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Many countries from the European region, which moved from a government financed and provided health system to social health insurance, would have had the risk of moving away from universal health coverage if they had followed a “traditional” approach. The Eastern European high-income countries studied in this paper managed to avoid this potential pitfall by using state budget revenues to explicitly pay health insurance contributions on behalf of certain (vulnerable) population groups who have difficulties to pay these contributions themselves.  The institutional design aspects of their government revenue transfer arrangements are analysed, as well as their impact on universal health coverage progress.    Methods  This regional study is based on literature review and review of databases for the performance assessment. The analytical framework focuses on the following institutional design features: rules on eligibility for contribution exemption, financing and pooling arrangements, and purchasing arrangements and benefit package design.    Results  More commonalities than differences can be identified across countries: a broad range of groups eligible for exemption from payment of health insurance contributions, full state contributions on behalf of the exempted groups, mostly mandatory participation, integrated pools for both the exempted and contributors, and relatively comprehensive benefit packages. In terms of performance, all countries have high total population coverage rates, but there are still challenges regarding financial protection and access to and utilization of health care services, especially for low income people.    Conclusion  Overall, government revenue transfer arrangements to exempt vulnerable groups from contributions are one option to progress towards universal health coverage.    Electronic supplementary material  The online version of this article (doi:10.1186/s12939-016-0295-y) contains supplementary material, which is available to authorized users.

international journal for equity in health

State budget transfers to Health Insurance Funds for universal health coverage: institutional design patterns and challenges of covering those outside the formal sector in Eastern European high-income countries