As a result of economic stagnation and international debt burdens, many developing countries are encountering difficulties in financing the recurrent costs of their health services. In 1986, with support from the US Agency for International Development, a study was initiated in Mali, Jamaica, and Costa Rica to 1. identify the nature, extent, and principal consequences of present and prospective recurrent budget shortages in publicly financed health care and 2. assess the feasibility and sustainability of alternative financing and resource allocation strategies to promote equity and efficiency in the provision of primary health care. The main source of health sector financing is direct payments from private households in Mali, taxes in Jamaica, and contributions by employers and employees in Costa Rica. Decentralization of control of local services, local retention of revenue from user charges, and the purchase of generic drugs by international tender represent the most feasible strategies for re-establishing poorly maintained and underutilized health facilities in Mali. In Jamaica, where a fee-for-service system predominates, a compulsory insurance scheme for those in regular employment is being considered, but provisions must be made for the many indigent and near-indigent patients. In Costa Rica, compulsory health insurance is able to make a substantial contribution to health care financing because a sizeable proportion of the population is employed; a shift to a system of paying doctors in primary care on a capitation basis seems feasible.