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Insurer acts to block plan

ACHMEA, the Dutch owner of Union, a health insurance firm operating in Slovakia, is taking the government of Robert Fico’s plans to reintroduce a unitary health insurance system quite seriously. So much so that it served notice of arbitration to the Slovak government on February 6 over what it views as the threat of expropriation of private health insurers. Achmea has already won a long-running court case over controversial legislation that prevented privately-owned public health insurers from retaining profits or distributing them to shareholders. Around the same time, the Slovak Health Ministry said that the project of switching the country to a unitary health insurance system is advancing so far without any problems.

Health Minister Zuzana Zvolenská(Source: SITA)

ACHMEA, the Dutch owner of Union, a health insurance firm operating in Slovakia, is taking the government of Robert Fico’s plans to reintroduce a unitary health insurance system quite seriously. So much so that it served notice of arbitration to the Slovak government on February 6 over what it views as the threat of expropriation of private health insurers. Achmea has already won a long-running court case over controversial legislation that prevented privately-owned public health insurers from retaining profits or distributing them to shareholders. Around the same time, the Slovak Health Ministry said that the project of switching the country to a unitary health insurance system is advancing so far without any problems.

“Achmea wishes to retain its investment in UZP [Union Zdravotná Poisťovňa] and maintains that the expropriation [being] contemplated is not in the public interest, that it is not taken under due process of law and that it is discriminatory,” said Achmea, which initiated the arbitration in response to what it calls Slovakia’s decision to seek to expropriate Achmea’s investment in UZP, in a press statement.

The manner in which Slovakia intends to proceed in the expropriation process clearly contravenes the Bilateral Investment Treaty (BIT), according to Achmea, which by commencing the arbitration seeks to avert the impending expropriation.

According to Achmea, the arbitration notice is given pursuant to the United Nations Commission on International Trade Law Arbitration Rules of 1976 and the Investment Treaty between the Netherlands and Slovakia.

While the Finance Ministry, which is in charge of arbitration procedures, remained tight-lipped about Achmea’s February notice, it has previously said that the treaty Achmea is referring to is not applicable, according to the Sme daily.

Achmea has already appointed an arbitrator and the Slovak government now has two months to do the same, according to the Achmea statement.

The cabinet of Fico blessed the project tailored by the Health Ministry, which assumes the realisation of a unitary system in 2014, on October 31. In order to become valid, the blueprint still has to receive parliamentary approval.

Unitary plan rolls on

“Everything is going according to plan as it should,” said Health Ministry spokeswoman Zuzana Čižmáriková, as quoted by the SITA newswire on February 6, adding that large-scale negotiations are taking place regularly at the ministry with all those involved.

The Health Ministry’s progress report on the unitary system, which the government discussed on February 6, suggests that a joint-stock Company for the Introduction of Unitary Public Health Insurance was established in late 2012 with representatives of the ministries of health care, foreign affairs, justice, labour and the interior sitting on the managing and supervisory boards.

The company will be securing activities linked to the legal and economic assessment of the state of non-state insurers, SITA reported.

The ministry lists three ways to create the single health insurance company: the acquisition of shares of the private health insurance companies, the takeover of management of the private insurers’ client portfolio and the expropriation of the private health insurance companies for an appropriate sum, with the first option listed as the best alternative. If the government reaches an agreement with the private insurers about the sale of their shares, the single health insurer may be launched as of January 1, 2014. In the event of expropriation, the single insurer will not emerge until July 2014, the Health Ministry wrote in its plan.

Lost arbitration

Last December, the International Court of Arbitration ruled that Slovakia must pay €22 million to Achmea for what it called a violation of the provisions of the investment treaty between Slovakia and the Netherlands. The law in question, which prevented privately-owned public health insurers from retaining profits, was passed by Fico’s 2006-10 government.

The Association of Health Insurers (ZZP), which groups Slovakia’s two remaining privately-owned public health insurance companies, Union and Dôvera, said that the decision of the tribunal was an important signal to the Slovak government and, according to its president Katarína Kafková, means it should re-evaluate its planned steps in the health-care sector, especially regarding the mooted expropriation of the private health insurers, SITA reported.

Fico questioned the legitimacy of the decision and said that it would “in no way” discourage him from pursuing his current policy of establishing a single, state-owned monopoly in public health insurance in Slovakia.

On the last day of January, Slovakia submitted a proposal to a court in Frankfurt to abrogate the verdict of the International Court of Arbitration, with the Slovak Finance Ministry arguing, among other things, that the treaty on mutual protection of investments was not applicable, SITA reported.

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