A new healthcare financing system for Austria based on theory, empirical evidence and international case studies

Presenter: Thomas Czypionka, Insitute for Advanced Studies Vienna (IHS)

Abstract

Objectives:
Austria stands in the Bismarckian tradition and spends 10,2% of GDP on healthcare. However, about 40% of public healthcare expenditure is tax-based, which is a higher share than in any other SHI country. Taxes are mainly spent by the federal and regional governments on inpatient acute care at a regional level, which is co-financed by the sickness funds, leading to considerable allocative and technical inefficiency.
For many years, commentators demanded that the Austrian healthcare system should be financed by a „single hand“ rather than by various stakeholders, as is the case at present. In our study, we aimed at developing models that could improve healthcare financing in Austria.

Methodology:
We used the 2008 WHO framework of healthcare financing for our approach to formulate reform options, beginning with a status quo analysis of financial flows as a starting point and the WHO goals of healthcare financing as the benchmark. After that, we compiled theoretical and empirical findings on the functions of healthcare financing and conducted case studies of eight European countries and their recent reform experience. Based on these findings, we combined empirical data, theoretical analysis and findings from the case studies to create six possible models suitable for the Austrian context. All models had to meet certain criteria like leading to any form of healthcare financing following patient’s needs across sectors and to perform (supposedly) equally or better in terms of the WHO goals.

Results:
Our first result in itself is the quite complete picture of all financial flows in Austrian healthcare. For the inpatient sector, this shows detrimental incentives of hospital funding, being split between sickness funds as passive co-payers and provinces. The money initially pooled in the nine provincial healthcare agencies paying the hospitals ranges from € 0,94 to € 0,65 per DRG-point, showing that financial equalization negotiations between provincial and federal government does not lead to needs-based allocation. Transparency and accountability in this sector are poor, and nearly no information on quality is collected or openly available.
The provincial statements of account are intransparent and do not always follow the rules of accounting set out by the accounting-ordinance, making public accountability difficult. Nevertheless we now for the first time in Austria have a quite comprehensive knowledge on healthcare spending on the level of provinces.
The sickness funds show considerable differences between revenues through contributions (from €1.384 to €2.642 per insured per year) as well as money spent on services for the insured (e.g. for outpatient services € 360-766 per insured per year), and do not equalize contributions or risks. Administrative costs are comparably low (about 4%).
Finally, we fomulated six models, three of which would make the provinces or the federal governement main financier of healthcare according to NPM principles. The latter three models assign this role to a modernized and streamlined structure of social health insurance funds. We also adressed possible solutions how to include stakeholders that currently share in healthcare financing but would have to give up this role.