THE COUNTRY’S smallest health insurer has shut up shop in response to the government’s vision for the country’s health insurance market. Európska Zdravotná Poisťovňa (EZP) abandoned its business just a few months after the government of Robert Fico obliged health insurers to channel all their profits back into the healthcare system.
The EZP began operating in Slovakia in January 2007, attracting a 2 percent market share by the start of 2008, according to the Healthcare Supervision Office. Market watchers said that the departure of the insurer will weaken competition in the Slovak healthcare market, which now features two state-run and three private insurers.
“We made the decision to leave based on changes to the legislation pertaining to health insurers,” Maroš Sýkora of J&T, the financial group which founded the insurer, told The Slovak Spectator.
Private health insurers in Slovakia are banned from paying out dividends to their shareholders, based on an amendment to the Health Insurance Act that the Slovak Parliament passed on October 25, 2007. Instead, any profits they make have to be fed back into the healthcare system. Private health insurers were critical of the law, and some have been considering taking Slovakia to the international courts.
The Healthcare Supervision Office attacked EZP for the way it closed its business, saying that the insurer should have asked for the authority’s approval first.
Chairman of the Healthcare Supervision Office Richard Demovič said that the insurer in fact “left more than 128,000 clients on the street, uninsured”.
“A responsible way to proceed would have been first to request the transfer of policyholders [to a different insurer] and only after that to cancel its status as a European Health Insurer and enter liquidation,” Demovič told the public-service broadcaster Slovak Television (STV).
The healthcare watchdog is now proposing another change to the legislation to prevent health insurers from quitting the business without its approval.
The supervision office said that EZP’s clients had been moved temporarily to Spoločná Zdravotná Poisťovňa (SZP), the state health insurance company, adding that the move will in no way affect their rights as policyholders.
“Whether EZP’s clients remain in SZP or are transferred into another insurer will be up to EZP’s liquidator,” Milan Michalič, spokesperson for the Healthcare Supervision Office, told The Slovak Spectator. He said he expects all commercial questions related to EZP to be resolved by June 30, with decisions about which insurer EZP’s clients will be moved to being made afterwards. For now, EZP’s clients have been moved to SZP free of charge; the next potential move will depend on any offer made by insurers interested in EZP’s clients, explained Michalič. Health insurers are unhappy at the prospect of being forced to seek approval from the supervision office if they want to close; and EZP said that no client was left without health coverage.
“At the time of announcing EZP’s entry into liquidation, we declared that all payments to healthcare providers would be covered just as before,” J&T’s Sýkora said. “Clients have no reason to worry.”
Moreover, the Healthcare Supervision Office decided to transfer policyholders to the Spoločná Zdravotná Poisťovňa by the same date that EZP entered liquidation, Sýkora added.
However, Demovič questioned the health insurer’s declared reason for quitting the market.
“By March 31, the insurer posted a loss of Sk26 million, which makes its statement that ‘we were not allowed to make a profit so we are leaving’ rather hard to believe,” Demovič said.
However, Tomáš Szalay, head of the Health Policy Institute, said that, in fact, EZP is the first visible victim of Fico’s healthcare reform, since it was the prime minister himself who last year pushed through the ban on health insurers extracting profits.
“For clients, the departure of EZP means seeing their options reduced, since only five health insurers remain on the market, of which two are state-run,” Szalay told The Slovak Spectator.
According to Szalay, the government has made no secret of its ambitions to build a state-run healthcare system and the legislation seems to reflect this goal.
Another private health insurer Apollo, which declared an interest in policyholders of EZP, said it does not think the insurer’s departure will dramatically shake up the health insurance market.
“The decision of EZP will have only a minimal impact on the share of health insurers on the market,” Apollo spokeswoman Radoslava Miklášová told The Slovak Spectator.
Currently, the closure favours the state-run Spoločná Zdravotná Poisťovňa; after January 1, 2009 EZP’s share of the market, which is approximately 129,000 clients, could be dispersed among the other health insurers, Miklášová said.
Apollo, which has been operating for the past 13 years, plans to continue operating in the market, she added. However, Szalay has a different take.
“Thanks to the revision to the law, the government has the right to sack the head of the supervision office, basically at any time, without giving any reason for doing so,” Szalay told The Slovak Spectator. “Can you under such conditions imagine that the chairman of the office would sign a decision to transfer these clients to a company other than a state-run insurer?”
According to Szalay, the departure of a health insurer from the market is a normal move and he doesn’t see EZP clients facing any danger.
“[EZP’s] clients would never have been endangered since the legislation regulates the temporary transfer of policyholders,” Szalay said. “I consider any amendment to the law so that ‘without the intervention of the [supervision] office no health insurance company can disappear’ to be quite dangerous.”
If for example the supervision office does not consent to the liquidation of the insurer, it would amount to a major barrier to leaving the market, which, after the ban on paying profits, would further devalue the investments of the insurer’s shareholders he added.
According to Szalay, the departure of EZP will in fact strengthen the position of the state-run health insurers on the market.
It means the share of private health insurers has dropped by 2.4 percentage points and the share of state-run insurers has increased by 2.4 points, said Szalay.