Cheap Health Insurance – Pre-Election Trick Or Real Relief?
08 December, 2011
Cheap Health Insurance – Pre-Election Trick Or Real Relief?

Governmental initiative to make health insurance available through GEL 15 worth package to pensioners and a bit cheaper for children starting from September of 2012 seems a pre-election trick to opponents while some sector pundits think it will give an impetus to underdeveloped individual insurance packages. 

Early last November Georgian government came up with a social care initiative to increase minimal pension rates from GEL 100 to GEL 140 under obligatory terms that tentatively GEL 15 out of the increased pensions

will be earmarked on health-insurance of people above 67. On the other hand, health insurance package for a bit cheaper than GEL 15 per month will also be available to children  under 5-year.

This means insuring 370 thousand pensioners and 250 thousand children above of already state-insured 900 thousand socially vulnerable people. Children under 3 years and pensioners over 60 have been enjoying free medical service but only in frames of targeted state programs.

According to Devi Khechinashvili, President of Association of Georgian Insurance Companies, the governmental initiative to provide wider range of children and pensioners by health-insurance packages instead of occasional medical help is a positive move.

Moreover, he expects the initiative to give an impetus to the underdeveloped individual insurance shunned by Georgian insurance sector as the most risky at the moment.

“Around 60-80% of Georgian families have either old people or children so once they will be insured and insurance companies enter in the families they start recruiting potential clients. Insurance of indigent people did not provide such chance because socially vulnerable families cannot pay for additional insurance package while part of ordinary families can,” Khechinashvili explained to Georgian Journal.

However Khechinashvili doubts that the questioned insurance package for GEL 15 or less is realistic as Nika Gilauri, Prime Minister of Georgia, suggested early in this past November.

“Works are underway but the price will be clear after tender. I would like the tender to be held as late as possible so as the price trend could be outlined and actuarial calculations provided,” Khechinashvili elaborated.

Georgian government in 2010 contrived to make GEL 9-12 worth insurance packages available for indigent people. Government named GEL 15 as a starting price per package at the tender expecting the price to drop however for the bidding price did not drop below GEL 13.5, government settled the matter by blackmail. It accused bidder insurance companies in alleged cartel agreement, made the tender results void and threatened to start investigation. In the end the state held the tender repeatedly where the suspect companies agreed on GEL 9-12 and the trust deal doubts disappeared.

Some sector pundits think insuring GEL 15 per package suggested by government seems less credible today than in 2010 as prices on medical services went higher, awareness of people increased and more beneficiaries ask for insurance service especially after Control Chamber of Georgia (CCG) discovered early this year that insurance companies enjoyed 60% profit through the state-supported programs thanks to non-transparency and eluding obligations to provide detailed information on available insurance package services to  clients 70% of which did not know they were insured. As a result of the CCG audit the National Bank of Georgia established stronger control over the insurance sector obliging it to air detailed financial papers each month and introduced sanctions for breach of assumed obligations.

Besides the new initiative envisages more comprehensive packages including surgeries while the previous state insurance packages provided mainly by ambulance and first aid financing.

Moreover, insurance sector faced about 27% bigger loss this year based on six month statistics [GEL 116 841 080 while the loss figure totaled to GEL 91 842 423 in the similar period of the past year].

Giorgi Gigolashvili, Head of Georgian Insurance Institute, doubts that GEL 15 is a commercial price to insurance companies as far as nobody disclosed details of the calculation laying ground to the proposed price-making.

“People over 65-age [as well as children under 5] are acknowledged as the risky group and frequency of referring to insurance service is much higher in this group compared to other insured people, and who can say whether  or not insurance companies can bear such expenses?” he asked GJ. “I would greet the initiative but why GEL 15 and not more?”

Some economic analysts doubt the underway initiative of insuring pensioners and children is a mere pre-election trick as parliamentary elections of 2012 are at door.  Opponents of the idea find unfair insuring pensioners only over 67 while the pension age in Georgia is fixed as 60 and 65 to women and men respectively. On the other hand, they think any kind of such “cheap” initiatives is made through crackdown on business as far as it is impossible to insure people at GEL 15 when it includes polyclinic services, the most frequent and not cheap service.

“Such cheap insurance requires in-depth system reforms while the underway initiative gives no sign of it. The thing that this insurance package enters into effect since September of 2012 inclines me to think it is just a pre-election trick to please people, it will work for three more months perhaps and then the presidential elections 2013 will be held and who cares…” one economic analyst, who does not want to be named, said.

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