First of all I would like to thank Caritas Europe the invitation, and to welcome the intention of Caritas to help the candidate countries to better organise and to cooperate on the forthcoming EU membership.
The civil society is always a good measurement unit of a society, that is why it is important to have a clear view of this sphere in the candidate countries.

1. In Hungary the public finance could not cover the increased costs of the social security system. So already in the early 80's it has become clear that also in the economic sphere as well in the public sphere the change is needed. It was also obvious that the new system must count with the self-care. In the Hungarian system, we can find the mutalities based on the social security system. The main law for the Voluntary Mutual Benefit Funds came into force in 1993. The real reform begun with this law of the whole distribution system. The foundation of this self-care institution could mean the first step in the reform of the social security. The health funds takes a primary part in our intention joining the EU, it can be an alternative in reducing the excessive state role in the health insurance.
2. Hungary is a small central-eastern European country with about 10 million habitants. Hungary's population in the last decades, decreased. In Hungary occurs the same as in Europe, the number of the marriages is decreasing and the number of children per family is in diminution. Since the increase in GDP per capita between the early 1970s and the late 1980s went together with the deterioration of the health of the population. The average life expectancy in Hungary is very low, lower than some of our neighbours. In the case of the men the average life expectancy at birth is 66,32 years and in case of the women is 75,13 years (1999 data). In the case of the middle aged man the mortality rate per thousand men is higher than before the Second World War. In Hungary the main mortality causes are heart and blood- vessel diseases, malignant tumours, these disease could be recognized with the prevention. Nearly 20% of the Hungarian society are older than 60 years, all together with the under 18-age group, around 50% of the society is dependent. This makes a big responsibility for the workers. It affects the future planning in the pension system, as well in the health care system. Hungary has his geographical problems (west-east), (city-rural parts). One-fifth part of the Hungarian population lives in Budapest. For example in Budapest in the Buda districts the average life expectancy is near to the Scandinavian figures, and in other parts of Pest (VIII, VI districts) the life expectancy is nearer to the third world figures. This also occurs in the west-east dimension. The number of the unemployment had fallen, its around 6,5% (263 thousand unemployed). The social security and health care system has his own problems; it cannot cope with the demographic tendencies. Each year more and more hospitals have financial problems. The wages are very low as for the doctors as for the nurses. More and more doctors leave the hospitals to work for pharmaceutical companies for higher wages. Many nurses leave their profession to work in other areas. The social security decreases the subvention of the pharmaceutical/medicine provision. The constant polemics around the health sector, the frequent changes in the ministries also affect the work and the reforms.
3. Among the AIM members there are two types of civil non-profit voluntary organizations. One is based on the unification of natural persons, meanwhile the other type of organizations are based on the unification of capital such as providence or fund. The structure of the governing body is different in case of the mutuality and in case of the providence. The main governing body of the mutualities is the general assembly, and its elected by the members, so the members are represented in the decision-making area of the mutuality. In case of the providence the governing body is the board of trustees, where the % of the members is very low -nearly 0%-. The Hungarian VMBFs are based on the unification of natural persons, the founders and members are the owners and the beneficiaries of this society. So the Hungarian translation to English is misleading, instead of fund it would be better to use friendly society. Hungary already in the medieval times had a well-organised civil union firstly for the miners, taken from the German example. During the 1990s with the political, social and economic changes, the process to change the social security system has accelerated. In 1991, the Alliance of the Hungarian Health funds was founded, what helped the foundation and the work of health funds. In 1992 the Alliance joined the international organization. After founding these funds the groundwork of the legal framework has begun. The main law for the Voluntary Mutual Benefit Funds came into force in 1993. The health funds have three roles namely financing health providers, providing health care and helping their members to be involved in health promotion process, to be responsible for their own health. Therefore, in Hungary the health funds mainly finance health promotion, prevention, the dentist, sanatorium care, occupational health and rehabilitation. These are complementary provides of the social security. In the Law on the VMBFs they kept the possibility for the funds - in time - to be able to take it upon the tasks of the health insurance system. Legislatives thought that the VMBFs will be able to reduce the increased costs of the National Health Insurance, but in the past few years, the number of health funds felt far from the expected. One of this reasons were that the Law on VMBFs restricted strictly the different fund types and its activities. As a result, health fund could not provide self-help activity (like sick pay), and it was not clear the financing of the health programs. This seriously affected the boost of the health funds. In 1996 in the Law on the VMBFs has changed, so from that a health fund can own an institution which is able to provide health treatment or health fund can operate such institution.

   VMBFs At the end of the year 2000	Number Of Funds	Number of Members (thousand people)		Capital (Billion HUF)
   Pension funds	116	1.082	89.2%	225.4	97.9%
   Health funds	30	71	5.9%	4.0	1.7%
   Self-help funds	20	60	4.9%	0.85	0.4%
   Total:	166	1.213	100%	230.25	100%

   At the present (end of the year 2000.) there were 30 health funds and 21 self-help funds. Still the 90% of the members and 98% of the wealth belongs to the voluntary pension funds. Therefore, the main tendencies -statistical ones- are defined by the voluntary pension funds. In 1999. at the end of year the number of the health funds 25, self-help funds 18. So in case of the health funds the increase was around 20%, and in case of the self-help funds was around 16%. The voluntary pension funds raise seems to become slower. At the first sight seems that the number of the health funds is nearly the same every year but the yearly termination and the number of new health funds is equal, that is why it looks like there's no evolution or just slow evolution. As we can see at the health funds they depend mostly from the employer, also of this 30 health fund, the 85% of its members belongs to the "big six" the six biggest health funds, approx. altogether with 60 thousand members. This means that trend is that the big ones gain more members meanwhile the little ones have serious financing problems till they give up. In Hungary, it's not "profitable" to found a health fund when the number of the members will stay below a thousand people. At the self-help funds occurs the same there are two big funds what concentrates the 75% of whole members and the 40% of the total capital. In case of the capital we can see that without the help of the big companies the funds could not grow in a faster term, because of its special situation its always needed to keep a high % of his capital in cash. This is a barrier in its economic enforcement. Interesting question is that, how the social security can pay back or pay to the health funds the money that they gain on the prevention made by the health funds. If this question is solved it would stimulate the function of the health funds. From the numbers we can see clearly that only the big health funds have a secure future. These big funds based on huge companies have the advantage of a well-based economic background and a big number of members granted.

4. The constitution recognises the right of the individual to defend his interest and to make economical or social organisation to do so. The main aim of the Law on the VMBFs is to enforce the civil organisations to provide social and health care as a complementary system to the social security. The law was based on the French Law on the Mutualities. Like I mentioned before the natural persons are the founders of the fund. It could be founded on place of work, professional area, department or on a territorial principle. The main founding principles are the independence, the mutuality, the solidarity and the voluntary membership. The fundamental rule or constitution determines the rules to became a member, the rights and obligations of the members, the provisions given by the fund, the self-government functioning, and the financial management of the fund. The constitution of the fund is obligatory for the members, workers, and supporters of the fund. The membership fee is to cover the functioning and provisions of the fund, the fee is a regular contribution paid by the member. The membership fee can be partly or totally paid by the employer. The personal account is the basic register on what the financial management of the fund is based. The Hungarian Civil Law acts about the waiting period after while a member can get the provisions. The functioning principles are the following: The Self-Government functioning principle is that each member has the equal right in the decision-making. The closed financial management principle is that the fund can provide only those provisions what are included in the basic constitution of the fund. The fund makes bases for its functioning and makes personal accounts. The fund according the basic constitution is responsible to third parts till the wealth of the fund. In case of the termination of a fund the member has the right to have the quantity on his personal account. The fund offers the provisions from the membership fee and from other contributions as donations, and acts according to the general assembly's decisions. The principle of mutuality is that the members equally create the security of the provisions, and they have the equal rights to the provisions, as each member is also the owner of the fund. The principle of voluntary is that the natural persons make the fund of their free choice and have the free will to join the fund. The principle of independence is that the fund according to the law has the own right to decide the kinds of the provisions and their own financial aspects. The principle of solidarity means that the members pay an equal fee what is not on risk base. The natural person who fulfils the acceptance rules must be accepted. The principle of association means that none religious, ethnical, political or racial distinction can be used when deciding the circle of the members. The Non-profit functioning is when the fund can't pay its profit to the members in any form. It can only use it for its basic provisions. In the foundation of a fund the following articles must accomplish: To establish a found at least 15 natural persons are needed. There is an establishing reunion what decides the starting of the fund. The basic constitution is done on this meeting. On the meeting they elect the officials of the fund and decide about their salary, the financial planning is also made here. A fund is a legal entity, it must be registered The types of the funds: its important that different fund types cannot work inside one fund.

   Name of the legal entity	Legal basis	Supervision
   Voluntary Mutual Benefit Funds (health or self-help fund, and pension funds)	Law on VMBFs	State Office for Supervision of the Monetary Organisations
   Insurance association	Insurance Law	State Office for Supervision of the Monetary Organisations
   Mutual friendly societies	Civil Law	Office of Attorney

   About the membership: Any person can be a member of the fund who has passed 16 years, and is a Hungarian citizen, acts according to the basic constitution and pays the membership fee. If the employer pays a part or the total quantity of the membership fee for the employees, he cannot denial to pay it for any employee who already has worked there for at least six month. About the donations and the donator: Any legal or natural person can be a donator of a fund, who gives money or other kind of donation to a fund, without any compensation. He can decide the aim and utilization of the donation, but the donation can be given only to the whole members of the fund.

5. Provisions offered by the health funds: Prevention: One of the funds most important provisions is the prevention, the screening test, and the complex diagnoses and the health advise. In the Hungarian health system the prevention is not in an important place. The costs of the prevention are high, and it will not decrease short and medium term costs of the social security, but many diseases can be cured by the prevention. The effects of the prevention are not only in the increasing life expectancy and decreasing health care costs, it also involves in the economic and social and cultural sphere. The prevention is also valuable for the fund when calculating their provisions. This way the health funds could make the members active partners in the intervention for a healthy way of life. Throughout its personal contact system the fund provides a good social background for their members. The aim of the prevention is that the members can feel secure about their health and the member feels that the fund does everything to prevent his health. The employers must realize the importance of the advantages that provide economically the health funds, surely an organisation with healthy employees is more effective economically. It is a theoretical question that how can the funds get back the benefits what they make through the prevention from the social security system. If this could be solved it would stimulate the funds even more. Dental care. More and more funds provide dental care because the state does not finance big part of the dental care. Nowadays only the urgent provision is paid by the social security. According the new law every patient must visit a dentist for a yearly control, the costs of this are covered by the social security. With the certification of this control the patient can receive some basic treatment free of charge. Without this the patient must pay for the basic provisions. Therefore, the dental care is one sphere where the active population (18-60 years), must pay for the provision. This causes that the dental care is also a basic provision of the funds. Partly repayment. Some of the health care provisions are only partly paid by the health security. Of these, the patient can receive the bill and the fund can pay it. This includes the special kind of materials, what accedes the regular norms. Patients must pay partly for the health care when they do not have an assignment, or if they choose an other provider different from the assignment. This can be a lot of money during a long hospital treatment. The total repayment. There are some provisions what are not basic provisions, and can't make use of it by the social security card. For these provisions the total costs must be paid. (like aesthetic surgery, recreational provisions, or not tested medical treatments). The conditions of the placement. There are cases when the patient needs a higher comfort or a single bedroom or the patient wants to go to other provider. Then the extra costs must be paid by the patient or by the fund. Waiting list. According to the health insurance law if the patient statutes do not require an immediate operation, they put the patient on a waiting list. Till now this kind of provision is not provided by a fund. However, for whom the operation is urgent it can make it through the fund. The sick-pay supplement. According to the law the sick pay is continuous after two years and it's the 70% of the daily middle wages, in case of hospitalisation or less then two years of insurance its 60% of the daily middle wages. In 1997 the average sick pay was around 835 HUF per day. Therefore, it was less, when the patient really needed the money to cure himself. The social background institutions, the home cares. According to the law if the patient condition requires, the insured has the right to get a provider where he can get the provision, but for around daily four hundred HUF. The hospice provision takes care of the people who are dying, but this also needs to be paid. These are areas, where the funds can help to cover the costs. Medicine, therapeutical supply, medicinal bath. The funds now can provide like self help health activity, so they can give financial support. So it is also an important area for the funds to contribute in the price of the medicine and therapeutical supply of the patient. According to the Social Security Health branch (OEP) the yearly drug/medicine, consumption per person in 1997 was 14.900 HUF, the social security contributed 9.900 HUF. So the Hungarian citizens had to pay the rest 5.000 HUF when buying the drugs. The same happens with the therapeutical supplies. The funds can also contribute when the patient buys these. Labour health. The health funds could be an important tool in organising the labour health. The employer with the establishment of a health fund can set on new bases the health care of their employees. According the 1993. XCIII. Law about the employer and the work security, the employer is obligated to provide labour health to all of his employees. The companies have the right to choose to maintain such provider or to buy it from a health institution the provision to their employees. Already many occupational health funds provide to their employees labour health, where the employer pays the membership fee. In the future, the labour health will be an important factor, and the occupational health funds are a good tool to do these tasks. With these tasks above the labour health the employer could have healthier, and more active employees. So the total balance of the costs and incomes will be positive for the company. Teaching healthy way of life. Some funds among his provisions have the healthy way of life and organising sporting possibility. According to professionals the health provision only counts 11% in one-man life, mostly - four times more - what counts is the way of life. With a healthy way of life many diseases can be prevented, but we must know what is healthy way of life. It contains the regular body exercise, a proper diet, a balanced way of life, etc. With the sports every member must be careful, it needs medical supervisors, not to make damages, just to get the best results and for the person to get more healthier. Recovery holidays, rehabilitation. From these two areas the state in the past years has marched out. So the funds could organise recovery and rehabilitation. Patient documentation. In Hungary the complex organisation of the patient documentation is not well done. Actually to do this documentation it belongs to the family doctor. The family doctors should know about all their patient. They should assign the patients to test hospital care, etc, and after the tests to summarize the patient documentation and to decide about the rehabilitation. So because of the high number of patients the doctors can't make it. This is the area where a health fund can take active part. Because of the screening test performed on each member, they can organise the patient documentation. The self-help funds mostly give sick pay, financial contribution in case of illness, contribution buying the drugs, school help, and financial help in case of death.

6. Organisation and financial aspects of the funds Organisations of a fund: The general assembly, The managing council, The Supervision council, The expert's council, it's not obligatory.

   
   

   The fund financially of his incomes makes three bases, a security base, a functioning base, and a liquidation base. The security base is for the payment of provisions, the functioning base is to grant the functioning costs, and the liquidation base is for the collection of the temporary not used money and to keep the liability of the fund. A fund must have a yearly financial plan:      The plan must include:      The number of members expected;      The expected quantity of provision and its price;      The expected incomes and the expected costs;      The development of the three bases;      In the incomes, the personal accounts must be separately for each member. The incomes from donations and supports and from selling a property also must be separate on the yearly plan. The long term financial plan has the same structure like the yearly plan, but its extended with long term calculations.

   VMBFs cash incomes and its percentage In the year 2000	Pension funds	Health funds	Self-help funds
   Membership fee paid by employee	26 %	8%	4%
   Membership fee paid by employer	66 %	54%	18%
   Donations, supports	8 %	38%	78%
   Total:	100%	100%	100%

Capital (billion HUF)

Name	1994	1995	1996	1997	1998	1999	2000
Pensionfund	0.422	6.8078	23.337	57.158	101.460	159.588	225.395
Pensionfundgrowth%		1512,2%	242,8%	144,9%	77,5%	57,3%	41,2%
Healthfund	0	0.003	0.020	0.192	0.769	1.917	3.999
Healthfundgrowth			539,1%	877,3	300,3%	149,4%	108,6%
Self-helpfund	0	0.007	0.021	0.050	0.132	1.160	0,850
Self-helpfundgrowth%			186,3%	141,7%	162,9%	775,6%	-26,7%
Totalcapital	0.422	6.818	23.378	57.400	102.361	162.665	230.244
Capitalgrowth		6.396	16.560	34.023	44.961	60.304	67.579
Capital growth%		1514,6%	242,9%	145,5%	78,3%	58,9%	41,5%

Sources of data:Hungarian Central Statisical Office (KSH), Hungarian Financial Supervisory Authority (PSZÁF)