Fiscal Sustainability of Healthcare Systems in Bosnia and Herzegovina: Challenges and Policy Recommendations

Abstract

This paper examines the fiscal sustainability of healthcare systems in Bosnia and Herzegovina (BiH), focusing on the interplay between financing, expenditure patterns, and care quality. The system is highly fragmented (14 ministries, 13 funds, three legal frameworks). Despite spending over 9% of GDP, BiH records suboptimal outcomes with per-capita health expenditure of 1,477 PPP USD, near the bottom of European rankings. Using National Health Accounts, fund reports, and WHO data (2008-2020), we trace trends and fiscal space. Key challenges include accumulating fund deficits; large regional coverage disparities (56.2% in Canton 10 to 109.3% in Bosnian-Podrinje Canton); high out-of-pocket payments (29.4% of total health expenditure vs 20.9% EU average); hospital bed-occupancy below 60%; and a threefold variation in per-capita insurance outlays across cantons. Revenues are concentrated: 91.7% of Federation HIF income comes from payroll while employees are only 28% of the insured, leaving the model pro-cyclical and vulnerable to demographic and labour-market shocks. Findings show that relatively high spending-to-GDP coexists with low per-capita resources, fragmentation, inefficient allocation, and weak incentives. In response, priority interventions are directed toward spending quality and allocative efficiency rather than simple revenue expansion: rebalancing toward primary and ambulatory care with strengthened strategic purchasing and solidarity-based risk pooling; expenditure rationalisation through higher capacity utilisation, stronger financial management, and performance-based payment; and targeted revenue diversification, most notably VAT differentiation on reimbursable medicines (estimated annual savings €8.5-€29.2 million), together with improved budget