There is a growing international interest in informal payment for health care - a payment that patients give, typically to medical doctors, for formally free services. The phenomenon is widespread and persistent in post-communist countries, but also reported from other countries in Africa and Asia. This thesis focuses on informal payments in Hungary, aiming to establish their scale and the motivation for giving, issues whose understanding are crucial in assessing their policy importance. The theoretical literature can be summarised in two contrasting hypothesis for informal payments. One is that patients pay because they want better care, which implies that payments reflect, and may sustain, defects in service delivery. This thesis elaborates a new theoretical framework that builds on this 'fee-for-service' hypothesis and Hirschman's theory of 'exit, voice, loyalty', identifying informal payments as one manifestation of another response to a perceived decline in health services: informal/internal exit or 'inxit' for short. The opposing view, the 'donation' hypothesis, however, considers such payments as motivated by gratitude, with no adverse effect on performance of health care. Unfortunately, previously existing evidence is inconclusive regarding both the motivation and scale of informal payments. The empirical part of this thesis addresses both issues directly, and also indirectly addresses motivation exploring any impact on equity, using a household survey, indepth interviews with patients and doctors, secondary analysis of existing datasets, official statistics and documentary analysis. Findings suggest that informal payment is indeed a problem in Hungary. First, although it is not a substantial source of health care financing (less than 5% of total expenditures in 2001), its importance as an incentive comes from its extent and distribution (at least 60% of the net income of family doctors and specialists) rather than its overall magnitude. Second, although survey findings did not confinn infonnal payment as a barrier to utilization and they supported gratitude as the most important motive, a contradiction has been found between the reasons for giving cited in the household survey and the revelation of pressures on patients to pay from in-depth interviews. Taken together, these suggest that payments generally take place a 'coercive' context, so the case for the 'donation' hypothesis is weak.