Αναλογιστική Μελέτη ΓεΣΥ 2024–2033

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 ILO/TF/Cyprus/R.29 
CYPRUS 
 Fourth Report to the Health 
Insurance Organization 
Actuarial valuation of the General 
Healthcare System as of 31 December 2023, 
covering the period 2024–2033 
 


 
 
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Printed in Switzerland 
 


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
iii 
 
 Foreword 
The present report has been prepared in the framework of the Trust-in-Fund project between the Health 
Insurance Organization (HIO) and the International Labour Organization, entitled “Actuarial Support 
Services to the Health Insurance Organisation” (CYP/25/02/CYP). 
The project aims at conducting actuarial valuation studies for assessing the financial sustainability of 
the Healthcare Insurance Fund (GHS Fund), using the ILO modelling approach designed for health 
insurance schemes, which is built on the principles of social security that underlie the ILO Conventions. 
This report, which has been carried out as of 31 December 2023 in compliance with relevant 
international actuarial standards, presents the financial results of the fourth actuarial valuation of the 
GHS since its inception in June 2019, covering the period from 2024 to 2033.




 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
v 
 
 Contents 
Page 
Foreword ..................................................................................................................................................................  
iii 
Acknowledgements ................................................................................................................................................  
xi 
Executive summary ................................................................................................................................................  
xiii 
Abbreviations and acronyms ................................................................................................................................  
xvii 
1. 
Introduction .................................................................................................................................................  
1 
1.1. 
Objectives of the actuarial valuation .....................................................................................................  
1 
1.2. 
Scope of the report ..................................................................................................................................  
2 
2. 
Description of the General Healthcare System provisions ...................................................................  
3 
2.1. 
Covered population..................................................................................................................................  
3 
2.2. 
Healthcare services under GHS ..............................................................................................................  
3 
2.3. 
Financing approach..................................................................................................................................  
4 
2.4. 
Source of funding .....................................................................................................................................  
4 
2.5. 
Reimbursement methods .......................................................................................................................  
4 
3. 
Projection methodologies ..........................................................................................................................  
6 
3.1. 
Methodology for modelling GHS income ..............................................................................................  
7 
3.2. 
Methodology for modelling the GHS expenditure ..............................................................................  
10 
3.3. 
Indicators to assess financial sustainability ..........................................................................................  
11 
4. 
Demographic, economic and labour market framework .....................................................................  
13 
4.1. 
Demographic framework ........................................................................................................................  
13 
4.2. 
Economic and Labour market framework ............................................................................................  
17 
5. 
General Healthcare System: Experience and assumptions ..................................................................  
22 
5.1. 
Financial experience ................................................................................................................................  
22 
5.2. 
Coverage experience ...............................................................................................................................  
23 
5.3. 
Claims experience and projection assumptions ..................................................................................  
25 
5.4. 
Administrative expenditure projection assumption ............................................................................  
32 
6. 
General Healthcare System: Base scenario projection results ............................................................  
33 
6.1. 
Demographic projections ........................................................................................................................  
33 
6.2. 
Financial projections ................................................................................................................................  
36 
7. 
Reconciliation with the previous valuation ............................................................................................  
44 
7.1. 
Introduction ..............................................................................................................................................  
44 
7.2. 
Amendments to the legislation ..............................................................................................................  
44 
7.3. 
Methodological improvements to the projection model ....................................................................  
44 
7.4. 
Experience update, 2022–23 ...................................................................................................................  
44 
7.5. 
Changes in assumptions .........................................................................................................................  
45 
7.6. 
Reconciliation results ...............................................................................................................................  
47 
 
 


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
vi 
 
Page 
8. 
Sensitivity scenarios and tests ..................................................................................................................  
49 
8.1. 
Sensitivity scenarios .................................................................................................................................  
51 
8.2. 
Sensitivity tests .........................................................................................................................................  
53 
8.3. 
Test results ................................................................................................................................................  
54 
9. 
Conclusions and recommendations .........................................................................................................  
58 
10. 
Actuarial opinion .........................................................................................................................................  
60 
Annexes 
1. 
Design features of the GHS ................................................................................................................................  
61 
2. 
The ILO/HEALTH modelling framework ............................................................................................................  
70 
3. 
Scheme-specific data and assumptions ............................................................................................................  
77 
4. 
Claims experience analysis and assumptions ..................................................................................................  
86 
List of tables in the annexes 
A1.1. Healthcare services covered by the GHS, by implementation date ..............................................................  
62 
A1.2. Contribution rates for each category of contributors during the first phase and full  
implementation phase ........................................................................................................................................  
63 
A1.3. Co-payments applied by healthcare service providers ...................................................................................  
64 
A1.4. Annual co-payments cap by beneficiary category ...........................................................................................  
65 
A1.5. Age groups and capitation rates ........................................................................................................................  
67 
A3.1. Active insured persons, 2023 ..............................................................................................................................  
77 
A3.2. Inactive insured persons, 2023 ..........................................................................................................................  
78 
A3.3. Average annual insurable earnings of active contributors, 2023..................................................................  
78 
A3.4. Registered beneficiaries, 2023–24 .....................................................................................................................  
79 
A3.5. Sample mortality rates applied to the insured population ............................................................................  
80 
A3.6. Rates of entry into invalidity ...............................................................................................................................  
80 
A3.7. Assumptions on the family structure, for male insured persons ..................................................................  
81 
A3.8. Assumptions on the family structure, for female insured persons ..............................................................  
82 
A3.9. Statutory pensions (amounts in euros where applicable) ..............................................................................  
82 
A3.10. Invalidity pensions (amounts in euros where applicable) ..............................................................................  
83 
A3.11. Widows’/widowers’ pensions (amounts in euros where applicable) .............................................................  
83 
A3.12. Orphans’ pensions (amounts in euros where applicable) ..............................................................................  
84 
A3.13. GHS scheme specific assumptions ....................................................................................................................  
85 
A4.1. Inpatient utilization rates, by gender, 2022–2024 ...........................................................................................  
87 
A4.2. Inpatient average cost per invoice, by gender, 2022–2024 ...........................................................................  
87 
A4.3. Outpatient utilization rates, by category and by gender, 2022–2024 ...........................................................  
88 
A4.4. Outpatient average cost per invoice, by category and by gender,  2022–2024 ..........................................  
89 


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
vii 
 
Page 
A4.5. Laboratory utilization rates, by category, 2022–2024 .....................................................................................  
90 
A4.6. Laboratories, average cost per invoice, by category, 2022–2024 ..................................................................  
90 
A4.7. Outpatient care pharmacy utilization rates, 2022–2024 .................................................................................  
91 
A4.8. Outpatient care pharmaceuticals, weighted average cost per invoice, 2022–24 ........................................  
91 
A4.9. Inpatient DRGs, quarterly utilization rate assumption, by age group and gender, 2024–2033 ...............  
92 
A4.10. Inpatient Z consumables, quarterly utilization rate assumption, by age group and gender,  
2024–2033 .............................................................................................................................................................  
92 
A4.11. Inpatient Z drugs, quarterly utilization rate assumption, by age group and gender, 2024–2033............  
93 
A4.12. Inpatient Z procedures and fixed fee items, quarterly utilization rate assumption, by age group 
and gender, 2024–2033 .......................................................................................................................................  
94 
A4.13. Outpatient specialists, quarterly utilization rate assumption, by age group and gender, 2024–2033 ....  
94 
A4.14. Allied health professionals, quarterly utilization rate assumption, by age group and gender,  
2024–2033 .............................................................................................................................................................  
95 
A4.15. Dentists, quarterly utilization rate assumption, by age group and gender, 2024–2033 ............................  
96 
A4.16. Nurses and midwives, quarterly utilization rate assumption, by age group and gender, 2024–2033 ....  
96 
A4.17. Assumptions of laboratory monthly utilization rate and average number of points per invoice, 
by test category, 2024–2033 ...............................................................................................................................  
97 
A4.18. Pharmacies and pharmaceuticals for outpatient care, monthly utilization rates and other projection 
assumptions, 2024–2033 .....................................................................................................................................  
97 
A4.19. Personal doctors’ current capitation reimbursement annual rates ..............................................................  
98 
A4.20. A&E departments, private hospitals, assumptions of quarterly utilization rate and average number 
of points per invoice, 2024–2033 .......................................................................................................................  
98 
A4.21. A&E departments of public hospitals, and ambulances, annual fixed cost .................................................  
98 
A4.22. Rehabilitation and palliative care, assumption of annual cost, for the years 2024–2033 ..........................  
99 
List of tables 
ES.1. Projected financial situation of GHS, 2024–2033 .............................................................................................  
xiii 
2.1. 
Healthcare services covered by GHS by implementation date ......................................................................  
3 
3.1. 
Legislated contribution rates .............................................................................................................................  
7 
4.1. 
Projection of the percentage distribution of population by age groups (0–14, 15–64 and 65+),  
2024–2033 .............................................................................................................................................................  
16 
4.2. 
Annual growth of GDP, productivity and employment, 2024–2033 ..............................................................  
18 
4.3. 
Assumptions of labour force participation, employment and unemployment rates, 2024–2033 ............  
19 
4.4. 
Assumptions of inflation rate, real and nominal increase of average wage, 2024–2033 ..........................  
21 
5.1. 
Financial statements, 2022–23 ...........................................................................................................................  
22 
5.2. 
Reconciliation of financial statements with the data received, 2022–23 ......................................................  
23 
5.3. 
Financial Indicators, 2022–23 .............................................................................................................................  
23 
5.4. 
Active contributors to the GHS, 2022–23 ..........................................................................................................  
24 


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
viii 
 
Page 
5.5. 
Registered beneficiaries in the GHS, 2019–2024 .............................................................................................  
24 
5.6. 
Claims experience, inpatients, 2021–2024 .......................................................................................................  
26 
5.7. 
Claims experience, outpatients, 2021–2024 .....................................................................................................  
27 
5.8. 
Claims experience, laboratories, 2021–2024 ....................................................................................................  
27 
5.9. 
Claims experience, pharmacies and pharmaceuticals for outpatient care, 2021–2024 .............................  
28 
5.10. Historical medical inflation, by healthcare category, 2012–2024 ..................................................................  
28 
5.11. Medical inflation assumption, by category, 2026–2033 ..................................................................................  
29 
5.12. Inpatient DRGs, quarterly utilization rate assumption, by age group and gender, 2024–2033 ...............  
30 
5.13. Outpatient specialists, quarterly utilization rate assumption, by age group and gender, 2024–2033 ....  
30 
5.14. Pharmacies and pharmaceuticals for outpatient care, monthly utilization rates other projection 
assumptions, 2024–2033 .....................................................................................................................................  
31 
6.1. 
Projection of GHS contributing population, by category, 2024–2033 ...........................................................  
34 
6.2. 
Projection of year-end GHS registered beneficiaries, by gender, 2024–2033 .............................................  
35 
6.3. 
Projection of year-end GHS registered beneficiaries, by age group, 2024–2033 ........................................  
35 
6.4. 
Projection of employee contributory earnings and other income sources, 2024–2033 ............................  
36 
6.5. 
Projection of GHS income, by category, 2024–2033 ........................................................................................  
37 
6.6. 
Projection of GHS contribution income, by income source, 2024–2033 ......................................................  
37 
6.7. 
Projection of other income, 2024–2033 ............................................................................................................  
38 
6.8. 
Projection of GHS benefit expenditure, by healthcare category, 2024–2033 ..............................................  
38 
6.9. 
Projection of inpatient benefits expenditure, by service type, 2024–2033 ..................................................  
40 
6.10. Projection of benefits expenditure, outpatient pharmacies and pharmaceuticals for outpatient 
and inpatient care, by service, 2024–2033 ........................................................................................................  
41 
6.11. Projection of benefits expenditure, dentists, allied health professionals and nurses & midwives, 
by category, 2024–2033.......................................................................................................................................  
41 
6.12. Projection of administrative expenses, by category, 2024–2033 ..................................................................  
42 
6.13. Projected financial situation of GHS, 2024–2033 .............................................................................................  
42 
7.1. 
Changes in GHS reserves, 2022–23 ...................................................................................................................  
45 
7.2. 
Changes to key assumptions: 2023 versus 2022 actuarial valuations ..........................................................  
46 
7.3. 
Reconciliation of the reserve between 2023 and 2022 actuarial valuations ................................................  
48 
7.4. 
Reconciliation of the reserve ratio between 2023 and 2022 actuarial valuations .......................................  
48 
8.1. 
Sensitivity scenario assumptions .......................................................................................................................  
50 
8.2. 
Sensitivity test assumptions ...............................................................................................................................  
51 
8.3. 
Results of sensitivity scenarios ...........................................................................................................................  
55 
8.4. 
Results of sensitivity tests ...................................................................................................................................  
56 
 
 


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
ix 
 
Page 
List of figures 
ES.1. Total income, total expenditure and reserve ratio of the GHS, 2024–2033 .................................................  
xiv 
3.1. 
Actuarial methodological modelling framework ..................................................................................... 
6 
3.2. 
Methodology: GHS contribution income from GSIS income sources ...................................................... 
8 
3.3. 
Methodology regarding GHS income from GSIS contributing population .............................................. 
8 
3.4. 
Methodology regarding GHS income from the GSIS pensioner population ........................................... 
9 
4.1. 
Historical life expectancies at birth, 1978–2023 ...................................................................................... 
14 
4.2. 
Historical total fertility rates, 1990–2023 ................................................................................................. 
15 
4.3. 
Historical net migration flows, 1995–2023 .............................................................................................. 
16 
4.4. 
Projected population percentage distribution and old-age support ratio, 2024–2033 ........................... 
17 
4.5. 
Projected labour force participation rates, 2024–2033 ........................................................................... 
19 
4.6. 
Evolution of the distribution of population aged 15–64, by labour force status, 2024–2033 ....................  
20 
5.1. 
Evolution of the number of registered beneficiaries, 2019–2024 .................................................................  
25 
6.1. 
Projection of GHS contributing population by category, 2024–2033 ............................................................  
34 
6.2. 
Projection of year-end GHS registered beneficiaries, by age group, 2024–2033 ........................................  
36 
6.3. 
Breakdown of GHS benefits expenditure, by healthcare category, 2024 ....................................................  
39 
6.4. 
Breakdown of GHS benefits expenditure, by healthcare category, 2028 ....................................................  
39 
6.5. 
Breakdown of GHS benefits expenditure, by healthcare category, 2033 ....................................................  
40 
6.6. 
Total income, total expenditure and reserve ratio of the GHS, 2024–2033 .................................................  
43 
A2.1. Overview of the modelling framework (building blocks) ................................................................................  
71 
A2.2. Overview of the relationships between models, scenarios, schemes and population groups ................ 
74 
A2.3. Overview of the calculation flow (a simplified flow) ................................................................................ 
74 
A4.1. Evolution of inpatient utilization rates, by age group, males, 2023–24 ................................................... 
87 
A4.2. Evolution of inpatient utilization rates, by age group, females, 2023–24 ................................................ 
88 
A4.3. Evolution of outpatient utilization rates, by age group, males, 2023–24 ................................................ 
89 
A4.4. Evolution of outpatient utilization rates, by age group, females, 2023–24 .................................................  
90 
 




 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
xi 
 
 Acknowledgements 
The ILO designated the Actuarial Service Unit (ASU) of the Universal Social Protection Department 
(SOCPRO) to oversee the conduct of the present actuarial valuation of the GHS Fund. 
Mr Costas Stavrakis, FIA, FCAA, senior social security actuary, undertook this work with the assistance 
of Mr Andreas Andreou, actuarial modelling expert. Mr André Picard, FSA, FCIA, the Head of SOC/ASU, 
supervised the project, provided technical inputs to the present actuarial valuation, as well as assumed 
overall technical responsibility. 
The ILO project team worked in close collaboration with Mr Angelos Tropis, the HIO Director of the 
Finance Directorate and the HIO project coordinator for the gathering of data and discussions on 
various aspects of the actuarial valuation. In addition to Mr Tropis, the ILO team is grateful to the HIO 
project team of the Finance Directorate as well as the various HIO subject-matter experts on the 
healthcare services covered under the GHS, who provided invaluable assistance throughout this project. 
The ILO extends its gratitude to the executive directors of the HIO for their fruitful collaboration and 
contribution throughout the project.




 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
xiii 
 
 Executive summary 
This report presents the results of the actuarial valuation of the GHS of the Republic of Cyprus as of 
31 December 2023. 
Projections have been made over a period of ten years, that is until 31 December 2033, as GHS provides 
short-term benefits highly influenced by the expansion of healthcare services and continuing advances 
in medical technology. The projection period is in line with actuarial practice for this kind of scheme. 
The historical data provided by HIO for the GHS income and expenditure projection have been sufficient 
and reliable. Nonetheless, the present actuarial valuation is subject to a high degree of uncertainty due 
to relatively insufficient historical series of GHS expenditure data, which constrains the development of 
robust and stable actuarial assumptions across several key areas. Subsequent actuarial valuations are 
expected for continuous monitoring of the financial evolution of the GHS and to hold a higher degree 
of certainty as they will gradually be based on longer series of historical data. 
Base scenario 
Financial projections as shown in table ES.1, indicates that the GHS Fund is financially sustainable over 
the period 2024–2033 under the current GHS provisions, including the legislated schedule of 
contribution rates. The above projections assume no policy change in terms of adding new GHS 
healthcare services other than those which had been anticipated to be introduced at the time of writing 
this report. Therefore, considering the reserve, 1 contribution rates are assessed to be appropriate to 
sustain the scheme financially in the short term and medium term and thus ensuring the maintenance 
of a constantly positive reserve. 
 Table ES.1. Projected financial situation of GHS, 2024–2033 (in millions of euros) 
Year 
2024 1 
2025 
2026 
2027 
2028 
2029 
2030 
2031 
2032 
2033 
Reserve (start of year) 
594 
709 
759 
781 
791 
797 
808 
824 
850 
882 
Total GHS income 
1 832 
1 993 
2 081 
2 165 
2 243 
2 326 
2 411 
2 503 
2 594 
2 691 
Total GHS benefits expenditure 
1 699 
1 921 
2 028 
2 121 
2 199 
2 279 
2 358 
2 440 
2 524 
2 610 
Total other income 
7 
10 
12 
13 
13 
15 
15 
16 
16 
17 
Total administrative expenses 
25 
32 
43 
47 
51 
51 
52 
53 
54 
55 
Surplus/Deficit 
115 
50 
22 
10 
6 
11 
16 
26 
32 
43 
Reserve (end of year) 
709 
759 
781 
791 
797 
808 
824 
850 
882 
925 
Reserve ratio 2 
0.42 
0.40 
0.39 
0.37 
0.36 
0.35 
0.35 
0.35 
0.35 
0.35 
Administrative expense ratio 3 (%) 
1.4 
1.6 
2.1 
2.2 
2.3 
2.2 
2.2 
2.1 
2.1 
2.0 
Total GHS benefits expenditure/ 
Nominal GDP (%) 
5.1 
5.5 
5.5 
5.5 
5.5 
5.5 
5.4 
5.4 
5.4 
5.4 
1 The estimated financial figures for 2024 are derived from actual experience data.   2 Reserve ratio refers to the level of reserve 
at the end of one year to the level of GHS expenditure for the same year. For example, a reserve ratio of 8.3% (one twelfth) 
indicates that the level of reserve covers one month’s expenditure.   3 Administrative expense ratio refers to the ratio of the level 
of administrative expenses in any year to the total GHS income amount of the same year. 
______ 
1 For the purposes of the present report, reserve refers to the GHS Fund accumulated surplus. 


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
xiv 
 
Figure ES.1 shows graphically the evolution of total income, total expenditure and reserve ratio of the 
GHS for 2024–2033. 
 Figure ES.1. Total income, total expenditure and reserve ratio of the GHS,  
2024–2033 (in million of euros) 
It follows from table ES.1 and figure ES.1 that the projected reserve ratio remains positive throughout 
the projection period indicating the sufficiency of the annual GHS income to cover the annual GHS 
expenditure. Nevertheless, over the period 2024–2029, there is a downward trend in the reserve ratio. 
From 2029 to 2033, the reserve ratio is projected to remain stable at an adequate level, above four 
months’ expenditure, reflecting broadly aligned growth rates between total GHS revenues and 
expenditures. 
Sensitivity scenarios and tests 
Since all projections have a degree of uncertainty, a variety of sensitivity scenarios and tests were carried 
out in order to measure the sensitivity of the projected financial position of the GHS Fund to future 
changes in the demographic and economic environments. 
Three sensitivity scenarios were performed on the results of the actuarial valuation to examine their 
sensitivity to changes in the following set of assumptions or measures: 
o economic adverse scenario, resulting to lower net migration, lower GDP growth rates, lower 
nominal wage increases, lower employment growth rates and lower labour-force participation 
rates from 2025 onwards, when compared to base scenario; and 
o introduction of new healthcare services, which are not currently covered by the GHS legislation. 
o GHS financial governance improvement: Activation of GHS institutional measures relating to its 
financial governance, which aim towards benefit cost containment, in accordance with the 
regulatory framework of the GHS. 
In addition, individual sensitivity tests were performed on the results of the actuarial valuation to assess 
their sensitivity to changes, either more or less favourable for the GHS, in the following four key GHS 
variables which are subject to a relatively high degree of uncertainty: 
0,42 
0,40 
0,39 
0,37 
0,36 
0,35 
0,35 
0,35 
0,35 
0,35 
 0,30
 0,32
 0,34
 0,36
 0,38
 0,40
 0,42
 0,44
 -
  500
 1 000
 1 500
 2 000
 2 500
 3 000
 3 500
 4 000
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
Reserve ratio
Amounts in million €
Total Income
Total Expenditure
Reserve Ratio


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
xv 
 
o cost resulting from the introduction of new/innovative drugs; 
o medical inflation: progressive growth to a higher or a lower level by 0.5 per cent over the 
projection period; 
o increase or decrease in utilization rates (all services); and 
o increase or decrease in inpatient utilization rates. 
The above sensitivity scenarios and tests show that, even though the projected financial status of the 
GHS Fund is sensitive to the above measures and assumptions, the reserve remains constantly positive 
over the next decade, until 2033, securing the viability of the GHS Fund. Nevertheless, certain sensitivity 
scenarios and tests have greater financial impact than others, resulting to, by the end of 2033: 
● Higher reserve covering more than five months’ expenditure – namely the scenario for GHS 
financial governance improvement and the sensitivity tests of progressive decrease of medical 
inflation, decrease in utilization rates and decrease in the inpatient utilization rates. 
● Lower reserve level covering between two and a half, and three months’ expenditure – namely 
the economic adverse scenario and the sensitivity test of increase in the inpatient utilization rates. 
● Lower reserve covering slightly above two months’ expenditure – sensitivity test of increase in 
utilization rates. 
Given the high degree of uncertainty associated with the projected financial results of the present 
actuarial valuation, as illustrated by sensitivity analyses, it is vital that the financial position of the GHS 
Fund is monitored closely and on a regular basis, so that, where necessary, corrective measures are 
taken in a timely manner. 
 
 




 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
xvii 
 
 Abbreviations and acronyms 
BE 
benefits expenditure 
CI 
contribution income 
CR 
contribution rate 
CPI 
consumer price index 
DRG 
Diagnosis Related Group 
GDP 
gross domestic product 
GEPS 
Government Employees Pension Scheme 
GHS 
General Healthcare System 
GSIS 
General Social Insurance Scheme 
HIO 
Health Insurance Organization 
FFS 
Fee for Service 
IAA 
International Actuarial Association 
ILO 
International Labour Office/Organization 
ISSA 
International Social Security Association 
PD 
personal doctor 
SHSO 
organization managing public hospitals 
SPS 
Social Pension Scheme 
GHS Fund 
Healthcare Insurance Fund 




 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
1 
 
 1. Introduction 
The present actuarial valuation report of the Cyprus General Healthcare System (GHS) has been carried 
out in compliance with the provisions of Part II, Article 4(2)(e) of the General Healthcare System Law of 
2001 (N.89(I)/2001), which stipulates that the HIO has the authority to conduct actuarial valuations of 
the GHS on an annual basis. This report presents the financial situation of the GHS as of 31 December 
2023 and the financial results of an ILO actuarial assessment for measuring the financial sustainability 
of the GHS up to 2033. The present actuarial valuation represents the fourth actuarial valuation of the 
GHS since its inception in June 2019. 
Given the recent implementation of the GHS as of 1 June 2019 and 2020 for Phase I and Phase II 
respectively, the present actuarial valuation is subject to a high degree of uncertainty due to the 
relatively insufficient historical series of data, which constrains the development of robust and stable 
actuarial assumptions across several key areas. Therefore, a number of sensitivity scenarios and tests 
are undertaken in Chapter 8 of this report in order to evaluate the sensitivity of results under different 
evolution paths of key demographic, economic and GHS-specific assumptions. Continuous monitoring 
of the financial evolution of the GHS is paramount in this context, as well as the reconciliation of results 
with subsequent actuarial valuations. In particular, reconciliation of results facilitates the evaluation of 
the soundness and reasonableness of the actuarial assumptions and the necessary adjustments during 
future valuations. 
1.1. 
Objectives of the actuarial valuation 
The main objective of the present actuarial valuation is to evaluate the financial situation of the GHS in 
the short and medium term, within the framework of the principles of social security that underlie the 
ILO Conventions. 
In particular, the present report aims to provide visibility on the financial sustainability of the GHS by 
reviewing the financial condition of GHS Fund in relation to its obligations arising from the 
implementation of the General Healthcare System Law of 2001. The main aims are to: 
o review the current and projected financial situation of the GHS as of 31 December 2023; 
o assess the medium-term financial viability of the GHS until 2033, assuming the legislation 
remains unchanged, and make recommendations on its financing; and 
o assess the sensitivity of the medium-term projected financial position of the GHS to changes in 
demographic and economic environments, as well as changes in GHS-specific assumptions. 
Communication of the results of actuarial valuations is very important to the HIO, enabling it to transmit 
a faithful picture of the financial position of the GHS and build members’ trust, which has a direct impact 
on the solid financial and social sustainability of the GHS. 
Finally, the present actuarial valuation has been undertaken in compliance with relevant international 
standards of actuarial practice, as promulgated by the International Actuarial Association (IAA) as well 
as the ISSA-ILO Guidelines on actuarial work for social security, thus aiming towards attaining the 
highest level of quality and transparency in actuarial practice for social security healthcare. The 
recommendations formulated therein are also in conformity with the relevant social security standards 
of the ILO. 


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
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1.2. Scope of the report 
The present report is structured as follows: 
● Chapter 2 gives an overview of the provisions of the GHS. 
● Chapter 3 describes the methodologies used to project the income and expenditure of the GHS 
as well as relevant financial sustainability indicators. 
● Chapter 4 presents the demographic, economic and labour market framework of the actuarial 
valuation. 
● Chapter 5 shows the past experience of the GHS and the assumptions made for the future based 
on that observed past experience. 
● Chapter 6 presents the GHS projection results under the base scenario. 
● Chapter 7 presents the reconciliation of the results with those presented in the previous actuarial 
valuation. 
● Chapter 8 presents sensitivity scenarios and tests, which assess the sensitivity of base scenario 
projection results to future changes in the demographic and economic environments, as well as 
changes in GHS-specific assumptions. 
● Chapter 9 presents the conclusions and recommendations. 
● Chapter 10 presents the actuarial opinion of the present valuation. 


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
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 2. Description of the General Healthcare System 
provisions 
This chapter gives an overview of the GHS provisions. A more complete description is provided in 
Annex 1. 
2.1. Covered population 
The GHS covers the following categories of beneficiaries: 
● Citizens of the Republic of Cyprus who have their ordinary residence in the areas controlled by 
the Government of the Republic of Cyprus. 
● European Union citizens who have their ordinary residence and either work or have acquired the 
right of permanent residence in the Republic of Cyprus. 
● Third-country citizens who have their ordinary residence in the Republic of Cyprus and have 
acquired legally either the right of permanent residence or the right to equal treatment in the 
sectors of social insurance, according to the provisions of the Cyprus National Law. 
● Other categories (such as refugees) under certain conditions. 
● Persons who are family members of the first two points or persons who are family members of 
the third point and who have also acquired legally the right of permanent residence. 
Family members are the spouse of the beneficiary and the children under the age of 21, or over the age 
of 21 who are dependent on them or their spouse, as determined by Regulations. 
2.2. Healthcare services under GHS 
All beneficiaries have access to the same healthcare services covered by the GHS. The healthcare 
services covered are described in table 2.1. 
 Table 2.1. Healthcare services covered by GHS by implementation date 
Date implemented 
Healthcare service 
1 June 2019 
Personal doctors for adults and children 
Specialist doctors for outpatient care 
Pharmacies and pharmaceuticals for outpatient care (Phase I Drugs: Generics/Off 
Patent and MeToo) 
Laboratories for outpatient care 
1 June 2020 
Inpatient care 
1 September 2020 
Accident and emergency care, ambulance services and Phase II Drugs 
(Innovative/high-cost Drugs) 
1 December 2020 
Dentists for preventive dental care 
Nurses and allied health professionals: physiotherapists, clinical psychologists, 
clinical dieticians, speech therapists, occupational therapists for outpatient care 
1 October 2021 
Midwives 
1 January 2022 
Palliative care 
1 January 2023 
Institutional rehabilitation services 
1 November 2023 
Allied health professionals: podologists for outpatient care 


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
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2.3. Financing approach 
For the implementation of the GHS, a GHS Fund has been established for the purpose of gathering the 
relevant contributions, and from which all payments to providers of healthcare services are made. The 
GHS Fund is administered by the Health Insurance Organization (HIO). 
The HIO sets an individual global budget for each segment of healthcare following consultations with 
the respective representatives of the healthcare providers. The total global budget corresponds to the 
annual expenditure for healthcare services covered by the GHS. In any given financial year, the actual 
expenditure for any segment of healthcare within the framework of the GHS cannot exceed the 
predetermined global budget, irrespective of the volume of services provided. This practice aims at 
containing the cost and ensuring the sustainability of the scheme. The annual global budget of each 
healthcare segment is allocated to the 12 months of the calendar year. 
2.4. Source of funding 
The GHS Fund revenues come from contributions, co-payments, personal contributions (contribution 
I)2, donations and legacies, investment income from assets of the HIO and any other income accrued 
from the activities of the HIO. The main GHS source of financing is contributions. 
2.5. Reimbursement methods 
The HIO reimburses providers through various reimbursement methods; these are: 
1. Price list (fixed fee): Reimbursement is calculated based on the list price of each item for the 
specific date. 
2. Point system: Reimbursement is calculated based on the number of points of each activity in a 
group, the total claimed number of points per group and the group budget of each month. Point 
values are calculated monthly, based on the monthly budget and the total number of points for 
the specific month. The HIO can define minimum or maximum amounts for point values. Claims 
reimbursements are based on the calculated point value of the specific group. 
3. Capitation reimbursement: Reimbursement is not claim-based. It concerns the personal doctors 
and the services they offer to beneficiaries registered in their list. It is calculated based on the 
number of days each beneficiary is registered to a personal doctor list according to a daily rate 
corresponding to the age group of the beneficiary. 
4. Performance reimbursement: Implemented in 2022 and aiming at improving quality of services. 
The reimbursement amount for each provider is calculated based on various key performance 
indicators (KPIs). 
5. Inpatient diagnosis related group (DRG) point system reimbursement: Inpatient services are 
reimbursed per case based on a DRG reimbursement method. The DRG cases are separated into 
normal, specialised and births. The Standard Base Rates (point value) which apply for each 
hospital for normal and specialised cases, are determined based on the score of each hospital on 
specific qualitative criteria. The Standard Base Rates for specialised cases are higher than the 
Standard Base Rates for normal cases. The Base Rate for all birth cases is fixed and it is the same 
for all hospitals. A pre-agreed number of points is defined for each hospital for normal and for 
specialised cases, up to which no discount factors apply on each hospital’s respective Standard 
______ 
2 Personal Contribution I will be paid in case a beneficiary goes directly to an outpatient specialist without a referral. Some 
exemptions are applied, as per section A1.5.2 of Annex 1. 


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
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Base Rates. In case a hospital exceeds its pre-agreed number of points, discount factors apply in 
order not to exceed the global budget. 
6. Fixed annual amount: A&E Department for public hospitals and ambulances of public hospitals. 


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
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 3. Projection methodologies 
The present actuarial valuation of the GHS involves cash-flow projections of its revenue and 
expenditures over a medium term, until 2033, so as to be able to estimate changes in the reserve. These 
changes vary from one year to the next as a function of the difference between the GHS revenue and 
expenditures. The actuarial projections in this report are based on: (i) the current legal provisions and 
governance of the GHS, such as eligible beneficiary population, healthcare services covered, financing 
approach and reimbursement methods; (ii) data regarding the starting point of the projections 
including data on the GHS contributors and registered beneficiaries; (iii) actual past experience and 
trends in the GHS contributory income and expenditure of each GHS healthcare service; and 
(iv) assumptions regarding future demographic and economic experience, as well as scheme-specific 
assumptions such as utilization rates and unit costs. 
Figure 3.1 shows graphically the methodological modelling framework used in this actuarial valuation. 
Details of that modelling framework are provided in Annex 2. 
 Figure 3.1. Actuarial methodological modelling framework 
It follows from figure 3.1 that the actuarial methodological modelling framework has the following four 
components: 
1. The demographic, labour market and macroeconomic component that provides a projection of 
the population, labour force, employment levels and macroeconomic data that are needed as 
input for the modelling of the GHS expenditure and revenues. 
2. The GHS income component that calculates GHS contribution income, other GHS income and 
other items treated as GHS income as described in section 3.1. GHS contribution income is 
calculated by projecting the assessment base for contributions, resulting from working income of 
the employed population and pension income of the pensioner population, using the economic 
and demographic data supplied by the above component together with scheme-specific 
assumptions, including the coverage of the contributing employed population. 
3. The GHS expenditure component that projects expenditure in various GHS healthcare services, 
on the basis of the projection of the eligible beneficiary population and scheme-specific 
assumptions of future utilization and cost developments, as well as GHS administrative 
expenditure. 


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
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4. The GHS financial results component that calculates the annual balance of GHS income and 
expenditure and produces the indicators used for assessing the GHS financial sustainability, as 
well as determining the adequacy of current contribution rates. 
3.1. Methodology for modelling GHS income 
The revenue of the GHS includes contribution income, other income and other items treated as income. 
The GHS contribution income, which represents the largest share of GHS income, results from working 
income of the employed population and pension income of the pensioner population. In particular, it is 
based on the following sources of income: 
● Earnings of employees: salaried and self-employed persons. Employed and self-employed 
persons are the General Social Insurance Scheme (GSIS) contributors. 
● GSIS pensions. 
● Other pensions, such as Government Employees Pension Scheme (GEPS) and Social Pension 
Scheme (SPS). 
Other GHS income includes revenues from rental income, interest on cash deposits, dividends of shares, 
other investment income sources, other taxable income related to GHS as well as EU pensioners’ and 
tourists’ medical expenses, all of which are of lesser financial importance. 
Other items treated as GHS income include co-payments, personal contribution I (see Annex 1) and 
discounts/clawbacks from pharmaceutical companies. 
For each year in the projection period 2024–2033, the GHS contribution income (CI) for each source of 
contributory income is projected by multiplying the legislated contribution rate (CR) by the size of the 
contributing population and its corresponding assessment base for the payment of contributions. The 
assessment base is the total amount of income subject to contributions. 
CIt = CRt * Contributing Populationt * Assessment Baset 
The total GHS contribution income (CI) of all sources of income is the summation of each income 
source’s CI. 
The legislated contribution rate (CR) of each source of income is presented in table 3.1. 
 Table 3.1. Legislated contribution rates (percentages) 
Source of Income 
Contributor 
Total 
Individual 
Employer 
State 
Employed 
Salaried employees 
2.65 
2.90 
4.70 
10.25 
Self-employed 
4.00 
– 
4.70 
8.70 
Pensioners 
GSIS, GEPS, other 
2.65 
– 
4.70 
7.35 
Other income 
Rent, interest, dividends, other 
2.65 
– 
– 
2.65 
The contributing population consists of the employed population, salaried and self-employed persons, 
as well as the pensioner population. 
The assessment base represents the total amount of earnings of employed persons and the total 
amount of pension income of the pensioner population, which are subject to contribution payments. 


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
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Figure 3.2 presents the methodological modelling approach used for calculating the GHS contribution 
income, resulting from GSIS insurable earnings of employed persons and GSIS pension income of the 
pensioner population, using the ILO actuarial pension model, which is currently used for actuarial 
valuation purposes of the GSIS. 
 Figure 3.2. Methodology: GHS contribution income from GSIS income sources 
Figure 3.3 presents the methodology used for calculating the GHS income from the GSIS active insured 
population, while figure 3.4 presents the methodology used for calculating the GHS income from the 
GSIS pensioner population. 
 Figure 3.3. Methodology regarding GHS income from GSIS contributing population 
 
 
 


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
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As shown in figure 3.3, the demographic projections of the active insured population are derived from 
the following: 
● The total population is projected starting with the actual population by age and gender, and 
projecting that population over the next decade using appropriate assumptions concerning 
fertility, mortality and migration. 
● Labour force participation rates are applied to the total population to obtain the labour force, 
distributed by age and gender. 
● The labour force is then separated into employed and unemployed persons. 
● Finally, GHS active contributors, which in essence are the GSIS active contributors, are projected 
by using appropriate assumptions about the rate of coverage of the employed population under 
the GSIS and annual decrements of termination causes under the cohort method. 
 Figure 3.4. Methodology regarding GHS income from the GSIS pensioner population 
As illustrated in figure 3.4, in order to determine the projected number of GSIS pensioners, by type of 
pension, the following income development process is applied: 
● Starting with the number of active insured persons and using past service records, it is 
determined whether these persons are eligible for the various types of pensions. 
● Once this potential population of beneficiaries is established, a probability of occurrence of the 
risk involved (type of benefit) is applied to the eligible population in order to determine the 
number of new pensioners that will emerge each year. 
 
 


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
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The probability of occurrence of the benefit varies according to the benefit involved. It may be: 
o retirement rates for determining statutory pensions; 
o invalidity incidence rate for determining invalidity pensions; and 
o mortality rates for determining survivors’ pensions. 
These new GSIS pensioners are then projected into the future using survival rates. 
The GHS income resulting from pension income other than the GSIS is projected by multiplying the 
projected total pension amount for each source, such as the GEPS and SPS, by the relevant contribution 
rate, using pension models other than ILO models. 
The GHS income resulting from other income is projected by multiplying the projected income from 
each of the above sources by the corresponding legislated contribution rate. 
The GHS investment income is projected by multiplying each year the GHS Fund accumulated surplus 
by the corresponding year’s interest rate. 
Finally, the GHS income resulting from other items treated as income for co-payments and contribution 
I is projected by multiplying the projected utilization with the corresponding co-payment and 
contribution I amounts. Discounts and clawbacks from pharmaceutical companies are projected based 
on the development of expenditure on pharmaceuticals. 
3.2. Methodology for modelling the GHS expenditure 
The expenditure of the GHS consists of the benefit expenditure and administrative costs. The benefit 
expenditure represents the largest share of GHS expenditure, while administration cost is only tiny 
fraction of total GHS expenditure. 
The projection of future benefit expenditure implies the estimation of the covered beneficiary 
population, which is different from the contributing population. The covered beneficiary population 
includes all persons who are entitled to benefits, who according to the GHS legislation also includes 
people who do not contribute, such as covered dependants and other inactive people such as the 
unemployed. 
For each year in the projection period 2024–2033, the benefits expenditure (BE) for each healthcare 
service is projected by multiplying the covered beneficiary population (CovPop), i.e., the number of 
potential beneficiaries, by a utilization rate and the average unit cost. 
BEt = CovPopt * Utilization ratet * Average Unit Costt 
The total benefit expenditure of all GHS healthcare services is the summation of each healthcare service 
BE. 
Utilization ratet is the number of invoices per capita (1 in case of capitation reimbursement). 
Average Unit Costt is the average cost weight (average number of points) multiplied by the average point 
value. 
Administrative expenditure consists of staff costs and non-staff costs and is projected using factors 
which reflect wages and prices respectively. 
 
 


 Report to the HIO: Actuarial valuation of the GHS as of 31 December 2023, covering the period 2024–2033 
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3.2.1. GHS healthcare ser