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Slovakia bans profits for health insurers

Slovakian Prime Minister Robert Fico was forced to abandon plans to create a single public health insurer by nationalizing a handful of private companies, Slovak news agencies said Wednesday.

"We will have to find another path so that public health insurance is not a commercial issue," health minister Ivan Valentovic said after the cabinet's weekly meeting. The proposal to nationalize four private health companies will not go ahead as originally proposed, education minister Jan Mikolej was quoted by the agency TASR as adding. The government will, however, proceed with moves to merge two publicly owned heath insurers, Vseobecna Zdravotna Poistovna and Spolocna Zdravonta Poistovna, it said. The initial proposal to create a single public health insurance company sparked conflict between Fico's leftwing Smer party and its junior coalition partners with a stormy debate on the subject carried over from last week.

Until Wednesday's meeting, Fico and his disputed health minister had insisted that the move to create one insurance company was the only cure for Slovakia's cash-strapped health sector. The move would have put Slovakia out of step with most of its neighbors. The Czech Republic's center-right administration is moving in the opposite direction to boost competition, as is Hungary's left-dominated administration, while a two-tier system is fast developing in Poland as individuals and companies, who can afford to, buy extra cover to complement the creaking centralized state insurance system. "This would have been a backwards move," commented Colin Lawson, a specialist in transition economies at Bath University in Britain. "Whatever benefits were brought by more competition will be lost."

Private insurers said they had to wait for the actual wording of the planned legal changes before deciding on their response, but they opposed the idea of banning them from making profits. “It is hard to understand this, because making profits is a basic motivation in standard business environment,” Eduard Kovac, executive director of the Health Insurers Assn., told Reuters. “No one can be punished for making profit.”

Slovakia's private health insurers include closely held Apollo, Dovera, EZP and Union, which have 1.7 million clients, or around 30% of all medical insurance clients in the former communist, EU-member country. The state runs two health insurers. The previous centre-right government transformed all of Slovakia's insurance companies into joint stock companies in 2005 following a final 20 billion koruna ($950 million) cash injection aimed at wiping clean health sector debts, in the belief that the threat of bankruptcy would boost efficiency. (