The range of services provided by the Austrian health care system has been greatly extended over the last few decades. The accompanying measures for long-term care bring the situation closer to the ideal concept of a 'seamless web' between primary, secondary and tertiary care. Due to the expansion in services it has become increasingly difficult to ensure the balance between the financing and degree of usage of the services. The reiterated political aim has been to achieve balanced financing via legally fixed social health insurance (SHI) contributions and taxation. A steadily expanding part is contributed by the private sector. In the 1980s, measures for SHI expenditure containment were implemented; in 1997 a new hospital financing system based on flat rates was introduced. In order to guarantee hospital financing, the historical financing shares of the SHI for the hospitals were introduced in the form of valorised global budgets. The contradictory incentives arising from the flat rates and global budgets lead hospitals to shift services to the primary and tertiary care sector, causing additional expenditure for SHI. Currently, attempts are being made to secure the financing by increasing the SHI contribution rates and patients' co-payments. Copyright