Economic Results of Health Insurance Companies

Commentary

In Q4 2006 the number of active units operating in the area of health insurance was the same as in the corresponding quarter of 2005-there was a total of nine health insurance companies in the CR employing 7 043 employees (FTE) altogether, which was 1.7% less compared with Q4 2005 (7 167 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 28 594 in Q4 2005 to CZK 31 294 in Q4 2006 (+9.4% year-on-year). In Q4 2006 the health insurance companies acquired intangible and tangible fixed assets (incl. land) worth CZK 71.5 million and CZK 76.7 million, respectively. Premiums written for Q4 2006 (excl. those paid by the state) reached CZK 37.2 billion and increased approximately by CZK 1.4 billion (+4.0%) year-on-year. This increase was caused by the minimum wage increase from CZK 7 570 to CZK 7 955 (Government Regulation No. 513/2005 Coll.) because payments of health insurance are derived in some cases from the level of minimum wage.

Premiums written for Q1-Q4 2006 (excl. those paid by the state) make up a substantial part of total revenues of health insurance companies and reached in the reported period CZK 139.4 billion, rising by approximately 8.8 billion (+6.7%) year-on-year. It should be also noted that the premiums written measured on accrual basis are not actual revenues of health insurance companies as these are lowered by premiums not paid.
The actual revenues of the health insurance companies - collections of premiums incl. those for persons paid by the state - reached CZK 180.4 billion in Q1-Q4 2006 which was 10.3% up on the same period in 2005 (CZK 163.6 billion) (source: the Ministry of Health of the CR; from the results of the first to twelfth redistribution of general health insurance premiums in 2006 and 2005).

The revenues of health insurance companies within the above periods of time cannot be compared with regard to an extra state payment rise for state insurants in 2006. Compared to originally budgeted allowance CZK 513 per an insurant, which was issued in January 2006, in the period February – March the state reimbursed CZK 560 per an insurant and from 1 April 2006 there was an increase to CZK 636 according to Act No. 117/2006 Coll. Since in both observed calendar years the frequency of state payment was changed (this applies to a refundable financial assistance, so-called “advanced payment“ from the state budget within the meaning of Article 12 (2) of Act No. 592/1992 Coll.), allowances rendered were significantly different.

While in the first half of 2005 an “advanced payment“ CZK 2.8 billion was fed into the public health insurance system, in 2006 the sum was CZK 5.5 billion, namely CZK 3 billion in January 2006 and CZK 2.5 billion in April 2006. First refund of “advanced payment“ was CZK 1.4 billion in Q3 of the relevant year, second refund was CZK 1.4 billion in Q4. In 2006, first refund passed in Q3, namely, first, a half of second “advanced payment“ CZK 1.3 billion was refunded in August and second, a half of first “advanced payment“ CZK 1.5 billion was refunded in September. Third, second half of second “advanced payment“ CZK 1.2 billion was refunded in November and fourth, second half of first “advanced payment“ CZK 1.5 billion was refunded in December. On the basis of the above, while “advanced payment“ amounting to CZK 2.8 billion was rendered in 2005 and refunded in two part-payments, in 2006 “advanced payment“ accounting for the total of CZK 5.5 billion was rendered and refunded in four part-payments during second half year.

Excl. “advanced payment“, compared to 2005 revenues from premiums incl. state payments for state insurants would increase by 11.5 % year-on-year in 2006. However, if we adjust for the effect of extra state payment rise compared to originally monthly budgeted allowance CZK 513 per an insurant in 2006 and compare the result with same period in 2005, revenues from premiums incl. state payments for state insurants would increase only by 7.1 %.

Of the total costs of health insurance companies in Q1-Q4 2006 (costs and expenses determined by cost method from respective funds of health insurance companies), 95.6% accounted for health care costs whose volume increased by 1.9% compared to the same period in 2005 (see sign No. 3). A key proportion in health care costs is made up by institutional care costs (49.9%), which recorded one of the highest increases (+8.4%) when compared with the same period in 2005. Another increase (+7.4%) when compared with the same period in 2005 was in expenses on out-patient services of practitioners.

The balance sum of the health insurance companies (the sum of assets or liabilities) reached CZK 63.2 billion at the close of 2006 and compared to the end of 2005 it increased by CZK 6.6 billion. The purchase price of intangible and tangible fixed assets (depreciable) – net assets of health insurance companies compared to the end of 2005 decreased by CZK 101 million.