Scathing report

Graz: mismanagement of civil servants’ insurance

Hans-Georg Windhaber, head of the City Court of Audit, tore apart the KFA, which is responsible for around 10,000 policyholders in the city of Graz.

(Bild: Krone KREATIV/Christian Jauschowetz, Opernfoto)

According to a Court of Audit report published on Thursday, the health insurance company of the city of Graz (KFA) is in serious trouble. A panel of experts must now clarify whether the insurance for around 10,000 Styrian civil servants can be saved at all. 

Rarely has a report by the Graz City Court of Audit been formulated so harshly. On the very first pages it is written in large letters: "The KFA is a risk for the city of Graz, for its insured and for itself. Its continued existence would be expensive for the taxpayers and policyholders of Graz".

The small but excellent health insurance fund for around 10,000 employees and pensioners in the Styrian capital has been under financial pressure since the coronavirus pandemic at the latest. This makes it all the more disturbing that virtually none of the expert recommendations from 2005 (even back then, the Court of Audit had a long list of shortcomings) have been implemented.

Sickness benefit from day 4
One thing in particular is costly for the KFA: unlike in all other Styrian municipalities, contract employees in Graz have to receive sick pay from the fourth day instead of the seventh week of sick leave and pay this themselves as a community. "The KFA also pays higher prices for medication than other health insurance funds," says the almost 100-page report.

The city must be able to afford the new approach and there must be no disadvantages for the insured.

KPÖ-Bürgermeister Elke Kahr zu den angestrebten Sanierungsmaßnahmen

Bild: ERWIN SCHERIAU / APA / picturedesk.com

The main points of criticism from the auditors, led by Hans-Georg Windhaber:

• The administrative system was "completely outdated" and also "uneconomical and very error-prone".
• The economic situation was "precarious".
• The IT is "hopelessly outdated".
• The organization is "unstructured".
• Benefits were "paid out to people without entitlement ".
• Invoices were simply released "without sufficient documentation".
• The control environment was "inadequate" .

"In short, there has been very little in the way of management and leadership in recent decades. On the contrary, the same problems still exist today that inspections revealed 20 years ago," the paper reads verbatim.

Mayor pulls the emergency brake
Mayor Elke Kahr's office recently announced that the current head of the KFA, Klaus Frölich, who was considered a confidant of former city boss Siegfried Nagl, would soon be retiring, while Anita Tscherne (from the Human Resources and Legal Department) was entrusted with the management agendas on an interim basis.

There are now two options for the future: either the insured persons are transferred to BVAEB (Versicherungsanstalt öffentlich Bediensteter, Eisenbahnen und Bergbau) or the insurance company is broken up and completely restructured.

"We have now commissioned our own study on this and have a neutral stance on all necessary measures. We will adhere to the results of the expertise," says Mayor Kahr's office. Postscript: "There are only two conditions from our point of view: the city must be able to afford the new approach and there must be no disadvantages for the insured."