Treasury aid not enough to save health funds’ constant deficits

Health Ministry report: Insurers delaying payments to suppliers; Leumit has sufficient funds for only two days.

By
September 8, 2014 07:05
4 minute read.
A doctor stands with stethoscope in this undated handout photo.

A doctor stands with stethoscope in this undated handout photo.. (photo credit: REUTERS)

The working capital of the four health funds is negative and reached minus NIS 7.5 billion at the end of 2013 and reflects their “difficulties” of financing their activities in the future, according to data released for publication Monday by the Health Ministry.

The good news is that the health funds – Clalit, Maccabi, Meuhedet and Leumit Health Services – had a total deficit of NIS 405 million in 2013 compared to NIS 848m. during the previous year.

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The bad news is that the reduced debt, according to the Health Ministry, was due to one-time Treasury allocations given retrospectively for previous years due to the delay in reaching and signing stability agreements with the health funds from 2011 to 2013.

Without the one-time Finance Ministry help for the insurers and “non-recurring losses,” they would have had a NIS 2.632b. deficit last year, compared to NIS 1.915b. in 2012.

These depressing data were issued by the ministry based on a financial report prepared by internal and external accountants; the authors said they hoped their report would help the public, health funds and decision-makers to understand health fund finances and make decisions better and improve services.

Without the one-time 2013 government subsidies, Clalit would have had a NIS 2.632m. deficit (compared to NIS 1.976m. in 2012); Maccabi NIS 243m. (compared to NIS 379m.); Meuhedet NIS 235m.

(compared to NIS 151m.); and Leumit NIS 239m. in both years.



By the end of 2013, according to the financial report, three of the health funds had a net capital deficit – NIS 53m.

for Maccabi, NIS 46m. for Meuhedet, and Leumit an astounding NIS 1.169b.

In Clalit, the figure was a surplus of NIS 630m., but the trend for the largest insurer is for constant erosion of that figure.

Because of the lack of cash, all the insurers have been delaying payments to suppliers, the report said. Clalit has enough cash for only 18 days of activities, 15 for Maccabi, 10 for Meuhedet and only two for Leumit.

The insurers’ expenses continue to rise, with higher hospitalization costs increasing by 6.6 percent in 2013; 7.4% more for wages; and 4.1% for purchasing medications and medical equipment. The steadily increasing cost of paying salaries to personnel in medical institutions due to new wage contracts in recent years has never been higher, the report said.

The basket of health services in 2013 totaled NIS 36.555b. – a 5.1% increase over that in 2012 (NIS 34.778b.). The NIS 100m. increase resulted largely from the updating of the Health Cost Index.

The health funds’ income is from health taxes collected and distributed by the National Insurance Institute according to a capitation formula; additional Treasury money for treating patients with a number of severe diseases; and copayments and other money paid by health fund members for drugs, equipment, supplementary health insurance and other services.

More than 15 years ago, the Treasury canceled the parallel tax, which used to be paid by the employers to help cover medical expenses of their employees, with the explanation that its cancellation would increase employment.

Instead, it seriously reduced money for the health funds and made them totally dependent on the Treasury, which decides how much to spend on health and how often to alleviate the insurers’ deficits.

For the first time since 1995, when the National Health Insurance Law went into force, there was an increase in the number of people that Clalit insured; the reported noted that this shift among the health funds was likely to have implications on the health system in the future.

In addition, 2013 was the first year in which the insurers’ income from their members fell below 7%.

Asked how the ministry would get the health funds out of their financial hole, no comment was available by press time.

However, Clalit Health Services, the largest insurer, said the report “again demonstrates the short blanket with which the health system is struggling. Clalit was again shown to be run the most efficiently of all four and that the per-capita cost in 2012 and 2013 was the lowest.”

Clalit’s hospitals are funded differently from the state hospitals and are discriminated against, the health fund charged, “and this cannot continue.”

Maccabi Health Services, the second-largest health fund, predicted that the insurers’ deficit will grow even more in 2014 and total NIS 3b. for all of them together.

“Getting periodical financial support is not the answer for this serious situation,” Maccabi said. “The current year is reaching its end, and we still don’t know what our budget will be for 2015. This situation causes fatal damage to our ability to function on a day-to-day basis and to plan.”


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