Austrian Health Funds Face Crisis

Austria's health funds are reporting growing deficits, with a funding shortfall of nearly EUR320mn (US$390mn) estimated for 2004. The funds cover roughly 75% of Austria's 8mn insured citizens, who increasingly complain that higher co-payments and restrictions on health services have led to worsening healthcare provision, especially among lower-income groups.

The ongoing financial problems of the sick funds contrasts with the outlook in neighbouring Germany, where funds and retailers have reached a compromise on co-payments and the sector's financial health at last appears to be improving.

Meanwhile, as Austrian consumers are effectively unable to change their health funds, the officially stated principle of universal and equitable healthcare provision is now looking increasingly strained.

Roughly three-quarters of all pharmaceuticals sold in Austria are reimbursed by the health funds, but their worsening financial performance is affecting the market. Government agencies have resorted to greater generic prescribing and restrictions to the approved drugs list in recent years, which is also expected to depress market growth in the medium term.