[3] All health care providers that receive public funds are required to negotiate annual contracts with the HZZO that set prices and payment plans.

[6] In 1993, the HZZO was created by the Croatian Parliament in order to consolidate the fragmented and decentralized health care system which had been inherited from the Socialist Federal Republic of Yugoslavia.

[7][8] The 1993 law recognized patient choice as a principle through a mandatory payroll tax of 15%[4] and allowing the use of private supplementary plans.

Noting that such factors as the country's aging and the generous benefits established since 1993 threatened the fund's sustainability,[11] the paper proposed reducing the amount of basic services that are free at the point of use, which would result in the HZZO becoming less dependent on payroll contributions.

[12] In order to increase revenue, the 2002 Health Insurance Law introduced higher copayments for hospital and specialist services.