Total expenditures and shares of private and public expenditures are presented in Graph 1. 

Graph 1. - Health care expenditures per year

 Slika Zdravstvo Graf

Source: BiH Agency for Statistics 

When observed at Etity level, data for FBiH and RS share of public and private expenditures is presented in Tabel 2. In the observed timeframe there was no significant change in share which was 60% for FBiH and 40% for RS.

Tabele 2. – Health care system expenditures by year at Entity level



Expenditure (u .000 KM)











































Source: BiH Agency for statistics

In terms of allocation of public and private expenditures, they were mostly allocated to hospitals, health care in outpatient clinics, retail and other providers of medical supplies. Growth of average 2.70% in total expenditures – 3.18% (2015), 3.42% (2016) and 1.52% (2017), was marked and details are presented in Table 3.


Table 3. – Expenditure for health care system by allocation

Share of public and private expenditure (in .000 KM)





Javni izdaci

Privatni izdaci

Javni izdaci

Privatni izdaci

Javni izdaci

Privatni izdaci

Javni izdaci

Privatni izdaci










Medical care facilities









Healthcare in outpatient facilities









Auxilliary services









Retail and other suppliers of medical supplies









Preventive health care









Healthcare system and insurance management 









Other providers









Foreign service providers























Source: BiH Agency for statistics

General conclusion is that each year more funds are used for financing growing problems but at the same time leaving the citizens unsatisfied with the services provided. The system is designed to maintain the existing condition and finance the oversized administrative apparatus without providing adequate service to the citizens.  Increase in number of pensioners and foreseen slowdown in the number of employed workforce is going to lead to slowdown in payment of contributions to the state health care system in the future, but also to the increase in needs which is going to have negative influence to sustainability of the health care system in BiH.

Health care facilities in Bosnia and Herzegovina are in debt of over BAM 2 billion, or precisely BAM 1.20 billion in FBiH[1] and BAM 1.06 billion in Republika Srpska[2]. Accumulated debts are the result of the system’s most significant characteristics: high costs, financial unsustainability and as a consequence unsatisfied beneficiaries[3], which all results in poor quality and scope of health care services.

The fact is that very few people who required medical attention in BiH would describe their experience of the service using the adjectives such as satisfactory, good or excellent. From the perspective of the patient there is always something missing in the health care systems in BiH – technical capacities, beds, instruments, materials, medications, and all that prolongs the time required for adequate diagnose or treatment of medical condition. Waiting often means deterioration of the state and in worse case scenarios it may have fatal consequences. If you ask people working in the health care system, they will point out almost similar problems – that they work under poor conditions, that they are understaffed and with no adequate equipment all spiced up with additional criticism that their salaries are too low for the level of education and job difficulty. Regarding the fact that workforce drain is in progress, with high chances of employment in EU member states before medical workers, we should not be surprised to see the situation where there would soon be insufficient number of doctors who would provide any kind of medical service.

Problem of corruption

Due to the above described fact that health is literally matter of life and death, and that people addressing the issue are not really satisfied with the reward system for their work which is well known fact to the citizens, our health care system is contaminated with highly pronounced problem of corruption. Citizens are unwilling to report it. Corruption in health care is rarely direct, but it is a matter of implicated (concludent) activities of medical staff who make sure that family of/or the patient are aware that the bribe is necessary[4].

It is very difficult to estimate the “price list” in health care system. Center for investigative journalism stated in their text Custom which became felony from 2004 that it is possible that the citizens of Bosnia and Herzegovina might be spending up to BAM 120 million each year. Some of the more recent estimates may be found in the text[5] published in March 2018 in PubMed Central Archive of the National Library of Medicine in the National Institute of Health in the USA about the cost of social frauds in the health care sector where it was estimated that magnitude of corruption and social fraud range between 3% and 8% of national health expenditures[6] [7]. In the resolution of German Bundestag about combating corruption in the health care system it was stated that the magnitude of corruption was up to 10% of total public health expenditures[8]. Having in mind that total health expenditures in 2017 in BiH were[9] according to BiH Agency for Statistics  BAM 2.8 billion (around 9% of GDP-a), loss of 3%, 8% or 10% of the amount on corruption means loss of BAM 84 million, BAM 224 million or BAM 280 million for BiH citizens only in that year.

Health care and migration of local population

All the conducted research on topic of migration of local population from all parts of BiH, which is one of the most difficult problems the country is dealing with at the moment, emphasizes that alongside with economic factors poor public services, corruption and lack of personal security are the most significant motives behind people’s decision to pack the bags and leave the country. It is the inadequate health care system that summarizes and amplifies the psychological effect of all the causes of dissatisfaction. Lack of security in the fact that one’s medical state is going to improve has devastating effect to perception of reality. Feeling of injustice when you realize that for the funds you contribute to the health care system fail to provide you adequate or timely service or that you are thrown at the end of waiting list because you lack personal connections and well-connected individuals are entering doctor’s office immediately, while you are waiting impatiently to get treatment often provokes feeling of helplessness, anger and frustration with the system which is totally different than the one caused by waiting in queue in municipality offices. Corruption can be particularly painful when there is no way to avoid it, when you are left without other choice because accepting corruption is the only option required for ensuring biological survival.

Separate and severe problem is doctors leaving abroad. There is no accurate register with the exact number of doctors who left Bosnia and Herzegovina. According to data provided by the president of the FBiH Medical Chamber, Harun Drljević, only in 2018 there were 267 doctors who left the country, in 2017 the number was 362 doctors from the territory of FBiH. Some doctors leave the country immediately after completing studies without becoming members of the chamber, and those people were supposed to take over the health care system in the following 15 years. Analysis of the FBiH Medical Chamber president also suggests that average age of doctors is 57.8, which means that this segment of workforce is comprised of elderly workers.[10]

Health care system and human capital

Health is the key component of welfare and living standard for any individual. Sickness or poor health and risk of death are central issues in shaping human possibilities and behavior. Therefore, there is strong argument that expenditures for health care system have direct effect to human welfare and happiness in practice[11]. Therefore, good management of funds in public health care system has not only great impact to migration of local population, but also directly to human capacities, the chance to part of population which stays in BiH to be productive.

It is estimated that almost 450,000 citizens of Bosnia and Herzegovina are not covered with health insurance which means that they have no access to basic health care services in the primary level of health care (prevention) which functions relatively well in BiH. If the estimates are correct, because official data is missing, there is significant number of marginalized people in both Entities without possibility of prevention of difficult medical conditions, which is in the long run risk group which not only represents significant social burden, but also fails to contribute economic growth. Therefore, development of basic package of health care for all the citizens of BiH is important aspect of prevention of additional social challenges.

New form of pressure the health sector faces are the consequences of the change in demographic picture which was significantly influenced only by health care system (migration of young people and entire families followed by expected return of our citizens from abroad at older age who spent most of their time working in western countries) and they will significantly contribute to reduction in influx of funds and increase in expenditures from the social funds, and the biggest pressure in that sense may be expected in case of health insurance funds.

What needs to be changed?

Therefore, it is necessary to implement the reform measures which would ensure a chain of positive changes. First of all, it is necessary to ensure efficient business operations of health care institutions, which means increase in availability and efficiency, measuring the cost and timeliness of services provided. After that, it is required to halt the health sector arrears and address their sanation in the system. In order to stop the ‘monopole over providing health care’ it is necessary to include more providers of health care services in the system, including the private sector.  

In order to develop solution for creation of basic package of health care services for the citizens of BiH, it is going to be necessary to develop a financing model. It would be commendable to utilize taxation of consumption, the dedicated taxation which is not purposed in redirecting the funds. Being specific, those are the excise duties on goods considered harmful to health, primarily in case of tobacco and alcohol. As individual segments, they are the greatest contributors to revenues from indirect taxes. Tax revenues from tobacco in the period 2009–2017 amounted to BAM 6.389 billion[12]. Data suggests that in 2018 excise duty revenues on tobacco amounted to around BAM 814 million and in 2019 to BAM 867 million.[13] In line with this data, sum of revenues was in total BAM 8.4 billion in the period 2009–2019, just from excise duties on tobacco, and these funds have not been directed to health sector, but directly to budget for public expenditures. Although the concept of excise duties is developed for the purpose of discouraging risk behavior through taxation policies, and directly charge the risk that consummation of those products presents to one’s health burdening the health care system which treats and pays the consequences of high-risk behavior, amount that was directed (dedicated) from excise taxes to health care insurance funds at Entity and cantonal levels was BAM 0.00. That is also noted in the BiH Law on Excise Duties, Article 2, paragraph 1 where it is stated that Excise duty revenues shall be paid on to the Single Account of the Indirect Taxation Authority (hereinafter: Authority) and their allocation shall be carried out in compliance with the Law on Payments on to the Single Account and Distribution of Revenues.[14]

Procedure for Amendments to the Law on Excise Tax Duties were set into motion before the BiH Parliamentary Assembly in January 2019 providing for the allocation of 5% of excise duties on tobacco to entity health care solidarity funds for treatment of children with severe medical conditions. Due to lack of political will to form majority in the Parliamentary Assembly this Law will be decided upon in one year time.[15]

Dedication of excise duties revenues to health care sector is possible without additional consumption taxation. Data of the FBiH Tax Authority suggests that in the period 2016–2019 collecting from public revenue increased by 39.62 %, which is in nominal increase by BAM 1.504 billion.[16] Such strong growth of public revenues provides space for necessary reforms – on one hand to invest in better coverage and quality of health care services and on the other less burdening of labor which would provide for creation of righteous system where quality services would be available for funds dedicated for that purpose without burdening other taxes and with reasonable prices of health insurance.

What is the governments’ plan for this issue?

Entity governments in BiH adopted new reform document entitled „Joint socio-economic reforms for period 2019 – 2022” (hereinafter: Joint reforms). This document is a plan of socio-economic reforms which are designed to ensure sustainable and fast economic growth, better competitiveness of the private and better business climate, and depoliticization and increase in the efficiency of SOEs. Special attention is paid to health care system reform in both entities which is, judged by the content of the document, one of the priorities in this mandate. Unlike the Reform Agenda which treated the health care system reform as part of the area “Public finances, taxation and fiscal sustainability”, its 2.0. version defines measures in the health care area through separate part entitled “Comprehensive reform and improved quality of health care system”.

Although this area covers two out of nine pages of the Joint reforms, listed measures are broadly defined[i], and from some of them it is not exactly clear which concrete steps would be taken by the competent institutions and in what manner. Nevertheless, it is evident that the priorities remained the same as in the previous mandate and measures defined by the Reform agenda and Arrangement with IMF remained to be implemented in this mandate: outstanding debts in the health care sector, financial evasion in health care institution and introduction of treasury system, better work efficiency and increase of scope and coverage of health care.

All the “taken” liabilities from this document are part of strategic documents of local legislature and international contracts and charts the government of Bosnia and Herzegovina signed and committed to increase coverage and accessibility of health care services, stop discrimination and introduce efficient and sustainable health care system. 

In the future period it is going to be necessary to work on the implementation of these measures, and when we take closer look to the list of measures, for that purpose all the levels of government in Bosnia and Herzegovina need to function. Otherwise, the scenario will remain the same – priorities set out in the Joint reforms will wait to be solved in the next mandate while citizens will wait in endless queues to leave the country and go somewhere where the system is in order and basic services are available to all the people financing them through work and expenditures.

[1]Solutions for collapsed BiH health care system, Aida Hadžimusić. Available at:

[2][2]Increase in debt of RS health care system, Government prepares new laws. Available

[3]Health care system in BiH: state and directions of possible reform, Foundation Public Law Centre, Ervin Mujkić. Available at:æe-reforme.pdf

[4]Health care system in BiH: state and directions of possible reform, Foundation Public Law Centre, Ervin Mujkić. Available at:æe-reforme.pdf

[5]Individual and Institutional Corruption in European and US Healthcare: Overview and Link of Various Corruption Typologies, Margit Sommersguter-Reichmann,Claudia Wild,Adolf Stepan,Gerhard Reichmann, Andrea Fried, PubMed Central archive, US National Library of Medicine, National Institutes of Health. Available at:

[6]Pfeil W, Prantner M. Sozialbetrug und Korruption im Gesundheitswesen (Social fraud and corruption in health care) Wien: Manz; 2013. [Google Scholar]

[7] Gee J, Button M. The financial cost of healthcare fraud. Portsmouth; 2014.

[8] SPD Antrag im Deutschen Bundestag. Korruption im Gesundheitswesen wirksam bekämpfen (Effectively combating corruption in health care). 2010. Available at: Accessed 28 Aug 2017.

[9]Statistical data about national health accounts, BiH Agency for Statistics. Available at:


[11]The Geneva Papers on Risk and Insurance Vol. 28 No. 2 (April 2003) 304–315, Health as Human Capital and its Impact on Economic Performance by David Bloom and David Canning. Available at:







[i]Socio-economic measures set out in the document „Joint socio-economic reforms for period 2019 – 2022“  from the area „Comprehensive reform and improved quality of health care system“:

(1) Both Entities shall take immediate steps in order to halt the growth of arrears in the health care sector and achieve financial stability, including detailed follow-up of financial results of funds and health insurance providers.

(2) In cooperation with the World Bank, both Entities shall make a list of all the liabilities of health care institutions. Models shall be developed from the mechanisms and solutions and in order to halt additional growth of arrears.

(2a) The next step shall be introduction of treasury system to all the medical centers  and hospitals in RS, while

(2b) FBiH shall start to work on introduction of treasury system to their health care system

(2c) Both Entities shall improve collection, analysis and distribution of data related to the efficiency of the health care system, and harmonize their data infrastructure with the aim of providing comparability.

(3) Adequate and sustainable financing shall be ensured in order to facilitate the reform of health care system and ensure efficient management, quality and availability of public health care to all the citizens including the marginalized categories.  

(4) In order to tackle the issue of duplicating the services and increase the efficiency both Entities shall take steps towards rationalization and development of more efficient network of services.

(4a) FBiH shall work on harmonization between the Cantons in terms of health insurance coverage and service quality.

(5) To increase efficiency and savings of the health insurance funds. Both Entities, in cooperation with their local communities and Cantons in FBiH, shall establish centralized procurement of medications, particularly for more expensive drugs and higher quantities of drugs.  

(6)Revision of contracts with health insurance providers and engagement of health care service providers shall be performed for the purpose of encouraging quality and efficiency.

(7) Mandatory health insurance for the unemployed shall be separated from the function of mediation in employment at the employment bureaus in order to relieve their capacities for more active support to job seekers.

(8) All the relevant levels shall be engaged in improved measuring and prevention of pollution which includes better implementation of regulations on environmental protection and energy efficiency.  

(9)Finally, quality of health care shall be improved through strenghtening preventive health care and widening the coverage and depth of primary health care. 








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