Health Insurance Failure

Health Insurance Failure

Health Insurance Failure

The FINANCIAL -- The State Healthcare Insurance Programme has failed in Georgia due to the ineffective management of the insurance companies involved, according to industry experts and controlling bodies.

Now the state is going to put healthcare insurance under its direct control as it suspects the private sector of having adjusted their obligations to suit their own interests. At the same time, the insurance companies are increasingly refusing to fulfil the obligations that the state imposed on them within the framework of the State Healthcare Insurance Programme, declaring the programme to be unprofitable for them.

The combined total loss of the six insurance companies involved in the state programme amounted to GEL 138,227,782. Officials say that it was the fault of the insurance companies who were greedy about getting GEL 350 million premiums per year from the state and took part in the tender without thinking about the serious responsibilities which the tender also gave them.

Insurance is a nightmare for many patients in the country with health problems. A long queue of patients waiting many hours to be seen by doctors is a common sight in both old and renovated clinics. Most of them are elderly people, who are using State Insurance, often called Pensioners Insurance, or the Universal Healthcare Programme also known as Universal Insurance. Such patients are not welcome in many places, they are not respected nor served the same as those that have private insurance.

While the insurance companies cannot meet their obligations without violations, the clients are forced to address the medical institution which their insurance company chooses for them, take the medicaments which the insurance company provide and undergo operations only when it is preferable for the insurance company.

A patient can choose the medical institution and doctor, according to the Patient’s Rights Law. But this right is currently being restricted by the insurance programme, because the law also allows the companies to choose the provider clinics themselves.

Doctors in Rustavi Stationary Clinic claim that the insurance companies are refusing to finance their clients if they need to get medical service in a medical institution which is not the company’s provider. “For example, when patients with heart attacks are brought to the hospital, we provide first aid for them. But for getting the additional treatment they require they cannot stay in the clinic as their insurance companies are not financing their treatment at our clinic. The insurance companies force the patients to be brought to their provider clinics, which in most cases are not in Rustavi. As the clinic cannot afford to treat such patients by its own resources, they have to travel from Rustavi to Tbilisi. In this way, many of them are dying,” one of the doctors from Rustavi Stationary Clinic told The FINANCIAL.

The state is also purchasing eight hospitals built by the insurance companies, as there is a danger that these hospitals will be transformed into commercial space as they are not financially profitable for the insurance companies. The services of village doctor and ambulance will be moved under the control of the state as well.

The process of assuming the management of healthcare insurance is officially starting on 1 April, 2014, when the insured people of “resolution 218” will be moved to the Universal Healthcare Programme. As for the pensioners which are insured under “resolution 165”, they will be joining the Universal Healthcare Programme supposedly by September 2014. There are two resolutions - 218 and 165. Resolution 218 started on 1 April, 2010, and covers socially vulnerable, refugee, teacher and laureate insurance. Resolution 165 which came into force on 1 September, 2012, covers retired people, students and children from 0 to 5 years old. There are 450,367 people insured under resolution 218 and 540,077 entities under resolution 165, according to statistics.

Today more experts think that the medical service in Georgia has worsened, according to research conducted by the Curatio International Fund, a not-for profit, non-governmental organization founded in Georgia in 1994. When asked how the quality of medical service has been changing during the last six months in Georgia, 21.9 percent of respondents answered that it has worsened slightly, while 14.1 percent were disappointed in previous research. While experts think that the Government has not made significant steps towards improving the medical service, the same experts think that the Government’s initiatives have been effective. However, this research was conducted before the Universal Healthcare Programme went into force and the result will be better by the time the next research is conducted, promises the Ministry of Labour, Health and Social Affairs of Georgia.

Research by Transparency International Georgia in 2012 concluded that there were insufficient legislative and institutional arrangements that guarantee the quality of services and patient rights in Georgia. “When a patient’s right is violated, he/she can file a complaint with the Health Insurance Mediation Service (HIM). The HIM’s competence is quite limited and it cannot enforce compensation from the company that infringed the consumer’s right. It is only authorized to negotiate between the parties. The lack of periodic quality monitoring, along with HIM’s inability to protect patient’s rights, leads to risks of low quality medical service and limited access,” the report indicated.

The first sign of failure in meeting the obligations appeared when Archimedes Global Georgia declared bankruptcy. The reason for the bankruptcy was that the company could not pay off its debts to medical institutions. The supervisory service required GEL 3 million from the foreign shareholders for paying the debts, but with no result. The Health Ministry had to transfer 370,000 insured citizens from Archimedes Global Georgia to the Universal Healthcare Programme, fully controlled by the state since 1 July, 2013. The Programme was launched on 28 February, 2013. The reason for its creation was the ineffective management of the existing state insurance programme. It was included in the pre-election programme of Georgian Dream, the political party in Georgia established through the efforts of billionaire businessman Bidzina Ivanishvili. After the party won the elections it started meeting the promises they had given to voters and thus created the Universal Healthcare Programme.

Another insurance company which refused to meet its obligations towards the insured clients of resolution 218 is Alpha, owned by Aversi, one of the leading pharmacy companies in Georgia, which has been exempt from its liabilities since 19 May, 2013, and whose insured customers are now included in the Universal Healthcare Programme as well. The representatives of insurance companies claim that the amount of money which was allocated for the premiums was not enough to meet the obligations. Officials suspect the reason to be the financial interests of the insurance companies.

“After the state took over the responsibilities we saw that the premiums were enough to provide the services without a problem,” said Lasha Nikoladze, Head of the Insurance Supervision Service. Previously Nikoladze was Director of Imedi L. Because of the risk of bankruptcy the company was purchased by Aldagi and is now united with this insurance company. “As the case has not been investigated nobody knows why the money was not enough for the insurance companies - because of incorrect management or because of their financial interests. This is why moving the health insurance from the private sector to the state is a good thing. It will be a relief for the insurance companies as many extra and costly responsibilities will be removed. Medical service and accumulated debt in the medical industry which is roughly tens of millions is a problem nowadays. Private service should be better than the state’s service. But in today’s reality we see that it is the opposite in Georgia,” he said.

“Archimedes Global Georgia got premiums of GEL 52 million and had paid premiums of GEL 61 million. This means that the company paid GEL 116 for every accepted GEL 100," said  Giorgi Gigolashvili, President of the Insurance Institute of Georgia. " Archimedes Global Georgia has debt of GEL 2-3 million towards different medical institutions. The reason for its bankruptcy was that it was mainly dependent on the premiums and provided only health insurance service. It did not develop other products. The companies were greedy about getting GEL 350 million per year from the state and took part in the tender for that reason. They did not think about the serious responsibilities which the tender also gave them,” he added.
inshur_cxrili.jpg“For a private company it was difficult to implement this project as the loss was more than the profit,” said Tina Stambolishvili, Head of Marketing Communications at GPI Holding. “There is no reason for us to continue participating in this programme. We are not afraid of losing customers as we have developed other products well enough which are working quite profitably,” she added.

“In Tbilisi there is a very bad situation as patients are not free to choose the medical service they want," said  Rusudan Gogolashvili, Head of the Universal Healthcare Programme management department. "Despite the fact that insurance companies have the right to let their customers go to their provider clinics, the medical institutions themselves should not accept the patients without knowing the patients’ will. But the fact is that the insurance companies signed such contracts with the medical institutions that if they send many patients to those clinics, the clinics will offer good rates to the insurance companies. The same financial interests can be found in terms of forcing the patients to get specific medicines. There is a specific list of medicines that the medical institutions should use during treatment. I mean generics, which are a type of drug defined as “a drug product that is comparable to a brand/reference listed drug product in dosage form, strength, route of administration, quality and performance characteristics, and intended use”. There is not a determined drug name or producer company’s name. If an insurance company forces a doctor to give a prescription for a concrete medicament to a patient that means that it has its own financial interests at heart,” Rusudan Gogolashvili added.

Alpha insurance company is considered to be one of the most probable insurance companies in Georgia to have been pursuing its own financial interests. The reason is that the company was founded by the Ltd. Aversi - Pharma pharmaceutical company, uniting more than 200 objects. Aversi has its own pharmaceutical manufacturer - Aversi-Rational, which produces 143 named medicines (230 positions) and Aversi Clinic as well. “This is enough to be interested in providing insurance to patients, to sell your own medicaments, and send patients to your own clinic. Financially this scheme will work profitably for the company,” said a source.

Aversi refused to comment on this issue.

Insurance companies invested GEL 220 million in building 51 + 2 clinics. Out of them eight clinics were built in commercially unprofitable areas - in Svaneti, Stepantsminda and Racha. As financially it is difficult for the insurance companies to keep the clinics there is a danger that these clinics will be transformed into commercial spaces, according to Nikoladze. “Building the clinics in territory where few residents live is not profitable for a private company despite the fact that there is geographically a need for having hospitals there. So the clinics will be purchased by the state. Insurance companies were forced to provide the services of village doctor and ambulance. The state considers that it is not the private companies’ business to provide such services and is taking over these services as well. Ambulances will therefore now be centralized,” said Nikoladze.

“Insurance companies have been implementing state programmes ineffectively and the state has assumed the responsibility for providing social guarantees to the population itself,” said Giorgi Gigolashvili.

“Retired people will move to the universal insurance with absolutely the same conditions which they had before, when they used the pensioners insurance.

"In 2012 half of all Georgians had no coverage and were paying out-of-pocket for health services in a privatized and largely unregulated health system.

Following the 2012 elections, the new government announced major reforms aimed at achieving UHC, including the creation of a state fund to purchase services directly from providers for those not covered by MIP. The new fund will by-pass private insurers. The commitment is laudable but significant challenges remain. Spending on health is low and the quality of primary health care is poor, largely due to the dominance of unregulated private providers. Questions remain over the design of the benefits package (especially pharmaceuticals) and the issue of copayments".

The limits, copayment and repayment capacity will be the same. The difference will be that the service will be administrated by the state instead of the private company, the customers will be able to choose the medical institution and doctor that they want and if they do not like the service which they get, they can change the clinic or doctor within a two month period of time,” she added.

The main differences between the Universal Healthcare Programme and State Insurance Programme for retired people is that the first programme gives the patient the choice to choose the medical institution while the second programme does not. While free choice in selecting the medical institutions is an advantage of the Universal Healthcare Programme, in return the pensioners insurance covers drug cost, which is not covered by the Universal Healthcare Programme. The pensioners programme covers drug costs of up to GEL 100 per pensioner annually.

Insured pensioners’ complicity in financing is 50%. A total of GEL 1,100,160,000 was spent on medicaments in 2011, according to the National Healthcare Report. Both programmes include outpatient and family doctor’s services as well as stationary (inpatient) service, where a patient stays in a medical institution for more than 24 hours. The limit for outpatient and stationary service is GEL 15,000. The second advantage of the Universal Healthcare Programme is that doctors may appoint elective surgery within a two month period of time, while the pensioners insurance programme determines a term of a six month period of time. “Within this interval of time the patient inevitably suffers and medical diagnoses are changed. Due to these reasons many patients opt to gather the money needed themselves and prefer to undergo operations earlier than the insurance company appoints for them,” said Gigolashvili.

“There are very few cases of retired people moving from the pensioners insurance to the Universal Healthcare Programme because many people do not know what the difference is between these two programmes. Also, people are hesitant to move to the Universal Healthcare Programme because they will not get drug cost financing any longer. For retired people, it is really a great help to be able to get this financing; it is not very much but it is still crucial. There are 650,000 retired people in Georgia and about 5,000 have moved to the Universal Healthcare Programme already,” said Gigolashvili.

Switching from the pensioners' insurance to the Universal Healthcare Programme is complicated, frustrating and connected to a lot of bureaucratic procedures. In many cases elderly people are not assisted in dealing with such issues.

The budget of both healthcare programmes was GEL 605 million in 2013.

“When the third phase begins all the mistakes will be summarized and the correction process will be started. It would be perfect if the cost of medicaments will be included in the Universal Healthcare Programme,” said Gigolashvili.

“Now the way out of this complicated situation is that the state should take over all the social responsibilities, observe how all the things work and how the budget is distributed over the different responsibilities, learn the problems, find a way out and then give back some of the responsibilities to the private sector again. If all the social responsibilities stay under the state’s regulations forever it is likely to cause new problems like inflexibility and create a corrupt system. Of course all the mistakes should be taken into consideration and corrected when the services will be given back to the private sector,” said Nikoladze, Head of the Insurance Supervision Service.
“Two years will be enough time to find the correct direction to go in, which course to take. Until then we need to observe the situation. We still do not have all the statistical information or any data to properly monitor things. The Universal Healthcare Programme should first come to pass and after a year or two it will show how it works and how it will be possible to make improvements,” he added.