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Smer's pet project runs into delays

THE PET project of the government of Robert Fico to reintroduce a unitary health insurance system, which has already put private health insurers operating on the market on alert, is falling behind its original schedule. The so-called transformation law, essential for one of the most discussed plans of the Fico administration, should have already come into effect on May 1. Yet state officials say the delay is due to efforts to devise a watertight law that is resistant to eventual arbitration, which the private insurers say would follow in the event of their expropriation by the state. Meanwhile, the Association of Health Insurers (ZZP), which groups the country’s two private health insurers, Dôvera and Union, suggested that the government should use the delay to reconsider its plan.

THE PET project of the government of Robert Fico to reintroduce a unitary health insurance system, which has already put private health insurers operating on the market on alert, is falling behind its original schedule. The so-called transformation law, essential for one of the most discussed plans of the Fico administration, should have already come into effect on May 1. Yet state officials say the delay is due to efforts to devise a watertight law that is resistant to eventual arbitration, which the private insurers say would follow in the event of their expropriation by the state. Meanwhile, the Association of Health Insurers (ZZP), which groups the country’s two private health insurers, Dôvera and Union, suggested that the government should use the delay to reconsider its plan.

The project continues and “speculations that it does not” are not justified, said Health Minister Zuzana Zvolenská, adding, as quoted by the SITA newswire, that the government still aims to stick to the major deadlines, while “the most important thing is to be certain that we do it the best way we can”. The single health insurer should start operating in July 2014.

According to Zvolenská, the priority is to make sure the whole process is in line with the constitution and international law. The draft, which among other things should establish a method for setting the price for private health insurers, will go to a normal interdepartmental review, said the minister, without specifying when this would happen.

The Health Ministry is cooperating in the preparation of the law with the Ministry of Finance as well as people who represent Slovakia in arbitrations pertaining to health insurers.

“The law is in an advanced stage of preparation,” said Finance Minister Peter Kažimír on May 7, as quoted by SITA newswire. “It is true that we have been delayed in the mutual review process regarding the constitutionality, as well as minimising all the possible problems that the process might bring.”

Kažimír considers the detailed preparation to be key, adding that the government will do its best to minimise the risk of eventual arbitration, adding that “on the other side there are very sophisticated partners, who have even sued us for things which have not happened yet”.

Kažimír has yet to state how much the single health insurer project will cost, adding that there is an effort to minimise the costs. However, he hinted that the eventual sale of the state’s share of Slovak Telekom would be a potential source of funding to cover the creation of the single insurer scheme, SITA reported.


The plan


On October 31, 2012, the cabinet of Fico gave the unitary health insurer project tailored by the Health Ministry its blessing. The ministry listed three ways in which it can create a single health insurance company: acquiring the shares of the private health insurance companies, taking over the management of the private insurers’ client portfolios, and expropriating the private health insurers for an appropriate sum, with the first option cited as the best alternative. If the government reaches an agreement with the private insurers about the sale of their shares, the single health insurer could 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.

However, the ZZP is appealing to the government to reconsider its plan and has reproached the Health Ministry for what it calls a lack of expert debate on whether a single insurer will bring benefits to policyholders.

“We believe that the time [schedule] shift is a signal that members of the government have started seeing the risks that professionals have been warning about since its [the plan’s] publication,” said ZZP President Katarína Kafková, as quoted by SITA newswire.

The ZZP called on the government to lead a discussion with the private health insurers since, according to the organisation, the process of expropriation will bring the insured only the risk of losses in international arbitrations.


The arbitration


Achmea, the Dutch owner of Union, a health insurance firm operating in Slovakia, already 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.

“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 was given pursuant to the United Nations Commission on International Trade Law Arbitration Rules of 1976 and the Investment Treaty between the Netherlands and Slovakia.

Zvolenská said the law would be prepared so as to withstand eventual arbitration.

“Whether we can avoid arbitration is not in our power because everyone has the right to turn to the courts, but we are certain that the law will be done in such [a way] that we can handle the arbitration,” Zvolenská said as quoted by TASR.

Kažimír commented that “suing the state is for many a pretty good business”.

“More or less it is a unique process in Europe, thus there are not many places to seek examples from; we are walking an uncleared path,” Kažimír said as quoted by TASR newswire, while suggesting that the review process is aimed at making sure that the process is in line with the law.


The schedule


Based on the original schedule, the tender for the selection of economic consultancy, which should have been wrapped up by April 30, has been delayed. The ministry however claims that the materials for initiating the public procurement have been finalised. The public procurement was scheduled to start in November 2012.

The joint-stock Company for the Introduction of Unitary Public Health Insurance, 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, should secure the procurement.

The transformation law was supposed to have become valid on May 1, 2013. A deadline of October 31, 2013 was given for negotiations with the shareholders of the private health insurers and the conclusion of contracts on purchasing their shares, and the single health insurer was scheduled to begin operating by July 2014.

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