PRAVILA EUROPSKE UNIJE O TRŽIŠNOM NATJECANJU I DRŽAVNIM POTPORAMA I DOPUNSKO ZDRAVSTVENO OSIGURANJE U REPUBLICI HRVATSKOJ
THE EU COMPETITION AND STATE AID RULES AND COMPLEMENTARY HEALTH INSURANCE IN THE REPUBLIC OF CROATIA: WHAT WENT WRONG?

Summary/Abstract: Competition and state aid rules are not applicable to compulsory health insurance in the Republic of Croatia, since the latter does not constitute an economic activity as defined by EU law. On the other hand, complementary health insurance, as established in Croatia, constitutes an economic activity, due to the existence of real competition between undertakings. The illustrated situation with competition in complementary health insurance market allows for the statement that special rules applicable to Croatian Health Insurance Fund (HZZO) provide the latter with a privileged position when compared to its private competitors to whom these rules do not apply. Moreover, this privileged position is strengthened by the fact that HZZO, as a legal monopolist within the sphere of compulsory health insurance, utilizes respective infrastructure in the field of complementary health insurance, which enables it to reduce expenses to the detriment of its private competitors lacking such a privilege. A solution for the described situation could be for the state to establish a separate entity to provide complementary health insurance. This entity would have to provide open enrolment and community rating, regardless of age, sex or health of the insured persons. In order to prevent private competitors from jeopardising the exercise of service of general economic interest by taking over only the insured persons with a more favourable risk profile, a risk equalisation scheme would have to be set up. This would result in a transfer of funds from insurers with a favourable risk profile to those with an unfavourable risk profile on basis of objective and clear criteria, thereby making it possible for the latter to provide service to the higher-risk insured persons like the elderly and the ones with chronic illnesses. In this way, a balance between the necessity to provide a service of general economic interest to all insured persons, including those with a higher risk, and competition on the EU internal market, would be struck.

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