Rising medical costs could ‘Americanize’ healthcare system

Taub Center research shows large decline in state funding.

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August 6, 2010 04:39
2 minute read.
Rising medical costs could ‘Americanize’ healthcare system

medicine 248.88. (photo credit: Ariel Jerozolimski)

The index of Israeli medical service costs is galloping forward, risking the “Americanization” of healthcare to unaffordable levels at a time when the state’s share in funding these services has declined to just 57 percent, according to a new report by the Taub Center for Social Policy Research.

The report was authored by Prof. Dov Chernichovsky, head of the health policy program at the Jerusalem center; Dr.

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Ronni Gamzi, a member of the center’s health policy program before he became Health Ministry director-general; and Dr.Guy Navon of the Bank of Israel.

Their 29-page report, released for publication on Thursday, states that the increase in costs has been “malignant,” and that increased investment in medical services per capita had almost been “erased” by the higher index of medical costs.

Eight percent of the gross domestic product goes to health services, while they constitute 5% of household expenses.

The team wrote that Israel’s hyperinflation of the 1980s “left a deep psychological scar – approaching paranoia” on economic decision-makers. While low inflation is a legitimate state target, they wrote, it has not occurred in medical costs. As the state is funding less and less of healthcare spending, leaving the citizen to pay out of pocket for a growing number of services, the rise in medical costs is placing a heavier burden on the individual, the report states.

The index of medical services increased by 35% between 1995 (when the National Health Insurance Law went into effect) and 2008, wrote the Chernichovsky team.

The citizen’s out-of-pocket expenses for healthcare increased by 18% during that period, and continue to rise. Thus, they wrote, Israel is adopting the unsuccessful US model and abandoning that of 22 advanced countries such as Canada and France, in which diseases and medical technologies are similar to Israel’s but public funding has increased.

Thus, even though Israel’s health system has shown impressive advances since 1995, it is in danger of negating them because of growing costs to individuals and the expansion of private medicine, they wrote.

As US President Barack Obama has launched a reform of the US healthcare system and will spend more federal and state funds on it, the trend there will be for lower out-of-pocket expenses – while Israel is going in the opposite direction, according to the report.

This will increasingly lead to failures in the public healthcare system, increasing demand for private medicine, which is already encouraged by supplementary health insurance. More public healthcare doctors will leave for private medical institutions, the authors of the report predicted, thus worsening conditions in public hospitals and health fund clinics.

Private institutions will invest capital in technologies and services parallel to those in the public system – a waste of resources, inefficient and lacking in managed care principles, the team wrote. The public will spend more on healthcare but not get any more services.

Equity and accessibility will decline, according to the report, which warns that this is what happened to the US in recent decades. Even though US medical technology has been very good, accessibility to healthcare by the lower socioeconomic sectors declined and left many people out. This means that health indicators of the US public declined. The same, they said, could happen here.


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