Czech government puts health insurer VZP under administration

11-11-2005

It's been in the air for weeks but now it actually happened. The newly appointed health minister, David Rath, has put that the largest state-owned health insurer, the VZP, under administration, bringing the conflict between the Social Democrat-led government and the VZP to a head. The VZP, which caters for some 70 percent of Czechs, is notorious for late payments to doctors and despite many state initiatives over the last years to improve its finances, the health insurer's current debt is more than 10 billion crowns (over 400 million US dollars).

Health Minister David Rath, photo: CTKHealth Minister David Rath, photo: CTK When Health Minister David Rath announced the forced administration on Thursday, he called it a declaration of merciless war against inefficiency and wastefulness. He blamed the management headed by director Jirina Musilkova and said it was up to Ms Musilkova now just how long the forced administration would last.

"If Ms Musilkova stops clinging onto her post, we will be able to launch a selection procedure for a new director who would guarantee professionally that this institution will not face such problems as it is facing now."

Mr Rath also hinted that hundreds of millions of crowns of VZP money were channelled to private accounts of people close to the opposition Civic Democratic Party. Shortly after the announcement of the administration on Thursday, Prime Minister Jiri Paroubek called on Jirina Musilkova to resign.

Ms Musilkova dismissed the allegations by Mr Rath and refused to step down. On the contrary, she is planning to take legal action.

"I don't know what the minister has in mind. Our insurance company does not support any political parties, there is no cash flow in that direction. We pay for the health care of our clients."

Jirina MusilkovaJirina Musilkova At a news conference on Friday morning, David Rath specified his allegations of financial links between the opposition Civic Democrats and the VZP. He said the main author of the Civic Democrats' health sector reform plan had a lucrative consultancy contract with the VZP and Minister Rath actually called on the Civic Democrat's shadow health minister Tomas Julinek to prove the publication of the reform proposal was not financed from the insurance company's funds.

As far as the patients - clients of VZP are concerned, Minister Rath said they need not fear.

"The VZP is now under full control of the state and therefore it is the best and most stable of all health insurance companies. This morning, I visited the company's Prague headquarters and saw just two people in the customers' hall."

The VZP caters for about seven million clients out of the Czech Republic's total population of 10.2 million but is responsible for about 80.0 percent of health insurance payments because it is legally obliged to guarantee medical care for the elderly and children for example. The company is now worried that those who might consider leaving it are those well-off and healthy, that is people who contribute the most money and consume the least care. Consequently the VZP fears it could end up in even deeper financial troubles.

11-11-2005