Abstract Background Many low-and middle-income countries (LMIC) of the World Health Organization (WHO) European Region have introduced social health insurance payroll taxes after the political transition in the late 1980s, combined with budget transfers to allow for exempting specific population groups from paying contributions, such as those outside formal sector work and in particular vulnerable groups. This paper assesses the institutional design aspects of such financing arrangements and their performance with respect to universal health coverage progress in LMIC of the European region. Methods The study is based on a literature review and review of secondary databases for the performance assessment. Results Such financing arrangements currently exist in 13 LMIC of that region, with strong commonalities in institutional design: This includes a wide range of different eligible population groups, mostly mandatory membership, integrated pools for both the exempted and contributors, and relatively comprehensive benefit packages. Performance is more varied. Enrolment rates range from about 65Â % to above 95Â %, and access to care and financial protection has improved in several countries. Yet, inequities between income quintiles persist. Conclusions Budget transfers to health insurance arrangements have helped to deepen UHC or maintain achievements with respect to UHC in these European LMICs by covering those outside formal sector work, and in particular vulnerable population groups. However, challenges remain: a comprehensive benefit package on paper is not enough as long as supply side constraints and quality gaps as well as informal payments prevail. A key policy question is how to reach those so far uncovered.