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An information leaflet of the Austrian Museum for Socialand
Economic Affairs compiled for the Main Association
of Austrian Social Security Institutions
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© published by the Austrian Museum for Social and Economic
Affairs,Vogelsanggasse 36, 1050 Vienna, phone 01 5452551, fax 01
5452551-55,
e-mail: [email protected], Internet:
http://www.wirtschaftsmuseum.atCompiled for the Main Association of
Austrian Social Security Institutions,
Kundmanngasse 21, 1030 Vienna, phone 01 71132-1120, fax 01
71132-3785,e-mail: [email protected], Internet:
http://www.sozialversicherung.at
ISBN: 3-902353-20-1Updated version 2004
printed by Paul Gerin, A-2120 Wolkersdorfprinted on non-chlorine
bleached paper
'Everyone, as a member of society, has the right to social
security and is entitled to realization... of the economic, social
and cultural rights indispensable for his dignity and the free
development
of his personality.'Article 22, Universal Declaration of Human
Rights, 10 December 1948
'Social security is the most reliable basis for
democracy.'Johann Böhm, first president of the Main Association
of
Austrian Social Security Institutions (1948-1959)
For more than 100 years, Social Insurance in Austria has
provided protection against the risksof sickness, old age and
accidents at work. The Health Insurance system mainly assumesthe
costs for medical and other services, irrespective of the amount of
contributions made.
After the end of one’s working life, the Pension Insurance
system, depending on one’scontributions, enables a decent living
standard during retirement. The Accident
Insurance system prevents accidents at work and occupational
diseasesand also provides medical treatment after such events.
We are living in a time of rapid societal and technological
change. Increasing prosperityand higher living standards, as well
as an ageing population, strongly influence
the future of secure pensions and a functioning health system.
In order to be ableto provide an effective and high-quality health
service both from a preventative
and a curative point of view for all patients, independent of
their socialstanding, the health system must be made fit for these
challenges
by means of substantial structural reforms.
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The AustrianSocial Security System
1
Family benefitsBenefits for members of the armed forces
Benefits for victims of war
Benefits for victims of the Nazi regime...
Public assistance benefits
Health insurance
Accident insurance
Pension insurance
Unemployment insurance
Social insurance benefits
socialinsurancein anarrow sense
Social welfare benefits
socialinsurancein abroader sense
Social insurance
Health insuranceAccident insurancePension insurance
Unemployment insurance
Public assistance
Family benefits(Child benefit, care benefit,
maternity benefit,...)Other benefits: Benefits for
members of the armed forcesBenefits for victims of war
Benefits for victims of the Nazi regime...
Social welfare
social welfare benefitssuch as disability benefits,
retirement and care homes,monetary assistance,...
compulsory insurance
benefits granted on fulfilment ofthe conditions for
entitlement
Non-contributory state supportfor families and certain
persons
Benefits granted on fulfilmentof certain legal provisions
Non-contributory 'last resort' ele-ment of the social security
system
Provision of a subsistence minimumin cases of need or
emergency
mainly financedby contributions Financed by general taxation
Financed by general taxation
The social safety net
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Social Insurancein Austria
2
Proportion of Social Security expenditure to gross domestic
product in 2001:Social Security expenditure: € 60,40bn = 28.5 % of
GDP
Pension insurance ............................ 11.0 %
Health insurance ................................. 4.9 %
Accident insurance ............................. 0.5 %
Other social security expenditure ... 12.1 %(Public service
pensions, child benefit,unemployment insurance, etc.)
Main Association of Austrian Social Security Institutions
Pension Insurance Health Insurance Accident Insurance
PensionInsuranceInstitution
9 DistrictHealth Insu-rance Funds
Austrian WorkersCompensation
BoardInsurance Institution for the Austrian Mining Industry
Social Security Institution for Trade and Industry
Social Security Institution for Farmers
Insurance Institution of the Austrian Railways
Insurance Institutionfor Austrian Notaries
Insurance Institution for Public Service Wageand Salary
Earners
Institutions
8 OccupationalHealth Insu-rance Funds
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Independent administrationof the Austrian Social Insurance
System
The Austrian Social Insurance system has been independently
administratedsince its inception in the second half of the 19th
century: representatives
of the insured and the employers manage the system.The state has
a regulatory function.
In Austria there are various forms:
Independentadministration ofprofessional and
employees' associationsestablished by law
e.g.Chambers of Commerce, Labour,
Agriculture, Medical Doctorsand Pharmacists
Independentadministration oflocal authorities
Independentadministration of the
Social Insurance System
Independent administration means that the state transfers
certainadministrative responsibilities to those groups of
people
who have a direct interest in these tasks.
3
The independent administration of the Social Insurance System
ensures:
independence from state administration
inclusion of important societal groups
democratic and customer-friendly administration
unbureaucratic and cost-saving organisation
stronger feeling of solidarity
relief and decentralisation of state administration
Independent administration in Austria
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Principles ofSocial Insurance in Austria
Solidarity is an act of conscious consideration, based on the
knowledgethat human beings depend on each other.
informal personal simple structure emotional integral
institutionalised societal complex structure neutral
specialised
4
Solidarity is the basis for social insurance:
Contribution-wise there is a transfer from high to low
earners.
Benefits provide a balance between those worthy of protection
and those less needy.
Many family members are provided with insurance cover for
free.
In the pension insurance system, there is a transfer from
employed personsto pensioners = contract of the generations.
Employers and employees both contribute to the system's
financing.
solidarity amongst friends
wealth freedom
social justice
solidarity
Solidarity
solidarity amongst strangers
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Principles ofSocial Insurance in Austria
Compulsory insurance is characteristic of theAustrian social
insurance system,
which thus includes practically all employed persons.
5
obligation to insure means that:
everybody has to take out insurance on his/her own
there is risk selection between high and low risk persons(no
obligation to contract)
higher or additional premiums for women, children and the
chronically ill
higher administration costs
Gainful employment leads to
compulsory insurance
providing insurance cover
compulsory insurance means that:
insurance is established by law
insurance cover begins immediately without any waiting period
(even in casesof previous serious illnesses)
the large number of insured persons guarantees an optimum spread
of risks
close dependants are insured on a non-contributory basis
contributions do not depend on individual risk
the large community of insured persons strengthens the
negotiating power ofthe social insurance system versus its
negotiating partners (doctors, pharmacists,...)
Compulsory insurance
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Principles ofSocial Insurance in Austria
Private insurance companiescan reject high risks (because of
a
higher occupational risk of accidents,old age, previous
illnesses,...).
Private insurance companiesregularly exclude benefits under
particular circumstances, such as delayin the payment of
premiums.
Social insurancemust not reject insurance
established by law.
Social insurancemust not turn away people
due to high risk (people with AIDS,severely disabled
persons,...).
Medical benefits are available to all insured persons
irrespectiveof their individual risk.
6
Social insurance – both regarding contributions and benefits -
does notdistinguish between high and low earners, young or old
persons, males and
females, or the healthy and the chronically ill.Private
insurance generally provides additional insurance for certain
services
(e.g. special hospital rooms, additional pensions).
No exclusion of risks
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Principles ofSocial Insurance in Austria
Social insurance provides high-quality services for all insured
persons.€ 97.5 of every € 100 in contributions is returned to
insured persons in the form of benefits.
Social insurance is legally required to use contributions
effectivelyas well as economically and primarily follows social
rather
than market objectives.
7
Administration costs as a percentage of total expense:
6.1 %
2.3 %
15 – 30 %
Private insurers in Austria(excluding advertising
expenditure)
Social insurance in Austriaoverall (2003)
Private insurers in Austria(including advertising
expenditure)
Pay-as-you-go system
State pensions are financed by means of the pay-as-you-go
system. This means that currentpensions are mainly financed through
contributions of the working population. The rest isfinanced
through general taxation.
Pay-as-you-go system means:
no investment or inflation risk
fast and economical collection of contributions
stronger feeling of solidarity
low administrative expenses
Funded system
Funded system means:
everybody has to save towards his/her pension
premiums and benefits vary
investment and inflation risk
high administrative expenses
Under the funded system everybody has to save towards his or her
own pension themselves.This system is mainly to be seen as an
addition to the state pension system, to make up forincome losses
in old age.
Not profit-oriented
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Social insurance in Austria, with its three branches health,
accident,and pension insurance, provides comprehensive
protection.
Almost the total Austrian population is covered byat least one
branch of social insurance.
Social Insurancein Austria
The three branches of Austrian Social Insurance:
Total income of thesocial security system in 2002
Total expenditure of thesocial security system in 2002
8
in case of illness and maternity,for approximately 7.9 million
people
health insurance
in case of accidents at work and occupationaldiseases, for
approximately 5.7 million people
accident insurance
providing for old age and surviving dependants,for approximately
5.2 million people
pension insurance
= 1 million people
e.g..state payments, mainly for contribution-freeinsurance
periods in the pension insurancesystem (approx. €
4.8bn)Compensation for compensatory supplement expensesin the
pension insurance system (approx. € 0.8bn)Deductibles paid by
insured persons (approx. € 0.5bn)Reimbursements for maternity
benefits (approx. € 0.3bn)
Employers' and employees'contributions
approx. € 27.9bn
health insuranceapprox. € 10.9bn
accident insuranceapprox. € 1.0bn
pension insuranceapprox. € 24.0bn
Other incomeapprox. € 7.9bn
Protection
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Approximately 3.2 million employed persons are insured in the
pensioninsurance system. Every month roughly 2 million pensions are
paid out.
The social pension insurance system is by far the most important
form ofprovision for old age in Austria. It ensures a fairly
comprehensive protection
of one's standard of living in old age.
Social PensionInsurance in Austria
The entitlement to a pension depends on how long a person has
been insured, on theassessment basis and (in the case of retirement
pensions) on the person's age.
Proportion of final net income to first net pension, retirement
pension(rounded figures in 2004 in €)
insurance years
last net income: 1,236
insurance years
last net income: 2,074
1) € 1,698 highest possible initial pension in case of income
exceeding the upper limit assessment basisand 45 accumulated
insurance years.
2) Should the 2004 pension (including all other in come) fall
short of the standard value of € 653 (€ 1,015 for husbandand wife),
an additional compensatory supplement is provided for try the
state.
substi-tutionrate
83 % 75 % 56 %
substi-tutionrate
82 % 73 % 58 %
1,027 927697
1,519
1,110
first
net
pen
sion
2)
9
Social pension insurance benefits:
Retirement Pension
Early Retirement Pensionafter an extended period of
insurance(with transitional arrangement)
Reduced Capacity to Work Pension(incapacity to work)
Surviving Dependants Pension
Rehabilitation Measures
Health Care
3545 25 3545 25
1,6981)
Provision for old age
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Increasing life expectancy and a low birth rate are changingthe
age structure of the population. The resulting challengesfor the
pension system can be managed, if timely reforms
adapt the system to the new situation.
Social PensionInsurance in Austria
10
1)1000 persons per year of age
Population pyramid 2000and forecast for 2030
Development of the pension per employeerate (number of pensions
per 1000 personsgainfully employed)
230
180150
100
Development of gross domestic productReal (1970 = 100 %) – at
1995 prices
1970 1980 1990 2000
619590522487
1970 1980 1990 2000
age inyears
90
80
70
60
50
40
30
20
10
60 40 20 0 0 20 40 601)
forecast 2030
Change in the relation between education – work – pension
1970
2002
Proportion of pensionersas a percentage of the
totalpopulation
retirement
24 years
14 years
education working life
23 years 35 years
19 years 44 years
23
19 63
58
77
82 24 %
17 %
Long-term Financing
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The number of persons insured in the accident insurance system
was onaverage 5.7 million people in 2002. The accident insurance
scheme isfinanced through employers’ contributions (99.6%) and the
Families’
Compensation Fund (0.4%).
Social AccidentInsurance in Austria
An example:A schoolchild suffers a complex leg fracture on a ski
course and has to be recovered by helicopter.A fortnight of
in-patient hospital treatment at a specialist accident hospital is
necessary, followedby a 21-day stay at a rehabilitation centre.
The overall cost amounts to approx. € 11,000,–
11
Since 1977 schoolchildren and students have been includedin the
social accident insurance system. Accidents which areconnected with
education or training will lead to receipt of a socialaccident
insurance benefit: e.g. accidents on the way to and fromschool,
accidents which take place during lessons or lectures,excursions,
or school skiing trips. For benefit to be claimed theaccident
insurance institution must be notified of the accident.The Head of
the school or educational institute has a statutoryduty to register
accidents. The insured schoolchildren andstudents need not pay
contributions. The insurance isfunded by general insurance
contributions and the Families´Compensation Fund.
Protection for schoolchildren and students
Social accident insurance benefits:
Prevention of Accidents at Work andOccupational Diseases
Occupational Medical Care
Medical Treatment after Accidents
Rehabilitation
Compensation after an Accident at Work andfor Occupational
Diseases; e.g. disabilitypension, benefits for surviving
dependants,integrity compensation
Provision in case of accidents at work
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Today, roughly 7.9 million people, or 97% of the population, are
protectedby social health insurance.
Social HealthInsurance in Austria
appendix operation € 550.–hip operation € 4,300.–cardiac valve
surgery € 7,900.–
examples of costs of operations(without costs of care,
rehabilitation or
sickness benefit):
12
Social health insurance services:
Preventive care– Mother-Child Passport– medical examinations for
young persons– medical examinations– preventive measures
Sickness– treatment by doctors and dentists– hospital care–
medicines– home medical care– psychotherapy– clinical psychology–
medical rehabilitation– ergotherapy– sickness benefit–
reimbursement (e.g. doctor of one's choice)– contributions towards
expenses (e.g. dentures)
Health aids (e.g. shoe inserts) andaids for the disabled (e.g.
wheelchairs)
Maternity– hospital care– maternity allowance
A monthly contribution of, on average, € 61 provides an insured
person and his/herdependants with comprehensive cover: treatment by
general practitioners, hospitalcare, ... Roughly 28% of the persons
covered are dependants, who are insured withoutpaying
contributions.
Protection in case of illness
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With the health service vouchers and, from 2004, the
e-card,medical services, which otherwise would entail high
bills,
can be consumed without payment.
Social HealthInsurance in Austria
This principle is called benefit-in-kind principle.
13
Health insurance institutions enter into contracts with doctors
and other parties(pharmacists, physiotherapists, ...).
Doctors under contract are obliged to treat patients on the
basis of vouchers (or the e-card).They later get paid for their
services by the health insurance institution.
Most insured people pay a fee of € 3.63 per voucher, public
servants andself-employed persons have to pay a deductible of 20%
of the doctor's fees.There are various exemptions.
The benefit-in-kind principle offers simple and unbureaucratic
accessto medical services.
Special emphasis is being puton keeping down costs for
medication: increase
of approx. 6.7% from 2001 to 2002!By comparison:
increase from 1997 to 1998 of approx. 13.4%!
Largest expenditure items of social health insurance(1990 – 1995
– 2002 in € m):
727
182
1990 1995 2002
1,3811,599
1,090
327
2,035
2,544
2,199
357
2,667
3,035hospital care
health aids
treatment bydoctors
administrativeexpenses
Access to Benefits
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Austrian Social Insurance is also present on the Internet!This
enables customers to contact the social insurance institutions
fast
and unbureaucratically. “Electronic Social Insurance (eSV)” –
thefuture-oriented initiative by all social insurance institutions
to provide
a customer-friendly Internet service
Social Insuranceon the Internet
14
eSV – electronic social insurance
Information on health, accident, and pension insurance
Forms and brochures for download
Statement of your insurance data, queries regarding insurance
status
Up-to-date graphs on the Austrian Social Insurance System
Health advice
Quiz on social insurance and health
Feedback
Ordering health vouchers
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