Private sector helps limit waste

The Slovak Spectator (TSS): What will happen to the health insurance market if the ministry carries out its plan to oblige people whose health insurance premiums are paid by the state to use one of the two state-owned health insurers?

Juraj Karpiš (JK):With the help of such legislation, the state would effectively control 60 percent of the insurance market. This would limit potential resources for non-state health insurers and reduce their power and influence. Such a measure would also fix the volume of financial resources, which would be decided by state bureaucrats, and would limit the freedom of choice between health insurers for many people.

TSS: As well as forcing people to take out insurance with VšZP and SZP, the ministry is also planning to change these two companies back into 'public institutions'. What would this mean?

JK: Joint stock companies are standard and transparent legal entities that have to abide by the Commercial Code. Losses can be identified easily and responsibility lies with concrete individuals - the managers of the given companies. Changing state insurers back into public institutions would reduce pressure for balanced management and would mean a return to "soft budgetary criteria". This is suggested by the [ministry's] draft Act on Public Health Insurance Companies, which enables "returnable financial assistance" [i.e. state subsidies] to be handed out to such entities. This would again give state insurance companies an advantage over private companies, which do not have unlimited access to public resources. It would also again encourage poor management at state health insurers. The last time SZP was bailed out, in January 2006, it cost Sk450 million in public funds, for instance.

TSS: Minister Valentovič is allegedly also considering the introduction of a single state insurer, arguing that a similar model is used by several EU member states. He says that among other things, the system would prevent the uncontrolled establishment of new insurance companies on the market. What do you think of this idea?

JK: This proposal de facto means the nationalization of health insurance in Slovakia and a return to the situation before 1994, when Slovakia only had a single health insurance company. If private health insurers were eliminated from the market, there would no longer be any pressure for efficiency and quality care. In addition, state bureaucrats would have the only word on distributing more than Sk80 billion [in health insurance premiums] among health care providers, which would create huge opportunities for corruption.

Private health insurance companies help to limit the waste of health care services, as unlike state insurers they are motivated by profit to punish health care providers that waste available funds or provide poor quality care. The effort of private insurers to make a profit slows the growth of health care spending and is a natural counterbalance to the interests of health care providers.

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