Slovakia’s largest health insurer, state-owned Všeobecná Zdravotná Poisťovňa (VšZP), is expected to be labouring under a cash deficit of at least €51 million by the end of this year. The impending shortfall is the result of mounting losses at the insurer, and has raised questions about how it will continue to pay for health care on behalf of its customers.
Representatives of VšZP and its sole shareholder, the Ministry of Health, have assured customers that there will be enough money available to cover the insurer’s existing agreements with medical facilities. VšZP is Slovakia’s biggest health insurer, with around 3.3 million people currently relying on it to cover their health-care costs.
VšZP ran up a record loss of €137 million in just the first eight months of 2016, according to an analysis carried out by accountancy firm Deloitte. The probe was ordered by the new head of the insurer, Miroslav Kočan, shortly after he was appointed to the post in May this year. Accounting losses are expected to continue mounting to €280 million for the full year, of which €224.4 million will be a cash loss. Since the insurer had only some €173 million in reserves at the beginning of the year, it is expected to be short to the tune of €51 million by end of 2016, the Sme daily reported.
“Since it is an accounting loss and VšZP settles its liabilities on the due date, its clients will not be impacted and their health care is fully secured,” VšZP spokesperson Petra Balážová told The Slovak Spectator.
However, financial manager and former auditor Marián Jánoš says that the insurer must find a way to secure the funds to be able to pay invoices.
“It will need additional resources in the form of a deposit from the shareholders – it should either receive it from the state or take a loan for at least €51 million,” Jánoš told Sme. The former option would amount to state aid, and could land the government in trouble, as it has done in the past.
The new management at VšZP has meanwhile called in the police in connection with the financial results that the insurer reported for last year. Based on the Deloitte analysis, Kočan now expects that VšZP should have reported a loss; instead it declared a profit at €17.6 million, triggering bonuses for senior managers.
The mounting losses are the result of higher costs of health care from 2015, stemming from a hike in the salaries of doctors and medical workers, a widening in the group of people entitled to additional payments while on medication, the introduction of a payroll-tax-deductible item, and an increase in prices for some treatments due to the abolition of fees in the health care sector, according to VšZP. As a result, costs rose by some €193.5 million, it claims.
However, the previous management failed to include the increased costs when creating so-called technical reserves, which the law requires the insurer to do. These reserves should have represented some €270 million, the insurer says.
If the previous management had taken the increased health-care costs into consideration, VšZP would have reported a loss in 2015, rather than a profit, the SITA newswire reported.
Tomáš Szalay from the Health Policy Institute, who also serves as external advisor of the health minister, sees two main reasons behind the high losses. First is this year’s parliamentary election. He compared the situation to 2010, when accounting problems were also revealed only after the election and a change in the insurer’s management.