The four public health funds – Clalit Health Services, Maccabi Health Services,
Kupat Holim Meuhedet and Kupat Holim Leumit – would much prefer to have only
young, healthy members who live in the center of the country. Their staffers
would be more relaxed; expenditures would be reduced and income raised; and
their provision of medical services so much easier and more pleasant. The
insurers would try hard to lure such “desirable” members from other health funds
and discourage “more expensive” members from joining, despite the fact that
since 1995, every Israeli resident has had the right to be insured by any of the
The fact that health funds’ customer magazines still largely
present smiling, vibrant, photogenic couples and their cute kids reflects this,
even though the insurers have been instructed by Health Ministry
director-general Prof. Ronni Gamzu to include many more images of the elderly in
their publications and advertisements in the media.
But that false
picture does not reflect reality in this or any other country. There are many
people who have serious diseases.
There are elderly and disabled and
people who live in the far-off and disadvantaged periphery of Israel, far from
luxurious apartment towers in Tel Aviv and villas in Herzliya Pituah. And unless
the insurers receive higher compensation for providing high-level medical
services to the “other Israel,” they will be unlikely to seek them
“Capitation” is known to health systems around the world as a method
of paying healthcare service providers a set amount for each enrolled person
assigned to that physician or group of physicians, whether or not that person
seeks care, per period of time.
In Israel, it refers more specifically to
bonuses given to health funds for having members from the “other Israel” who are
more expensive to treat. A fair “capitation” formula would establish genuine
competition among the health funds; there is no point for an elderly person with
chronic diseases or a younger one with in a wheelchair to join a health fund if
there are no clinics or medical specialists in his area. If these are absent,
those who need more and better healthcare will just remain in the fund they
joined decades ago.
The tool was instituted in January 1995 with the
passage a few months before of the National Health Insurance Law to compensate
the insurers for “undesirable” members. Today, the capitation formula affects
the distribution of NIS 27 billion of the NIS 30b. basket of health services,
but experts agree that as the actual amounts of shifted money is not large, the
effect has not been good enough.
The formula has been changed several
times since the national health insurance system was established, each
mini-reform recommended by a temporary committee of health administrators and
government representatives; there is no permanent panel including academics who
are experts in the field. The recommendations are studied and approved by the
Finance and Health Ministries.
However, most of the changes in the
capitation formula have not had a significant impact; they have shifted health
fund allocations by only one percent.
The Health Ministry section of the
State Comptroller’s semi-annual report published last Tuesday afternoon includes
a discussion of capitation. Almost simultaneously, a conference on the issue was
held at Jerusalem’s Van Leer Institute.
With an attendance of several
dozen experts, it was organized by the Israel National Institute for Health
Policy and Health Services Research (NIHP). This body is headed by former
Hadassah Medical Organization director-general Prof.
who wears a new hat as director-general of the National Insurance Institute
Mor-Yosef, whose NII collects health taxes from residents’ monthly
income and distributes them among the four health funds according to the number
of members they have and the capitation formula, commissioned a study on
It was conducted and presented at Van Leer by Prof.
Leah Ahdut of the Ruppin Academic Center along with Prof.
Amir Shmueli of
the Hebrew University.
The timing was coincidental: The NIHP, Mor-Yosef
told The Jerusalem Post
, ordered and financed the study a long time before the
State Comptroller worked on the section dealing with capitation. But both were
perhaps inspired by the fact that for the first time since 2010, a new committee
will meet soon to consider an updated formula. But how should the formula be
altered? Ahdut said at the conference that new thinking on capitation is
required, adding more social and economic variables to the formula. The health
funds are required to provide health services to all comers but – unlike private
health insurance companies – they can’t set the premiums according to risk.
Therefore, capitation is needed as a mechanism to compensate the health funds
for expensive care that should be of high quality.
impossible to measure patients’ future needs, thus the formula is based on
actual spending,” said Ahdut, whose study carried out with cooperation from
Clalit Health Services (the largest health fund, with 52% of residents covered)
began in 2008. A health and socioeconomic profile of about one million Israelis
was used for the research. Clalit has relatively more members living in the
periphery and more with lower socioeconomic status than the three other
insurers. This mix is different from that of Maccabi Health Services, which has
more young members living in the center on the country; Meuhedet also has many
such members but also has a higher share in the periphery; while Leumit is
between Clalit and Meuhedet in profile.
Interestingly, Ahdut found that
the higher the socioeconomic level of a city, town or village, the higher the
One would expect that the lower the income and
education level, the more would be spent. But people who are better off make
more demands on the health system and are more aware of their privileges,
especially regarding disease prevention, health education and early diagnosis.
In the periphery, more money is spent for treating serious diseases and those
related to aging, disability, cancer, diabetes and organ
According to research partner Shmueli, there is a clear
economic benefit for insurers to have younger and healthier
Although the insurers must accept all who want to join them,
“there can be hidden selection by giving incentives to attract the young and
healthy through advertising, selective marketing, lower-quality services for
people who are expensive to treat and locating clinics farther away from the
Despite the fact that the chronically ill and elderly need
medical services more than others, they do not get more consultation time with
doctors than the healthy and young, he continued. Countries like Belgium and
Germany include in their capitation formulas the objective health condition of
health fund members according to the type and number of prescription drugs they
receive and the conditions with which they have been diagnosed.
capitation variables such as whether a person is employed, how many children he
has, whether he is married or not and even income are not very influential in
making a fair balance and encouraging the health funds to give them preferential
treatment, said Shmueli. Others, such as disability, the socioeconomic level of
where members reside, gender and age are more helpful.
“It is only fair
that residents in the periphery get the same treatment as people living in the
center who have the same health problem,” said the HU researcher.
possible to compensate health funds for their extra expenditure on patients who
suffer from disability; this criterion should be in the formula, along with age,
gender and socioeconomic factors. I don’t know if capitation formulas are the
best way to compensate and provide balance, but if it is used, it has to be done
Age was the main new criterion for capitation from 1997, prior to
which only the number of members was used. Later, 11 different age groups were
created for the formula instead of the original nine, giving more compensation
for infants and the elderly.
Later, distance from the periphery was added
as well, but all agree that the way it was calculated did not add significant
money to people living in distant areas.
There are wealthy towns and
villages such as Meitar, Lehavim, Omer and Kfar Vradim in the periphery, while
there are concentrations of poor people in the center, thus causing
complications in criteria for bonuses. More recently, gender was added as a
criteria, as younger women cost more in their fertile years, while men generally
get chronically ill at a younger middle- or old age than women.
health funds still receive no bonus for meeting health targets such as reducing
the number of diabetes, osteoporosis or stroke cases and other chronic
conditions by prevention, health promotion and early detection.
comptroller wrote that way back in 1994, it was recommended that a permanent
capitation committee be appointed for ongoing followup on the distribution of
health taxes among the insurers rather than the two ministries appointing a
temporary committee once every few years.
The Health Ministry is willing
to do this, but the Treasury opposes it. The issue of a permanent, professional
body even reached the High Court of Justice, and in his latest report, the
comptroller endorsed the idea, as did Ahdut and Shmueli. The comptroller also
called for adding “health condition” according to medical diagnoses in the
formula, which is common in Europe.
For this, updated databases on their
membership must be prepared and presented by all four health funds to the
authorities – such as the Central Bureau of Statistics – but the comptroller
said this has still not happened.
“A health fund that is not compensated
for large expenditures for treating ‘expensive members’ is liable not to invest
the necessary resources needed by such a patient,” the comptroller wrote. He
called on the two ministries to change the capitation formula properly so the
insurers will have the incentive to care for the “other Israel.”
Gefen of Meuhedet’s planning branch told the NIHP conference the supply of
accurate and updated information about the health funds’ members is
“Unsuitable data is used, making it hard to compare the four
insurers. It is not uniform.
The time has come to have a permanent team
including apolitical academic researchers without vested interests who know the
technique and can report ongoing data.”
Mor-Yosef suggested that the NII,
which is the pipeline that allocates health taxes, should be the basis for
coordinating new capitation formulas.
“We don’t set policy, but we can
have a national database of information and do research on how much money to add
to the insurers. We should use this opportunity to share data. The health funds
are more willing.
We must go forward quickly.”
director-general Prof. Asher Elhayani said it was unfortunate that “there is no
incentive for the health funds to offer preventive medicine or to treat patients
in a more sympathetic way. Dialysis should be prevented. Kidney transplants
instead of dialysis can be provided. But since the antirejection drugs after
transplants are very expensive, health funds could prefer to keep kidney-failure
patients on dialysis,” he said, not mentioning that their life expectancies are
seriously reduced as result.
“There must be incentives to make people in
their 40s and 50s healthier.”
Health Ministry director-general Gamzu
concluded that the conference took place at a good time because a new capitation
committee is about to be appointed.
“The ministry wants to make big
changes using a fairer and more professional mechanism.
But it won’t be a
drastic change, because only 1% of allocations will be affected... We must not
only slice the cake but make it bigger. The health funds should not have to face
sudden major allocation changes. The system has to be stable.
the capitation formula must not be opportunity for a health fund to eliminate
its deficit but rather to improve healthcare,” he said.