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Cash worries over state health insurer

THE ECONOMIC crisis is putting a large dent in the budget of the country’s biggest health insurer, Všeobecná Zdravotná Poisťovňa (VšZP).

THE ECONOMIC crisis is putting a large dent in the budget of the country’s biggest health insurer, Všeobecná Zdravotná Poisťovňa (VšZP).

The state-owned insurer estimates that it faces a revenue shortfall of about €25 million for the first three months of 2009. By the end of this year, due to increasing unemployment and worsening payment discipline, revenues may lag behind the €2.07 billion plan by over €63 million, according to the ČTK newswire.

VšZP has already adopted a set of money-saving measures to mitigate the effects of the financial crisis and says its priority is to secure urgent health care. VšZP director Zuzana Zvolenská admitted that the crisis and its effects on the health-care sector may extend waiting lists.

“This may happen,” said Zvolenská on April 6, as cited by the SITA newswire.

Because of VšZP’s slimmer budget, some hospital departments may, during the second half of 2009, get less money than they currently receive.

Zvolenská announced that the insurer has prolonged its contracts with most health-care providers only until the middle of the year and that payments will remain at last year’s levels.

In early March, the Slovak Chamber of Pharmacies confirmed delays in payments from VšZP.

“We have reports from pharmacies from several regions,” Peter Stanko, a member of the chamber’s presidium said on March 15, as cited by SITA. “For now it is not an alarming situation because the delays are between 10 and 20 days beyond the deadline set by the law.”

The Health Policy Institute, a health-care think thank, pointed out on its website that VšZP’s cash reserves on April 6 were not enough to cover even a single day of the insurer’s normal outgoings.

“The cash on account of VšZP, €3.5 million, does not cover even one day’s expenditure of €5.5 million,” HPI wrote on April 6. “It has been shown that VšZP, under political pressure, has significantly overestimated its financial capacities. It has neglected the principles of prudent economic management and has not paid enough attention to the strategic purchase of health care.”

The HPI juxtaposes VšZP’s cash position with that of private insurer Dôvera, whose €46.5 million in funds represents a financial reserve of 35 days’ expenditure.

“In this context HPI regards last week’s decision by the Health Care Supervision Office (ÚDZS) ordering Dôvera to elaborate a revitalisation plan as being absurd,” HPI writes. “It is not Dôvera, but VšZP, that should urgently elaborate a revitalisation plan.”

Dôvera is also being made to pay a fine of €166,000.

The ÚDZS fined the biggest private insurer because Dôvera had not submitted all the documents confirming its adequacy of coverage for January, HPI wrote on its website.

But the insurer has argued that when submitting financial statements it followed all ÚDZS regulations. It said it considers the office’s decision to be incomprehensible and tantamount to harassment.

According to the ÚDZS, after a reduction in Dôvera’s share capital last year it assumed the insurer had found itself in financial trouble.

Measures adopted

“VšZP has already adopted a plan of [money-]saving measures to mitigate the impacts of the financial crisis,” Petra Balážová, a VšZP spokesperson, told The Slovak Spectator. “The measures are related to savings in operating costs and personnel costs - but also in the core business, i.e. the purchase of health care.”

The insurer has offered to pay health-care providers at last year’s price levels until June 30, 2009. VšZP said it would react flexibly to actual developments in revenues and would negotiate with providers about prices for the next period.

“VšZP is approaching contracts with providers with maximum responsibility,” Balážová told The Slovak Spectator.

She added that VšZP is maintaining adequacy of coverage, a parameter used to assess the condition of a health insurer in Slovakia, in line with the law.

On April 7, the ÚDZS responded to media reports about the financial situation of VšZP.

“The office has carried out, by methods of supervision, an analysis of VšZP management,” Milan Michalič, a ÚDZS spokesperson, told The Slovak Spectator. “ÚDZS does not consider the assessment of the daily balance in [VšZP’s] account to be relevant from the viewpoint of evaluation of the adequacy of coverage.”

Health insurers submit to the ÚDZS data about their adequacy of coverage. According to Michalič, on the basis of submitted data and data obtained by the office, “it is not necessary to order VšZP to elaborate a revitalisation plan as the documents submitted do not prove that it is failing to meet its obligations towards providers.”

The Health Ministry, which acts as the state’s shareholder in VšZP, said there was no reason for what it called the panic which has arisen around VšZP.

“The Health Ministry has information about the operation of VšZP,” Zuzana Čižmáriková, the spokesperson of the Health Ministry told The Slovak Spectator. “The basic difference in the operation of the insurer is also in the fact that VšZP, during the [current] crisis, does not create reserves in its accounts, but uses the funds immediately for its policy holders, i.e. the money goes back in the system.”

The adequacy of coverage is not being measured by the amount of funds which the health insurer has in its account, but according to its ability to settle payments in line with contracts with health-care providers, Čižmáriková explained.

“And VšZP does this,” Čižmáriková told The Slovak Spectator. “The financial operation of VšZP is balanced... and depending on revenues from public health insurance [payments] it adjusts expenditures to revenues.”

According to Čižmáriková, the ministry does not see any reason to increase the capital of VšZP and does not have any problem with VšZP’s management.

“The economic crisis has not touched the patient in any way so far and we will do our utmost in order that the patient does not feel any impact from the [economic] crisis,” said Čižmáriková.

VšZP is the biggest health insurer in the country, with about 2.9 million policyholders (out of a total population of around 5.4 million). It ended 2008 with a positive balance of €30,000 on total revenues of €2.199 billion, the SITA newswire wrote. During the whole year its adequacy of coverage did not decrease below the level set by the law at 3 percent. Its adequacy of coverage was 3.33 percent on average.

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