Health funds’ cash deficits spiraling, report finds

There was an increase in hospitalization costs of 5% compared to 2014, a 5.2% rise in salary costs and a 5.1% increase in medication and medical equipment costs compared to 2013.

By JUDY SIEGEL-ITZKOVICH
Ya'acov Litzman, the deputy health minister (photo credit: MARC ISRAEL SELLEM)
Ya'acov Litzman, the deputy health minister
(photo credit: MARC ISRAEL SELLEM)
Three of the four public health funds are in growing financial deficits, according to the latest Health Ministry report released on Tuesday.
The report found that Maccabi Health Services is NIS 296 million in the red, Meuhedet Health services is in the red by NIS 50 million and Leumit Health Services, the smallest health fund, is in the worst financial position with a negative cash balance of NIS 1.18 billion.
Clalit Health Services, the largest health fund, has a positive cash balance of NIS 123 million, but this figure has been constantly declining in recent years.
Health Minister Ya’acov Litzman said he is “very worried about the insurers’ deficits that threaten the stability of the health system. We decided not to do a cosmetic treatment or to intensify the stability agreement with the health funds, but rather to deal in a basic way with the lack of resources and the twisted state allocation of funds.
“We are advancing a program for changing the method in which the hospitals are compensated for treating health fund members and updating the cost of living and the demographic index.
The combination of the two can bring an answer to the challenges of the system in the coming years,” he said.
The ministry said that the net assets of Maccabi were influenced by the fact that the financial report of the second- largest health fund was completed before its stability agreement was signed – thus most of its income was not included.
In addition, the cash surplus of some of the health funds in 2014 was influenced by the fact that some received significant advance payments on the account of the 2015 figure, the report stated.
Meuhedet, the third largest fund, has enough cash left for 18 days of activities, compared to 17 for Clalit, 14 for Maccabi and only two for Leumit.
The smallest fund, Leumit, was the only one that presented a growth in deficit when state supports were subtracted.
It totaled NIS 296 million in 2014 compared to NIS 239 million the previous year.
To cope with the deficits and bring about financial stability, there is a need for a solid budgeting model for the public hospitals including those owned by Clalit, the ministry report said. It also said that the system needs to properly adjust the health cost of living index to take account of demographic changes, transfer a significant amount of state supports on the basis of the cost of the basket of health services, and carry out steps to put the Leumit fund into financial balance over the long term.
There was an increase in hospitalization costs of 5% compared to 2014, a 5.2% rise in salary costs and a 5.1% increase in medication and medical equipment costs compared to 2013.
The cost of the basket of health services for the whole population totaled NIS 38.6 billion last year – an increase of 5.5% compared to 2013, when the total was NIS 36.6 billion. It was the second year in a row that the number of members in Clalit had grown the fastest compared to the other health funds. In Leumit, the drop in members continues, while in Meuhedet, there was the largest increase in members.
Besides getting the mass of their income from health taxes distributed by the National Insurance Institute, the health funds receive income from copayments for medications and medical equipment, copayments for visits to doctors and outpatient clinics, diagnostic institutes and supplementary health insurance policies. Such income, however, has declined from 6.99% of the funds’ income in 2013 to 6.74% at present.
The entire report appears in Hebrew on the ministry’s website at www.health.gov.il.