Economic Results of Health Insurance Companies

Brief analytical comments

In Q1 2006 the number of active units operating in the area of health insurance was the same as in the corresponding quarter of 2005, there were a total of nine health insurance companies in the CR. In Q1 2006 there were in total 7 082 employees (FTE), which was 1.3% less than in Q1 2005 (7 174 employees). The average monthly wage (calculated from wages free of other personnel expenses and from the number of the employed persons above) increased from CZK 18 639 in Q1 2005 to CZK 19 871 in Q1 2006 (+6.6% year-on-year)

Premiums written (excl. those paid by the state) make up a substantial part of total revenues of health insurance companies. In Q1 2006 they amounted to CZK 31.5 billion, rising by 5.7% on Q1 2005. This increase was also contributed to by a rise in the minimum wage from CZK 7 185 to CZK 7 570 (Government Regulation No. 513/2005 Coll.) because payments of health insurance premiums are derived in some cases from the level of minimum wage. It should be also noted that the premiums written measured on accrual basis are not actual revenues of health insurance companies as these are lower by premiums not paid. The actual revenues of the insurance companies—collections of premiums incl. those for persons paid by the state—stood at CZK 46.3 billion in Q1 2006 and were 8.9% up on Q1 2005 (CZK 42.5 billion) (source: the Ministry of Health of the CR; from the results of the first to third redistribution of general health insurance premiums in 2006 and 2005). The revenues of the health insurance companies in this period cannot be compared—although both Q1 2005 and Q1 2006 saw a change in the frequency of payments by the state for its insurants (returnable financial assistance, “advanced payment”, from the state budget within the meaning of Article 12(2) of Act No. 592/1992 Coll.) however in different amounts. In Q1 2006 it concerned the amount of CZK 3.0 billion, the same period of 2005 then the amount of CZK 2.8 billion. Without the advanced payment in the first quarters of the years compared the revenues from the collection of premiums also including the payment by the state would have risen by 9.0% year-on-year.

Of the total costs of health insurance companies in Q1 2006 (costs and expenses established by expenditure approach from respective funds of health insurance companies), 96.7% accounted for health care costs paid from the basic health insurance fund and the prevention fund or possibly from the preventive care fund; these costs increased by 5.5% year-on-year (see Table 3). Institutional care costs make up a key proportion in health care costs (48.6%), these had the highest increase compared to same period of 2005 (+9.7%). Compared to Q1 2005 costs of prescribed medicines and medical devices given out on vouchers decreased by CZK 27 million. The drop of the business mark-up could have also contributed to this decrease because since January 2006 the trade margin of distributors and pharmacies was cut down from 32% to 29%.

In Q1 2006, the health insurance companies acquired intangible and tangible fixed assets (incl. land) worth CZK 24 million and CZK 75 million, respectively. The balance sum of the health insurance companies (the sum of assets or liabilities) reached CZK 56.3 billion at the close of Q1 2006, increasing by CZK 1.5 billion on the end of 2005. The acquisition value of intangible and tangible fixed assets (depreciated) – net in assets of the health insurance companies was CZK 41 million down on the end of 2005.