Health insurance endangered by eroded basket, reduced funds

Yet Health Ministry assessment shows system has had major successes 15 years on.

February 2, 2010 23:50
3 minute read.

health operation surgery 88. (photo credit: Courtesy)


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Exactly 15 years after the national health insurance system was launched, it is seen as having produced many benefits. Nevertheless, the basket of health services is not keeping up with the best and most essential technologies, and the average Israeli spends considerably more as health taxes and copayments, with the Treasury picking up less of the tab.

This was stated in a 60-page report to mark the anniversary that was prepared by Nir Keidar and Dr. Tuvia Horev of the Health Ministry’s economic and health insurance branch and released for publication on Wednesday.

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Before the establishment of national health insurance, residents could voluntarily become members of one of the four health funds, and Clalit Health Services (then Kupat Holim Clalit) insured the vast majority of residents.

Most people were members, but some – such as the elderly, poor, those with serious conditions and those who were not members of the Histadrut labor federation or political parties or who lived in the periphery – were often rejected. Political parties – Labor/Clalit and Likud/Leumi – owned two of the four insurers.

Thanks to the reform, all legal residents – not only citizens – are automatically members of the health fund of their choice, and no one can be turned down for any reason, whether age, health, place of residence, ethnic background or income. A national health insurance tax was based on income, and it is paid to the National Insurance Institute, which allocates the collected money among the four health funds.

The basket of health services cost NIS 28 billion in 2009. But while in 1998, 47 percent of the basket was covered by health taxes and 48% by the Treasury, in 2009 53% was covered by health taxes and only 40% by the state budget. The rest is paid for by copayments. In 1995, when the new system went into effect, 33% of national health expenditures were paid out of pocket by residents; by 2008, that figure had climbed to 42%, according to the ministry’s report.

In 2008, 5.1% of family income was used for health expenses, with dental care responsible for the main costs followed by supplementary health insurance policies with one’s public health fund and/or private insurance companies. Three-quarters of Israeli families hold supplementary health insurance.

The population increased by 43% between 1995 and 2009, but the basket was increased due to population growth by only 25%, thus increasing the erosion of public expenditure for health. During the same period, funding for the basket of health services was updated by 62% while health costs rose by 79%.

The Treasury has in recent years become a bit more generous when it comes to health expenditures, as it paid for an average 1.64% expansion of the basket per year, compared to 0.76% annually between 1998 and 2005. But this is still below the 2% automatic annual increase that health system experts insist is needed to keep the basket properly updated.

Clalit, which was the strongest health insurer in 1995, has consistently lost members as it became easy to change health funds, and people who were previously not accepted by Maccabi Health Services and Kupat Holim Meuhedet were able to join them. Just 52% of the population are today members of Clalit, compared to 63.2% in 1995. New immigrants and young families increasingly join these two, but Kupat Holim Leumit has not grown in proportion to these insurers.

Maccabi rose from nearly 19% of the population in 1995 to 24.4% today, Meuhedet from 8.8% to 13.4% and Leumit from 9.1% to today’s 9.3%.

Horev said that in the past 15 years, the national health insurance system has had “many achievements, but the erosion of funding sources is liable to harm them.”

He advised changing the funding formula so that residents will spend less of their own money for healthcare and so the poor and socially weak sectors will have more accessible care.

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