Slovakia’s new government has approved a “consolidation” package of measures (18 in total) to bring down their existing budget deficit. By increasing taxes, fees and other contributions, the new government’s plans are thus far only on the revenue side of public finances and are forecast to bring in an additional EUR 1.96 billion.

Regarding the health system, the major measure included in the new package concerns increasing the employer contribution rate the SHI system by 1 percentage point, from 10% to 11%. The employee contribution remains flat at 4%, while the self-employed contribution rate will also rise, from 14% to 15%. These rate rises will generate an additional EUR 357 million. Before the parliamentary elections in September 2023, all political parties declared interest in raising additional revenues (that is, tax hikes) and increasing the general transfers to the health system from the state budget, while the idea of increasing the contribution rates was not campaigned on. The rising contributions rates for employers and the self-employed has likewise surprised analysts. For example, Dušan Zachar from the Institute for Economic and Social Reforms (INEKO) argued for instead increasing consumption taxes and legalizing co-payments in the health system, while Martin Vlachynský from the Institute of Economic and Social Studies (INESS) pointed out that these rate increases are not linked to quality or quantity metrics.

Additionally, and according to the larger budget proposal, the payment for the so-called “state insured” will reach EUR 2.1 billion next year, which is approximately the same level as in 2023 but a massive increase compared to EUR 1.2 billion in 2022. This high increase was partially driven by the vision to increase the state payment to the level comparable with neighbouring Czechia, among other measures taken in 2023. According to analyst Martin Smatana, in 2022, the Slovak state paid EUR 31 per state-insured person monthly, while in Czechia the payment was EUR 72 per person. This difference decreased in 2023: EUR 60 was spent per capita on the state insured in Slovakia against EUR 78 in Czechia.

Altogether, the pooling and distribution of revenues to Slovakia’s three health insurance companies will reach roughly EUR 8 billion EUR in 2024, which represents about a 25% jump from 2022 levels (see Table 1). This was confirmed by State Secretary of the Ministry of Health, Michal Štofko, in his interview with the publication Denník N in December 2023. According to State Secretary Štofko, this money should be used to (1) cover the potential debt of state hospitals, (2) increase hospital productivity and (3) provide new resources to introduce a new catalogue of services in outpatient care.

Table 1

Despite this and the other 17 measures in the package, the credit rating agency Fitch downgraded Slovakia’s rating to “A−”. The main reasons for this are

1. overall deteriorating public finances,
2. wide deficits,
3. an uncertain fiscal consolidation trajectory and
4. an upward trajectory of debt.

In recent years, the Slovak health system has faced several problems with regard to pharmaceuticals, creating a growing list of challenges for policymakers. For example. Slovakia has a high overall consumption level of medicines in comparison to other OECD countries, but research shows low levels of generic and biosimilar medicine usage [1].

There is also a general lack of availability of innovative medicines, and managed entry agreements (MEAs) for new medicines on the Slovak market saw only seven new contracts between 2018 and 2021. In the field of oncology, only 20% of indications with confirmed effectiveness out of 135 were reimbursed in 2021 and only one oncology innovative medicine was categorized (that is, was put on positive medicine lists) that same year [2]. As such, expenditure for the reimbursement of medicines through the exception regime (including orphan drugs and those such as Cisplatina and Dakarbazín that left the market, in addition to innovative medicines that are mainly for oncology patients) is now worth over EUR 50 million annually, as many critical medicines were not categorized, with prescribing physicians resorting to sending reimbursement requests directly to the health insurance companies (HICs) [3]. Overall, these problems have contributed to a lack of transparency and predictability of the environment [3] as well as the decreasing bargaining power of the state, and there has been a gradual departure of multinational companies from the Slovak market [2].

In an effort to address these issues, a new amendment to Act No. 363/2011 Coll. on the scope and conditions of payments for medicines, medical devices, and dietetic foods from public health insurance and on amendments to certain acts was approved in June 2022 [4]. The key changes include the following:

• Changes in the categorization process, including the introduction of consultations before proceeding and simplified MEAs, which alone brought 57 new medicines (69 new indications) onto the market in 2022; the Ministry of Health is now responsible for closing MEAs, which previously was done by the HICs and involved negotiations with all three.
• Transparent rules for decision making under the exception regime and upper limit on the volume of funds (3.9% of the allocated funds for HICs – postponed via legislation to 2024 after HICs nearly hit this upper limit (roughly EUR 60 million) in the first few months of 2023 alone).
• Adjustments to the QALY threshold that is now based on GDP per capita from two years prior. For regular medicines, 3 times GDP per capita (for 0.33–1 QALY gained) or 2 times GDP per capita (for 0–0.33 QALY gained) is applied; medicines for a rare disease or an innovative treatment have higher thresholds of up to 10x GDP per capita. 
• Requiring the three HICs to make the list of approved medicines through the exception regime available online.
• New procedures for determining, changing and cancelling reimbursement groups, as well as changes in the revision of reimbursements, referencing or entry of generic and biologically similar drugs.

On 20 March 2024, the Ministry of Health published Decree No. 55/2024, which defines the amounts of expenditure for each type of health care in the budget for each of the three health insurance companies (HICs) for 2024 (the so-called Programme Decree).

Health insurance expenditures are expected to be 11.5% higher than in 2023, amounting to EUR 7.68 billion in 2024. The primary drivers of the increase in expenditures are hospitals (19.3% annual increase), medical devices (18.5%) and outpatient specialized services (11.4%), as captured in Table 1.

Table 1

The budget, despite the fact that there is a fixed payment for the state’s policyholders from 2024 onwards, is calculated as in previous years, that is, the sum of expenditure for existing policies, for policy changes and subtracting the planned austerity measures, as shown in Figure 1. 

Figure 1

Impact of existing policy measures’ growth on 2024 expenditure 

Without taking any new measures, the expenditure on health services will grow by roughly EUR 521 million. The largest increase is due to wage growth in the sector, followed by medicines and medical devices, inflation and ageing.

Each year, the budget assumes that health workers’ wages will grow at the same rate as the average wage in the economy. The total of these automatic wage increases for all hospital and ambulance staff is set at EUR 253 million for 2024, representing a 7.7% annual increase in the basic component of the wage and the components linked to it.

Due to the categorization of new medicines and medical devices that already took place in 2023, a natural increase is also budgeted for this item, with an expected increase on medicines and medical devices by a total of EUR 124 million.

The budget also covers the natural increase due to inflation and ageing. Expected CPI inflation, which was forecast by the Finance Ministry when the budget was drawn up, is projected at 4.9% for 2024. The natural growth in health care output, and hence in ageing expenditure, is budgeted at EUR 43 million.

Impact of policy changes on 2024 expenditure 

EUR 283 million is earmarked in the decree for measures and priorities of the ministry that go beyond natural growth, as explained in the previous section. The largest policy change is the additional financing of institutional health facilities to the amount of EUR 261 million above the growth in personnel costs and inflation, prioritized for the following purposes:

the top-up funding of hospitals under the competence of the Ministry of Health for an amount of EUR 191 million, and

to cover the increase in production due to the reduction of waiting times, the introduction of DRGs and the implementation of the optimization of the hospital network, with a budget of EUR 70 million. 

All three of Slovakia’s health insurers reported first-quarter losses in 2023, according to the Health Care Surveillance Authority (HCSA, 2023). The problem is expected to worsen, with a cumulative loss of approximately EUR 300 million expected for 2023, representing approximately 4% of the health insurers’ total revenues.

The biggest losses and most problems are faced by the state-owned VšZP, with annual losses estimated to be around EUR 240 million and its equity, that is, the value of its assets, falling into negative values by the end of the year. This would result in its liquidation as an insurance company.

Therefore, VšZP’s Supervisory Board, upon request from the Ministry of Health (MoH), prepared an analysis of the reasons for the losses along with a proposal for recovery measures at the end of May 2023. The Supervisory Board approved the proposal, and the MoH directed VšZP to implement 13 of the measures in June; the Supervisory Board is responsible for the supervision of their implementation.

Approximately 40% of VšZP’s losses (and similarly of other insurance companies) stem from errors on the budgeting side. When the MoH switched to programme-based expenditure budgeting in 2022/2023, it began dictating minimum spending amounts to all insurers by care group. However, the MoH does not budget revenues in this detailed way. As a result, VšZP’s revenues have been underestimated by approximately EUR 93.5 million when compared to the way in which the minimum expenditure was set by Decree 100/2023 in March 2023.

Another approximately 40% is accounting shifts. The programme budget is made so that on a cash basis, the revenues and expenditures are balances. However, insurance companies are public limited companies with double-entry accounting and naturally there is a shift between the cash and accounting view. This became significant in 2023, as several amendments to the law shifted the timing of payments for some items that were not covered by revenue in the budget. On the accounting side, though, these are ledgered as a cost. For VšZP, this represents approximately EUR 90 million of the expected loss.

The remainder (roughly 20% of expected losses), is health care expenditures, which are higher than the MoH budgeted for in Programme Decree No. 100/2023. The primary driver of the increase is pharmaceuticals, whose growth is approximately four times the budgeted plan. This is due to the amendment to the Medicines Act in June 2022 (see related Policy Analysis on pharmaceutical reimbursement legislation and reforming categorization processes). Many more medicines are coming onto the market and entering the categorisation process than in previous years, that is, being added to the positive lists of reimbursed medicines, and the impact of this is approximately EUR 50–60 million higher than budgeted for VšZP. Thus, while medicines were expected to grow by around 2% in 2023, the increase is currently estimated at 8% or more. In addition to medicines, spending on laboratory diagnostics or inpatient care is growing faster, which is, for example, due to the opening of two new hospitals in Slovakia (Bory Hospital and Cardiocentrum Šaca in Košice).

As the Ministry of Finance does not have sufficient resources to cover VšZP’s losses in full and savings have to be found on the VšZP side, the recovery plan for VšZP introduced in June 2023 and its 13 measures aim to save approximately EUR 52 million by the end of the year.

The measures are divided into two parts – administrative savings (EUR 11 million) on operations and savings to eliminate above-standard increases on care (EUR 41 million). The latter is primarily aimed at reducing expenditure on laboratory diagnostics and boosting allocative efficiency of company resources. As a part of the effort of the MoH to realise these savings, the CEO of VšZP, R. Strapko was dismissed and interim management is currently in charge (TASR, 2023).

Even if savings are achieved, VšZP will need a top-up of EUR 165 million (that is, 3.8% of the VšZP’s annual revenue) to avoid receivership status next year and additional liquidity problems as early as December 2023.

The Ministry of Finance has not yet promised whether it will proceed with the refinancing, as they are waiting to see if VšZP can enact savings measures this year before guaranteeing additional funding. In May, VšZP already experienced cash problems in paying its liabilities, which is why the MoH proceeded to advance payments. Thus, cash is not currently an issue for the payment of invoices, but only until December 2023, when this payment will be cleared. The MoH therefore has until the end of the year to resolve the situation, but with national elections on 30 September 2023, there is no guarantee that any top-up funding will be able to materialise in time to prevent VšZP’s dire liquidity issues.