The responsibility in Austrian health care has been divided between the federal and nine autonomous provincial authorities. This division is defined in the federal constitution. The federal authorities are responsible for basic legislation concerning health care but the executive regulations and implementation are in the hands of the provincial authorities.

The federal government has been responsible on reform process in order to control the cost but prevailing the principles of equal access for all and solidarity in financing trough public compulsory health insurance. The core of the reform is an Austrian Health Care Plan and the introduction of a performance related hospital financing system.

Individual physicians in private practices provide the most part of primary health care under contract with the health insurance agencies. Hospitals are mostly in private ownership. Healthcare financing is based to social insurance and subsidised by taxes (12%). The Regional Health Funds get their incomes based on federal and regional taxes and public health insurance contributions which are budgeted for the next three years. Funds may also finance alternative health care facilities. The social insurance system is compulsory and covers nearly everyone. Some 40% of the population have supplementary private health insurance.

Primary care is free f charge for 80% of population and the rest has co-insurance or they are exempted due to the low income. In institutional care out of pocket liability is limited to first 28 days. Specialised care and prescribed drugs include both co-payments and co-insurance.

Primary care providers get their incomes based on fee-for service system. They do not have a gate keeping role. Simultaneously, with the introduction of the performance related hospital financing system (Austrian Diagnosis Related Groups) whole hospital financing has been reformed. They are now financed jointly by the owners and by the public Regional Funds, one in each of the nine provinces. In some provinces, these Funds provide all the public money for the hospitals, while in others there is additional financing available from provincial and local governments.