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Ailing insurers oppose cure by junction

THE HEALTH Ministry plans to medicate the problems of the two biggest Slovak insurance houses, Spoločná zdravotná poisťovňa (SZP) and Všeobecná zdravotná poisťovňa (VšZP), which have been in court over the debts of SZP towards a special payment re-distribution pool, by merging the insurers.
SZP's debt towards the pool climbed to Sk2.4 billion (€58.34 million) between 2000 and 2002, when the insurer refused to transfer part of the compulsory insurance premiums collected from its clients to the fund.

THE HEALTH Ministry plans to medicate the problems of the two biggest Slovak insurance houses, Spoločná zdravotná poisťovňa (SZP) and Všeobecná zdravotná poisťovňa (VšZP), which have been in court over the debts of SZP towards a special payment re-distribution pool, by merging the insurers.

SZP's debt towards the pool climbed to Sk2.4 billion (€58.34 million) between 2000 and 2002, when the insurer refused to transfer part of the compulsory insurance premiums collected from its clients to the fund.

The health insurance law obliges all five Slovak health insurers to tuck in a portion of their premiums into the pool, from which the funds get redistributed among the insurers based on the numbers of economically active and non-active clients. The poll operates on a solidarity principle, which forces insurance houses with more economically active clients to help the houses that insure more of the elderly, children, and women on maternity leave.

However, the state-controlled SZP, which had been established primarily to serve employees of the national railway company, the police, and the Slovak Army, mostly insures economically active clients. Thus it was drawing considerably less money from the re-distribution pool than it had been depositing into the fund.

SZP is the product of an Interior Ministry insurance house merger in which the health insurer of Slovak Railways joined with the military's health insurance company, to create 700,000 clients. Of this number, 200,000 clients are either employees of the railways, army members, or police who fall under a special insurance regime.

Slovak railways primarily dragged SZP into debt by not paying the compulsory insurance payments for its employees; they owe Sk1.3 billion (€31.6 million) to the insurer. The hope that SZP can get the missing payments from the railways is rather feeble.

SZP's failure to transfer funds to the redistribution pool has affected the other state-run insurance house, VšZP, which insures the most economically non-active clients.

However, SZP claims that it has been regularly transferring the fee to the redistribution pool since October 2002.

As of January 2004, the insurance houses should be transformed into joint stock companies.

The Health Ministry claims that merging the taxpayer-driven insurers could prevent future problems that the planned transformation of the health insurance companies might bring.

However, SZP opposes its merger with Slovakia's largest health insurer (VšZP). SZP director Peter Kvasnica told news wire SITA on September 22 that the law on SZP only enables the abolishment of the insurer - not its merger with another company.

SZP's Rudolf Martančík told the financial daily Hospodárske noviny that once SZP is dissolved, Slovakia will be the only NATO member country lacking separately guaranteed health care financing for army members and their families.

According to Martančík, most countries cover health care for soldiers either directly from the state coffers or through a special institution or health insurer. The merger of SZP with the VšZP will, after all, put pressure on the departments of the interior and defence, which will have to seek funds to cover special health care for the military and police. It will annually drain Sk75 million (€1.82) from the state budget.

Moreover, Kvasnica does not think that the merger can solve the debts. "Unless we collect due premiums from the railway company, SZP will be unable to settle its debts," Kvasnica told news wire SITA.

The VšZP management has also expressed that the merger will most likely not solve the SZP's debts towards the pool.

Five health insurance companies operate on the Slovak market. SZP and VšZP are taxpayer-driven, while Apolo, Sidéria, and Dôvera are in private hands.

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