Financing the Public Health System

Austria's public health system is predominantly financed by payroll-based contributions. The study examines the effects of alternative financing sources. Raising the ceiling on insurable earnings by 25 percent would yield an additional € 220 million per year, which on balance would allow reducing the contribution by 0.4 percentage points. Extending the contribution base to rental incomes subject to a rate of 7.5 percent would generate some € 80 million. Changing the employers' health insurance contribution to a value-added regime would allow reducing the contribution rate of 3.6 percent of the payroll (up to the ceiling) to 1.6 to 2.6 percent of the value added (depending on the definition). Raising the special taxes on consumption (levied on mineral oil, tobacco, alcohol, etc.) by a quarter would permit cutting the health insurance contribution by 1.25 percentage points.