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Health Minister Criticizes Insurance Companies

Health Minister David Sergeenko has criticized insurance companies. However, insurance industry representatives  do not agree with the Minister’s remarks. It is the Government’s habit  to point fingers to insurance companies, the industry representatives said.

As reported, Health Ministry plans to launch the second phase of reforms to increase efficacy of universal health program. Health Minister David Sergeenko said that accents will be made on quality of services  and purposeful spending of budget allocations.

Budget allocations are frequently deposited into  the pocket of management of provider clinics. As a result, service staff and patients bear losses. The second wave of reforms will start on March 1, the Health Minister said.

Representatives of insurance companies are ready to refurbish  databases of beneficiaries and transmit information to the state, on the one hand. On the other hand, they do not implement this in practice, the Health Minister pointed out.  Insurance companies have financial interests in this situation, Sergeenko added.

Because of invaluable databases, about 1 million GEL budget funds are spent without transparency. The Health Minister supposes that these finances are deposited into insurance companies. That’s why  the private business is not interested to specify databases, Sergeenko noted.

“Representatives of insurance industry, not the whole industry, but its representatives, verbally or in written form, showed readiness  to renew databases, but, in reality, they have not performed the promise. Their words and affairs  differ from each other very much. According to our estimations, the existing non-transparent system absorbs about 1 million GEL from state budget a month. Nothing is lost in nature and these millions are not lost either and I suppose these finances are deposited onto accounts of several insurance companies. The longer the existing status-quo lasts, the more millions will be lost. Insurance companies make financial benefits of this situation and despite their official statements for discussions, consultations to make everything transparent,  in reality, they temporize the process, because  1 million GEL is an impressive revenue for a month”, Sergeenko noted.

Under the reformation project, fulfillment of three criteria (attainability, price and quality) will be controlled strictly, Sergeenko said.

“On the one hand, we are obliged to carry out reforms in continuous regime. The announced second wave of reforms is called the second wave conditionally, but this is the chain of reforms. On the other hand, we are obliged to make proportional influence on three key components in healthcare sector – attainability, price and quality”, Health Minister David Sergeenko noted.

A special group will be created to explore purposeless spending at medical facilities to the detriment of patients’ safety. All responsible bodies will be called to account, the Health Minister said:

“A workgroup will be created to monitor outcomes of health reforms. We have taken this decision, because control of health costs is very difficult. For example, in the USA MedicAid-MediCare administration applies to financial department of Federal Bureau of Investigation every year and FBI carries out investigation activities.

Despite there is so huge administrative instrument in the USA for healthcare sector – every year FBI’s financial department exposes aimlessly-requested funds of 0.5-1 billion USD. We will arrange analogical service in Georgia too. This structure was shaped last week and it will make medical facilities return funds requested without purpose. We will call to account medical facilities or specific employees in the event of criminal signs detection”, David Sergeenko said.

The Caucasus Business Week (CBW) has inquired the position of insurance companies regarding the Health Minister’s statements.

Devi Khechinashvili, head of Georgian Insurance Association, says that insurance companies has no relation to  the universal health program money. Consequently, it is unclear what the Health Minister implied. There is no relation between insurance industry and universal health program, he said.

Before the February 9 resolution, unfortunately, there were no legal grounds, under which insurance companies would transmit personal databases to Health Ministry. When the Government ensured the mentioned legal basis, the Ministry received the due databases in 5 days, Khechinashvili noted.

«Transmission of personal information is a regulated issue. For many years we used to suggest them to create due legal environment. They have created it now and no problems exist any more. This is their habit to point fingers to insurance companies», Khechinashvili noted.

According to his statement, under the new amendments, hundred thousands of citizens will lose access to universal insurance and inbuilt insurance products. This signifies that people will not be able to cover catastrophic risks. Objective of the government is to insure citizens, but the real practice is very bad, unjust and inefficient, Khechinashvili said and added that insurance packages will rise in value by about 10-20%.

He noted that it is impossible to save budget funds through separation of private insured beneficiaries from universal health program.

«There are beneficiaries, who enjoy inbuilt insurance packages. This category did not have private insurance in 2013. Later, they joined the state program and then bought products from private insurance, which were not financed by universal health program. Citizens with such corporate insurance packages account for about 100 000. This category will have only inbuilt insurance services that do not enable to cover hospitalization component, in practice. Inusrance companies will offer them to revise conditions to either make products more expensive or worsen conditions. Making package more expensive will promote the industry, but I believe that a part of beneficiaries will reject similar offers and they will prefer to accept worse conditions. At the same time, we have about 30 000 persons, who enjoy individual insurance.  About 70% of these beneficiaries will face the following dilemma: they will lose universal insurance and maintain only additional component, but unlile corporate beneficiaries, no insurance company will offer better conditions to them, because this category represents a risk group. Thus, separation of universal health program and private insurance package cannot save budget funds», Devi Khechinashvili said.

Government of Georgia should explore the project anew and make certain amendments into it, he added.

«Amid discussion of an open platform, it was not necessary to adopt this resolution. Somehow or other about 3 million citizens  in Georgia are involved in universal health program. Today part of them buys inbuilt products and I think the government should maximally promote this process. If this resolution remains unchanged, then no inbuilt product will exist in Georgia. 3 million persons will have only universal program and they will have to cover all other services from their own pockets. It is necessary that Government meet with private sector and revise the resolution. This should not concern individuals, beneficiaries of inbuilt component and so on», Khechinashvili said.

Giorgi Gigolashvili, president of Georgian Insurance Institute, refrained from making comments on the statement made by Sergeenko in relation to insurance companies. However, it is indisputable that every person in Georgia must be registered, he said. The Government must know, who uses this or that program – insurance policy or universal health program. Moreover, in case of separation, private insurance beneficiaries must have guarantees that they will return to universal health through full coverage, by base package.

According to Gigolashvili’s statement, the faster uninsured persons are included  in the universal health program, the better and efficient results we will receive.

«The policies should not narrow coverage for universal health program for those beneficiaries, who own insurance policies of insurance companies and at the same time, have withdrawn from universal health program. This is optional and beneficiary may buy cheap package, but the state sector is to supply due information to beneficiaries about what the universal program was covering and what they will receive as part of new policies», Gigolashvili said.

According to his information, if bodies without private insurance return to universal health  package without problems, then their rights will be protected, he said.

«There is nothing revolutionary and this was a natural continuation of processes», Gigolashvili said.

Dimitri Khundadze, first deputy chairman of parliament’s health committee, noted that the legislative body had achieved agreement with insurance companies that they would supply databases to the Parliament.

«They pledged and, at a glance, they gave consent, but they have not taken practical steps. We have not ceased communication with them. We met with them several weeks ago. They introduced a presentation, which was unclear for me. The Authorities will be responsible to finance target groups that are not able to take healthcare costs.  Naturally, in target groups differential approaches will be carried out on the ground of co-financing principle. We will set margins for those, who have revenues. Above this margin, health insurance will be obligatory and after this the Government may apply the principle of differentiated co-financing», Khundadze said.

Four years have passed since introduction of universal healthcare state program. In 2013 the universal health program was applied to all citizens of Georgia, who did not use other health insurance package. Objective of the program was to grow accessibility of population to medical services and to cut citizens’ costs on healthcare.

Before 2013, health insurance state program were implemented by private insurance companies, while universal health program is carried out by Social Service Agency and private companies are not involved in it. Consequently, insurance-related financial risks come on state budget.

Universal Health Budget

Statistics of the past years shows that the Government cannot curb universal health program expenditures and the program’s plan budget grows on annual basis, however, over the past 3 years, the budget turned out insufficient.

The 2014 program budget constituted 200 million GEL, however 338 million GEL was spent. The 2015 program budget increased to 470 million GEL. However, at the end of the year additional 100 million GEL was spent. In 2016 universal health program budget made up 570 million GEL, but even this sum turned out insufficient and according to state treasury indicators, 681 million GEL was spent in the reporting year.

As to the year of 2017, the universal health program budget makes up 660 million GEL.