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INSURANCE - CRITICS LABEL THE GOVERNMENT'S THERAPY LETHAL

Government prescribes a "cure" for health insurance

WHEN PM Robert Fico cancelled the Sk20 fee for a visit to the doctors and the Sk50 fee per day at the hospital, the government was hoping that the public would see it as a sign that the country's troubled health care was at the top of the government's agenda.

WHEN PM Robert Fico cancelled the Sk20 fee for a visit to the doctors and the Sk50 fee per day at the hospital, the government was hoping that the public would see it as a sign that the country's troubled health care was at the top of the government's agenda.

Whether or not the public got the message, the move did manage to evoke violent reactions from health care professionals.

However, the real fight over health care did not start until Fico announced the government's plan to stop health insurers from making a profit, saying that health insurers should only keep four percent of their revenues to cover costs and re-invest the rest in the health sector.

"We are against a profit being made from health insurance because that would be the easiest money-making scheme in the world," Fico said. "Send me your money, I'll keep seven or eight percent as profit and then send the rest to the health sector."

The government is now aiming to revise some of the reforms made by the previous health minister, Rudolf Zajac, in order to bring the sector more in line with their social-democrat ideals.

The Health Ministry has already submitted its proposed changes to the cabinet for discussion. These changes would forbid insurance companies from making a profit, transform the state health insurance companies from joint-stock companies into state institutions, and make it compulsory for all people whose insurance is paid by the state to register with state-owned insurers.


An equal playing field


Slovakia currently has six health insurance providers of which two, Všeobecná Zdravotná Poisťovňa (VšZP) and Spoločná Zdravotná Poisťovňa (SZP), are owned by the state and the other four, Dôvera, Union, Apollo, and Európska Zdravotná Poisťovňa, are private.

Tomáš Szalay of the Health Policy Institute estimates that private health insurers turned a profit of approximately Sk1 billion (€30 million) last year, and stated that health insurance companies should have the right to make a profit just as other health care organisation.

"Pharmaceutical companies, medical technology producers, suppliers of medical products, and even the bakeries that supply the hospital with rolls all work in order to make a profit," Szalay said. "Should they also give up their main motivation for working?"

Eduard Maták of Penta Investments, a private equity company that has a share in two private health insurance companies, a 100 percent share in Dôvera and a 49 percent share in Apollo, agrees with Szalay.

"If we are not going to make a profit, then I don't see the point in investing billions in the health sector," Maták said. "We are not a charitable organisation." He added that the government's efforts might end in the private sector pulling out of the health service business.

However, the managing director of the publicly owned VšZP, Anton Kováčik, said that the conditions set out for private and public health insurance companies should be the same.

"It is unacceptable that private insurers manage profit in a different way than public insurers do," Kováčik said.

VšZP and SZP's revenue is fed back to the state, which owns a 100 percent share in both of them, and is added to the state's budget while private health insurers' profit ends up in the bank accounts of their shareholders.

"The mission of a health insurer, according to European Union principles, can't be the maximising of profit for shareholders," Kováčik told The Slovak Spectator.

Kováčik is convinced that health insurance companies' main task is to administrate finances in the health sector.

According to Maták, however, the role of health insurers includes more than just collecting fees and dividing the money among health providers. "If that was their only job, tax offices could do it instead of them," he said.

He added that insurers should actually pay more to health care providers who offer a higher level of service and professionalism, as this would stimulate competition on the market. He said that when money is equally divided among health care providers, the result is a loss of motivation to be more effective and offer better quality services, offering the Fakultná hospital in Bratislava as an example.

"Although some of its six departments are in unsatisfactory condition and are in urgent need of reconstruction and modernization, the hospital still neglects making any changes to the budget and instead asks for more money from the insurer," he said.


Taken under the state's wing


All the citizens whose insurance dues are paid by the state, such as children, pensioners, the unemployed, and women on maternity leave, might be soon forced to switch to the state-run VšZP if the parliament approves the cabinet's amendment to the Insurance Act. If they don't want to be insured by VšZP, they will be able to move to SZP, the state's second health insurance provider, starting in January 2008.

According to the Health Ministry, the state should have better control over the money it puts into the system, because it pays more than anyone else in health care dues.

"The proposed changes aim to ensure that economically inactive citizens will have state-guaranteed health care. The state puts the sum it pays for a certain group of citizens under the care of a health insurer in which it has a 100 percent share. At the same time, it can also ensure that the insurer pays for quality health care," the Health Ministry said in a statement to The Slovak Spectator.

Szalay said that forcing a particular group of citizens to take on a certain insurer means breaking the conditions under which health insurers are licensed to provide services.

"It means that the citizens might have to accept an insurer they would probably never choose if not forced to," Szalay said.

As for other insurance companies, the state health insurers would be managing 87 percent of all health service resources, which would enforce their dominant position on the market and weaken the influence of private sector, he said.

However, according to Kováčik, the more people who are insured by a single health insurance company, the easier it is to enforce the solidarity principle.

"We [VšZP] are able to provide the necessary level of service since we have the most experience in the health care sector," he said.

According to the Health Care Surveillance Authority, Slovakia's two publicly-owned health insurance companies have a 67 percent market share, which comes to about 3,6 million people, while only around 1,7 million citizens are insured by private health insurers, most of them (around 760,000) with Dôvera.

A massive influx of new clients into VšZP, especially people who have either lost their job or gotten a new one and graduates who have just started working, will result in a lot more bureaucracy, said Maták, adding that he cannot really accept the government's reasons for proposing the bill.

"They claim that the state covers the health insurance premiums for economically inactive people, but it's the citizens who are the source of that money; it comes from our taxes," he said. "I pay a premium to my health insurance company and I also pay taxes. I don't see why my retired parents or my wife on maternity leave should be insured by a different health insurance company than myself."

If the state adopts these policies, private health insurance companies will probably consider legal action, said Maták, who is also the head of Dôvera's supervisory committee. If people whose health premiums are paid by state move to a public health insurer, Dôvera will lose around half of its clients.

Szalay thinks that legal proceedings would be justified: "The prepared change in the health service sector contradicts the Slovak Constitution and European Union law," he said "In the case of health insurers with foreign shareholders there might also be a conflict in Investment Protection contracts."

Private health insurance companies could bring their complaint to the Constitutional Court, the European Commission or International Arbitrage. It is estimated that the Slovak republic could lose over Sk30 billion in legal proceedings.

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