How Treasury officials cut the health pie

A rare interview with the senior deputy director of the Finance Ministry's budgets branch.

lots of money 88 (photo credit: )
lots of money 88
(photo credit: )
A few dozen people in their 20s and 30s who have graduate degrees in economics, business administration and law are among the most influential bureaucrats in the government - making recommendations and decisions that affect the life of every Israeli. They are the staff of the Finance Ministry's budgets branch, whose director's chair - after two months of being empty - has been filled by Udi Nissan. In many ministry headquarters in Jerusalem and Tel Aviv, these officials are referred to half derisively as "the Treasury boys," even though some have been "girls." The branch's senior deputy director, Raviv Sobel, is at 39 considered an "old timer." The Haifa-born graduate of Yeshivat Nehalim who earned a BA in law and a BA and MA in economics and business administration joined the branch in April 2009 as a "referent" (budget liaison) in communications when now-Knesset Speaker MK Reuven Rivlin headed that ministry. Two years later, he was promoted to liaison on health, taking on enormous responsibility for setting public health budgets. Today Sobel has control of budgets not only for health but also for the National Insurance Institute, education from preschool through the universities, social welfare and employment. That gives him responsibility for some NIS 130 billion in state budget money - more shekels than those controlled by the CEOS of the country's leading banks. In a rare interview in his modest office, Sobel told The Jerusalem Post that he came to the Treasury "just by chance. A friend of my wife said the ministry was looking for a liaison to the Communications Ministry, so I applied. The first day was a strange experience, as you really don't know what you should do. They bring you material and you study it. After a month or so, you have learned the ropes." THE STRAIGHT corridors of the second-floor Budget Division, with their picturesque view of the Knesset, are filled not only with the scent of power but also of tobacco smoke; even though legislation bars smoking in all workplaces, some of the very-stressed young employees regularly violate the law in their offices. Sobel, who is not one of them, shrugs his shoulders as if to say, "What can you do?" Sobel dismissed the idea that no matter who arrives as finance minister, it's the "Treasury boys" who make the decisions. "Every finance minister has his own policy. We advise him and prepare the material to help him make decisions. The minister comes with his macro-economic policies, while we fill in the details," noted Sobel, who counts out the ministers he has served - a remarkably high seven in nine years, from Avraham Shochat of Labor to Yuval Steinitz of the Likud. "It is not only the minister who sets policy. In recent decades, globalization has also determined many things, and the current economic crisis has clearly had its impact on Israel." The branch is unusual in having employees who spend only a few years, rather than decades, in the ministry. "They are young, and the staff renews itself; there is always new blood; they don't get stuck; they have new ideas. Alongside these benefits is the fact that there is no organizational memory, as they don't stay there long," says the deputy director. After a mandatory cooling-off period, they may go off to work in corporate business, the banks, government companies or any other place they are invited. Most become powerful and well-paid people after "graduating from" the Budgets Division. But until then, they work with great intensity. There are periods before the budget is approved when they are up 24 hours a day. "This is certainly hard for their families," said Sobel, who has three children at home in Modi'in. "They are the real heroes." I WAS THERE, however, to hear specifically about the health budget, which Sobel knows well, mostly from balance sheets and Health Ministry budget proposals but also from conversations with ministry and hospital staffers and personal and family experience with the health system. "We don't supervise the ministry. We set principles by which it operates and make allocations," he said simply. "The medical system is like a delicate dangling mobile - if you touch one part, it shakes up another. My job is to help keep it stable; and in fact, during the past eight years, the public hospitals haven't suffered great shockwaves," he explains, mentioning as an exception the capital's financially troubled Bikur Holim hospital, which he says "Jerusalem can manage without." He and his budget colleagues "try to preserve the stability of the system while making it more efficient. The share of health costs in the nation's Gross Domestic Product is around 8%, compared to twice that in the US, where more than 50 million people have no health insurance, and the accessibility and level of care for the average American is lower than in Israel. The Budgets Division has been much criticized by academics in the health field and Health Ministry officials for the gradual decline in the share of state funding in national healthcare costs. Currently, some 43% of the costs come from the pocket of Israeli residents - a sad commentary on the National Health Insurance Law that went into effect nearly 15 years ago and was aimed at giving Israelis equal access to public medical care whatever their incomes. Prof. Gabi Bin Nun - a leading health economist who last year moved to teach at Ben-Gurion University of the Negev after decades as the Health Ministry's expert in the field and as a deputy director-general - has frequently denounced this trend, pointing out that the gap between rich and poor is prominent in the quantity and quality of medical care. In addition, people from the lower socioeconomic levels increasingly have difficulty making the copayments for medications prescribed for them, and visits to specialists. Sobel stated: "We don't like the 43% figure, but a lot of that is really dental care, which is not part of the basket of health services. I am not opposed to public spending for some dental care, but that depends on how the Health Ministry sets its priorities. Most people prefer not to make difficult decisions; it's easier to say: 'Give me the money.'" Would he agree to a reduction in health taxes for nonsmokers (it can be tested objectively by a blood test)? Sobel said he hadn't heard the proposal before, but would consider it. "It's really the job of the Health Ministry. But in any case, the health taxes of smokers would have to be increased to cover reductions for the nonsmokers. Yet I fear that some smokers would try to pay illegally to get a certificate of a nonsmoker and benefit from lower taxes." ASKED BY The Post to comment on Sobel's comment on the decline in public expenditures for healthcare, Health Ministry director-general Prof. Avi Yisraeli differed, saying "the main clause in household budgets for health care is indeed for dental care, but there has been no change over the years in its share. Thus it's impossible to blame that for the continuing trend of higher personal copayments and the decline of public spending on health. It is often explained by the increasing percentage of people who purchase supplementary health insurance [from their public health fund] and private health insurance." Yisraeli added that any step taken to minimize public expenditure, such as including dental treatment for children in the National Health Insurance Basket, will "significantly reduce the level of private expenditure and its percentage of national health expenses." The Arrangements Bill, invented by the Treasury in 1985 as an "emergency measure," has snowballed in its influence in the past decade or so. Attached to the National Budget Law and voted on en bloc by MKs, most of whom have no clue as to what it contains, it has been used by the Budgets Division to make major structural changes in the economy, and especially in the health system, without issues being discussed in depth by the plenum and specialized Knesset committees. When former Likud MK Dan Naveh was health minister nearly a decade ago, one of his pet projects was aimed at weakening the responsibilities and profits of private pharmacists supported by powerful lobbyists. He pushed for an Arrangements Bill provision that would enable petrol stations and other retailers to sell over-the-counter medications such as aspirin, nose drops and paracetamol and "increase accessibility to such drugs" when pharmacies were closed. Pharmacists argued that it would increase the risk of adults and children harmed - or even killed- by overdoses as customers would purchase without professional advice. It passed, but counter to Naveh's claims, it has not lowered pharmacy prices. Instead, petrol stations and other places charge more for the drugs, and they are mainly interested in customers who come in to buy aspirin and a variety of other products. Sobel insisted "it was not meant to lower prices, but merely to make them more accessible. We never claimed it would be cheaper. Pharmacists should give more advice to customers and not spend so much time marketing products." A FEW YEARS ago, Sobel and colleagues succeeded in privatizing the school health service, which according to highly critical State Comptroller reports has proved to be a disaster. The Public Health Association that took over this responsibility from the Health Ministry has resulted in delays in vital vaccination of pupils and eliminated the health education that used to be provided by school nurses. "You just need good supervision of those who provide services as contractors," declared Sobel. Two decades ago, nearly every elementary, intermediate and high school had an in-house nurse not only to treat illness and immunize but also to talk about the dangers of smoking and drugs, casual sex, alcohol and other drugs, as well as to monitor conditions such as scoliosis. Today, they are only a memory. "I agree that we have to do disease prevention in the schools," said Sobel. "But who says you need a nurse to do it? Instead, you can train counsellors, who are less costly. And the Health Ministry receives over NIS 400 million a year to spend flexibly on health. If the ministry wants to change its priorities and put more stress on health promotion and disease prevention, it can do so with this amount of money." The budgets official also wants the cost of the anti-viral drug Tamiflu - bought for millions of shekels after the government feared an epidemic of H1N1 "swine flu," to come at the expense of the basket, even though Yisraeli insists that it should be covered by the Treasury and not come at the expense of the health system, "just as fighting a war is a national effort. Being ready for an epidemic requires a lot of money, and our ministry does not have the budget to cope with it." Sobel fails to mention that the Health Ministry's "mad money" is in fact funding to expand the basket of health services annually, specifically lifesaving and life-extending medications. It was introduced in the late 1990s after it became clear that the basket could not remain static as new medical technologies become available. Every year, Health Ministry officials have had to go to Treasury budget officials with their hats in hand, pleading for an increase; some years they were simply turned down completely, but two years ago, a three-year agreement was reached expanding the basket by a set sum. Public health experts and MKs have called for an automatic 2% increase, with additions to the basket to be decided by the Health Ministry followed by a public committee. Sobel insisted that the multi-year deal is fine, with no need for automatic updating, especially as "the economy has good years and bad years, and we shouldn't always have to expand it by a set amount; the health system may not need the same increase every year." But Yisraeli countered that spending on health promotion and disease prevention, which is vital, cannot come at the expense of an expanded drug and technology basket. "The basket is almost the only source of funding for introducing important technologies into the basket." Yisraeli also commented that allocations for school health services "have been cut continually by the Treasury and not by our ministry. In fact, we can not restore what was, but it is possible to invest not a large sum to improve the service." Among the numerous health-related clauses that were forced out by MKs and public protest from the just-approved 2009-2010 Arrangements Bill were a proposal to charge the 16.5% value-added tax (VAT) on fresh fruit and vegetables, even though nutrition experts said it would be a disaster, as eating produce considerably reduces the risk of cancers, heart disease and other chronic illness and would especially harm the poor, who already buy cheap and fattening junk food and very little fruit and vegetables. Another Treasury idea that was rejected was to allow the establishment of a fifth health fund - the first one aimed at making a profit. Sobel argued that this would increase competition among the four public health funds and improve their services. He said members would not pay any more, but their health taxes would be sent there. However, the Health Ministry director-general argued that a fifth fund would not contribute much to competition, "as we have seen that very few residents switch insurers. The vast majority are happy with their health fund. A fifth insurer would try to skim off the cream of health fund members - the young, healthy and wealthy - causing deficits among the four. It will bring no benefits!" The Treasury opposes the building of private hospitals, private medical care (SHARAP) in the public hospitals and the increase of public hospital beds (this because medical care is increasingly moving to community facilities). The Health Ministry does not see eye to eye on some of these positions. The different perspectives of the Health Ministry and the Finance Ministry's Budgets Division will probably go on forever, but the public and their representatives must decide if they trust one or the other to decide on their healthcare services or should they modulate one, the other - or both.