SLOVAKIA: Private health insurers on the verge of nationalization

The two private health insurance companies currently operating in Slovakia will have to leave the market next year, as the government approved a plan to reinstate a single public health-insurer system starting 2014 in order "to stop the inflow of funds to private provider", Bloomberg reports.

"The Health Ministry will early next year pick an adviser to assess the value of the two private insurers operating in Slovakia", Premier Robert Fico said on Wednesday. According to his statement, the government will negotiate with the two private health insurance providers the buyout terms during the entire 2013 year, but if they will fail to reach a reasonable agreement by the end of the year, the two companies will be, most probably, expropriated.

Robert Fico is a well known advocate of a strong state influence in the economy and also an adversary of the private entities' involvement in the health and pensions sectors. After acting against the private pension funds, he has accused private health insurers of making profit from public funds, which instead should be spent fully on treatment. The government says a unified system will channel more funds for health care at a time when the country is striving to reduce the budget deficit, reports Bloomberg.

The two private operators subjected to the future nationalization are: DOVERA, owned by Czech-Slovak private equity group Penta, managing the health contracts of 1.4 million clients, and UNION, a subsidiary of the Dutch insurer ACHMEA, with a portfolio of 400,000 clients. The state-run General Health Insurance Company controls the health insurance issues for the rest of 3.6 Slovak citizens. According a recent survey quoted by Reuters, many Slovaks believe they get a better service from the private companies and, according to the private think-tank Slovak Health Policy Institute, a petition against returning to a single health insurer was already signed by more than 10,000 people.

The government will sell some other state assets to finance the costs of the purchase or the eventual expropriation, FICO said, without elaborating. In response, the opposition parties suggested the cost of the entire operation will amount to hundreds of millions of Euros, a too large sum considering that the government already needs to raise taxes on companies, banks and high-earners in order to accomplish the goal of decreasing the country's budget deficit next year to less than 3% of GDP, from a planned 4.6% in 2012.

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