In November, 2007, Georgian government initiated state insurance piloting program financed by the budget of Ministry of Health, Labour and Social Affairs of Georgia. It would cover insurance of population below poverty line in private insurance companies. Insurance coverage limit was defined by the medical service predetermined packet. As for the beneficiaries, they were selected with the help of household financial status evaluation methodology.
One of the most important elements of the state insurance program planning is insurance net (risk) premium definition, that must be monthly paid by the state on each insured person.
Adequate net premium is defined on the basis of actuarial calculation. So, it is not surprising, that in spring, 2007, due to the Social Insurance Mutual National Fund order, the Association of Actuaries and Financial Analysts implemented project „Definition of medical insurance tariffs for vulnerable people“. The following goals were set in the framework of the project:
Calculation of insurance premium amount appropriate for insurance coverage defined by the order №40N of 2007 by the minister of Health, Labour and Social Affairs of Georgia;
Working out recommendations about above mentioned insurance coverage optimization.
Every insurance program needs good planning and efficient management in order to be successful. The last one (efficient management) means project periodical monitoring and making changes from time to time to eliminate some gaps in it. Apart from this, need of periodical actuarial calculations was caused not only by sharp rise of number of project beneficiaries, but by the extension of medical service.
Actuarial calculations performed during the above mentioned project implementation process were mainly based on the Social Insurance Mutual National Fund data that was collected in the framework of national (non-insurance) program implementation. To improve state insurance program and make it more efficient, Ministry of Health, Labour and Social Affairs of Georgia started to create a database of insurance compensation given during the program implementation process.
According to these bases and the data of private insurance companies participating in the state insurance program, in 2008-2009, group of consultants completed by the members of Association of Actuaries and Financial Analysts, again performed actuarial calculations and submitted its recommendations about net premium amount correction. These works were performed due to the request of Ministry of Health, Labour and Social Affairs of Georgia and support of the United States Agency for International Development.
In 2010, prices were set not according to the net premium calculated by actuarial methods, but according to the lowest prices suggested by insurance companies (according to the auction held on a geographical principle).
In 2011, government of Georgia, took a decision about continuing state insurance program monitoring and also planned program extension in future. It implied covering children under age 6 and population older than 65 by the program.
Besides, since the program beginning, its implementation statistic data collecting, arranging and storing had been performed by different departments for four years. Supposedly, because of this, there was no data collecting and storing mutual standard and on the other hand, there were some gaps while transferring data from one department to the other.
As a result, in 2011, Ministry of Health, Labour and Social Affairs of Georgia initiated a new project that was supported by the United States Agency for International Development as a part of Health System Strengthening and Support Project (HSSP). The aims of the new project were: preliminary study of the data stored in Social Service Agency, extension of the project monitoring and definition of net premium for its new part.
In 2011, a group of AAFA members was again asked to perform actuarial analysis of the state insurance programs. In the framework of the program, consultants made an analysis of the state insurance program data bases and submitted their improved and restructured versions. Apart from this, they worked out statistical accounting new forms and submitted a detailed manual of their filling.
Besides, various and detailed methodology of individual net premium calculation was used in the project framework. After performing the proper calculation, meanings of net premium appropriate for different groups and regions, groups of population and different medical service were submitted.