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MERGING THE TWO PUBLIC INSURERS IS NO LONGER AN IMMEDIATE OPTION

Health Minister Valentovič changes his mind

SLOVAKIA'S Health Minister Ivan Valentovič has changed his mind over a proposal that has already brought turbulence to the country's health care sector.
In May, the minister proposed the creation of a single public health insurer. But now he says that merging the two public health insurers, Všeobecná Zdravotná Poisťovňa and Spoločná Zdravotná Poisťovňa, before the adoption of the euro is not such a good idea.

SLOVAKIA'S Health Minister Ivan Valentovič has changed his mind over a proposal that has already brought turbulence to the country's health care sector.

In May, the minister proposed the creation of a single public health insurer. But now he says that merging the two public health insurers, Všeobecná Zdravotná Poisťovňa and Spoločná Zdravotná Poisťovňa, before the adoption of the euro is not such a good idea.

The merger, if it goes ahead now, would strengthen the position of private insurers and thus destabilise the health insurance market, Valentovič said.

When the minister first came up with the idea of a single public health insurer, he argued that the current health insurance system puts pressure on state health insurance companies, so the best way to save money would be to establish one health insurance company funded from public sources.

Slovakia currently has two state-owned health insurers, while the other four - Dôvera, Union, Apollo, and Európska Zdravotná Poisťovňa - are privately owned.

The merger would make the flow of finances between the insurers and health care providers less transparent and confuse clients, the ministry wrote in its official report to the cabinet.

It would be financially and administratively demanding and it would bring negligible financial effects.

During the merger process, both public insurers would lose clients due to the campaigns that private insurers would run, the ministry said. The ministry also expects the merger would inflate health care prices.

Private health insurers, however, said that the recent statements by the Health Ministry have had a negative effect on the sector.

"Union has the feeling that Mr. Valentovič has recently been destabilising the market, and as such, also the clients," Nina Zelníková, spokeswoman of the Union health insurer, told The Slovak Spectator.

Dôvera said it interpreted the minister's latest move as an expression of chaos and a lack of concept.

"While he just recently proposed and defended the creation of a single health insurer, now he says the opposite," Patrik Mozola, director general of Dôvera, told The Slovak Spectator. "It is proof that the minister is unable to prepare and handle the demanding process of merging two public insurers."

The ministry also argued that "there is a lesson to learn from previous mergers of health insurers."

An official Health Ministry document referred to the failed merger of health insurer Perspektíva with Všeobecná Zdravotná Poisťovňa, which resulted in serious financial losses that remain unsolved for the public insurer.

The merger of public insurers could only benefit the market if public health insurance is provided by a single insurer and other health insurers provide only comple-mentary health insurance, the document further says.

The ministry also said that the revision to the Act on Health Insurers, which cuts the cap on the amount of collected premiums that health insurers can use to cover administration costs from four percent to three percent, would harm the eventual merger. The ministry argues that the merger would in fact inflate administrative costs, and also the number of employees.

Anton Kováčik, the general director of the largest public health insurer, Všeobecná Zdravotná Poisťovňa, considers the ministry's decision to shelve the merger a good move.

Stabilising insurers with the three-percent operational costs and handling the transition to the euro will reduce the risks, and the merger process will be simplified, Kováčik told the press.

"Currently, when a fight for clients is raging, merging these insurers without perfect preparation is very demanding," Kováčik said.

The ministry said that the eventual merger of the insurers was planned for the time of the country's entry to the eurozone, which itself is costly. Merging insurers at the same time would be an immense financial burden.

The arguments that the ministry used to defend the preservation of two public insurers are contradictory, Mozola said.

"On one hand the ministry proposes to cut the operational expenses to three percent, but at the same time it uses the same argument as a reason why the two public insurers cannot merge," Mozola said. "The claim that at least two years after the merger it is impossible to expect job losses, but on the contrary an increased work force, is also probably a world curiosity."

The number of employees dropped from 770 to 520 in the first three months after the merger of Dôvera and Sideria, according to Mozola.

The ministry's proposal is more proof that it does not have a clear concept and vision of the direction Slovakia's health care sector should take, Tomáš Szalay of the Health Policy Institute told The Slovak Spectator.

Recently, the draft bill that would prevent private health insurers operating in Slovakia from using their profits to pay dividends to shareholders evoked a massive protest from the private health insurers.

The revision, which substantially modifies the way health insurers operate on the Slovak market, still has to make it through parliament. The previous two drafts tailored by the ruling coalition's Smer party failed in parliament.

Prime Minister Robert Fico and Valentovič argued that health insurance companies are making their profit from public funds, and thus it would be inappropriate for them to use these funds to pay dividends to their shareholders.

Health insurers said that the bill was a systematic attack on their operation. If parliament passes the bill, the insurers said they would take the legislation to international courts.

"This government has taken the road towards creating a single insurance company," Eduard Kováč, executive director of the Association of Health Insurers, told The Slovak Spectator.

The health minister of the Mikuláš Dzurinda government, Rudolf Zajac, wanted to introduce two types of health insurance: public, which would be obligatory, and voluntary. The latter would have covered services that go beyond the scope of general insurance.

Hospitals and health insurers would have been transformed into joint stock companies where managers would be responsible for the financial situation of their institutions, based on Zajac's reform ideas. The current government killed Zajac's reform plans.

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