Austria: Social Security System To Undergo Restructure – But Will It Achieve Cost Savings?

Last Updated: 26 March 2019
Article by Rainer Herzig

Introduction

At present, the Austrian social security system comprises 21 insurance carriers:

  • one local health insurer for each of Austria's nine provinces;
  • five company insurers;
  • the railroad and mine worker insurer;
  • the public officer insurer;
  • the notary insurer;
  • the farmer insurer;
  • the self-employed insurer;
  • the general insurer for occupational accidents; and
  • the employee pension fund.

These 21 insurers are coordinated by the Main Association of Social Insurance Carriers and governed by the principle of self-administration. The various management and supervisory bodies are comprised of representatives of the insured. Employer representatives, who must also pay contributions, are nominated by the Chamber of Commerce. The Chamber of Employees nominates:

  • four-fifths of the representatives of the local health insurers and the company insurers; and
  • two-thirds of the representatives of the pension fund and the railroad and mine worker insurer.

For the management and supervisory bodies of the general insurer for occupational accidents, employees and employers are represented equally.

New structure

Merger of insurers

A recent amendment to the Social Security Act proposes merging the nine provincial social security institutions with the five company insurers into a single Austrian Health Insurer, which will have an affiliate in each province. It also proposes merging:

  • the public officer insurer with the railroad and mine worker insurer; and
  • the self-employed insurer with the farmer insurer.

Whereas the latter two will provide health, accident and pension insurance, the Austrian Health Insurer will provide only health insurance. The pension fund and the insurer for occupational accidents will continue to exist.

Further, the Main Association will be transformed into the Umbrella Association of Social Insurers. The number of administrative and supervising bodies will be reduced and the supervising authority of the state (the Ministry of Labour and Social Affairs and the Ministry of Finance) will be strengthened. The services and benefits provided for the insured (which differ slightly in each of the nine provinces) will be harmonised.

As of 1 January 2020, health insurance for employees will be provided only by the Austrian Health Insurer. The umbrella association will be reduced, as only five insurers (instead of 21) will remain. The preparatory works for implementing the new system will commence on 1 April 2019.

New structure of umbrella association

The Conference of the Social Security Institutions will replace the former board of the Main Association. It consists of the representatives of the five social security institutions and their deputies. The conference oversees the management of all business matters unless reserved by law for the general assembly. The general assembly comprises:

  • the representatives of the administrative boards of the social security institutions and their deputies;
  • the chair of the general assemblies of the social security institutions and their deputies;
  • three people representing the elderly; and
  • three people representating the disabled.

The representatives of the elderly and the disabled have consulting but not voting rights.

New general agreements with physicians

The Main Association has concluded several general agreements with the chamber of physicians on behalf of existing social security institutions. These agreements will be replaced by a new general agreement due to the now nationwide structure of the remaining social security institutions providing for a nationwide uniform mission to provide care (ie, a nationwide uniform catalogue of services). However, the possibility for regional differences in respect of services, the allocation of contract doctors and primary care units will remain.

New structure of Austrian Health Insurer

The current administrative bodies of the regional social security institutions (ie, the board, supervising assembly and general assembly) will be replaced by one administrative council. The administrative council will comprise 12 insurance representatives, six of whom will be employee representatives and six of whom will be employer representatives. The representatives will be delegated by the Chamber of Employees and the Chamber of Commerce according to the outcome of the last chamber elections. National or regional delegates will be excluded from becoming insurance representatives. The representatives must provide a qualification certificate (training and final exam by the Ministry of Labour and Social Affairs). The administrative council will make decisions by simple majority.

Stronger supervision

Austria's supervising authority will be strengthened without compromising the constitutional principle of self-administration. Ministry of Finance supervision will be extended to all social insurers (including the Austrian Health Insurer and the General Accident Insurer). The Ministry of Labour and Social Affairs, together with the Ministry of Finance, will examine the expediency, profitability and providence of the administration. To execute this supervision, ministry representatives may:

  • participate in meetings of the insurers;
  • object to resolutions; and
  • request postponement of agenda items.

The pay scale for management requires the approval of the supervising authority.

The Ministry of Labour and Social Affairs will enact template rules of order for the administrative council and the general assembly which will remain applicable until these bodies resolve their own rules of order (subject to the approval of the supervising authority). The supervising authority must approve the new rules of order if they comply with the principles of the template rules of order.

Implementation process

Between 1 April 2019 and 31 December 2019 the administrative council will function as a transfer committee to steer the transition process. To prevent local social insurers from obstructing the merger, all important decisions must be made by the transfer committee. The transfer committee may deal with all matters which are currently the responsibility of the institutions' board. The transfer committee will also appoint the chief executive and the three deputies of the Austrian Health Insurer for five years.

A new administrative board of the Pension Fund and the General Accident Insurer will be appointed as of 1 April 2019. The chair of the Pension Fund administrative board will be a member of the group of employees and the deputy chair will be a member of group of employers. The chair will rotate each year.

In respect of the new insurer for public officers and railroad and mine workers, the amendment provides that the employee representatives will be appointed by the Ministry of Labour and Social Affairs on proposal by the trade unions.

Going forward, the insurer for the farmers and the self-employed will also provide the insurance services of occupational accidents. Further, the insurer's board, supervising assembly and general assembly will be replaced by an administrative board comprising insurance representatives to which the same conditions apply as for general health insurance.

Comment

The Austrian social security system has been characterised by regional and occupational fragmentation and the domination of employee representatives. Consequently, the (social democratic-dominated) trade unions have had significant influence over the social security institutions' administration. A streamlining of this fragmented structure to reduce costs is certainly welcome; however, on closer inspection, the cost-reducing effect of the reform seems rather exaggerated. Although the new Austrian Health Insurer replaces the nine local health insurers and five company insurers, nine regional offices remain. As such, only the number of insurance representatives (who are not paid a salary, but do receive an expense allowance) has been reduced. It seems that the reform's main purpose was to stop the domination of employee representatives by balancing employee and employer representation. This should reduce the influence of social democratic trade unions and increase the influence of the conservative Chamber of Commerce and supervision by the centre-right government which has been in power since January 2018.

Published in ILO, 20 March 2019

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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