The Health and Finance Ministries, as well as the Knesset Health Committee, support a significant increase in the health tax that Israelis pay every month.
Health insurance tax is levied at 3.1% on the first NIS 7,522 and at 5% on the difference between that figure and the ceiling calculated for monthly income at NIS 49,030. If approved, the increase to 3.25% and 5.15%, respectively, will go into effect at the beginning of 2025, but committee approval will make it possible to allocate a dedicated budget for the mental health system next year. The increase will mean NIS 1 billion more for psychiatric care.
Committee chairman Shas MK Yoni Mashriki said that the increase must not come at the expense of the state’s participation in the Basket of Health Services. “We will make sure that this budgetary addition from the tax increase will indeed reach the needs of mental health.” He demanded that the two ministries submit an orderly plan on how the NIS 1 billion that is to be added will indeed be dedicated to the mental health system.
According to Prof. Gabi Bin-Nun, a senior health economist in the health systems management department at the Ben-Gurion University of the Negev in Beersheba, because health fund premiums constitute a dedicated tax for healthcare, the expectation is that when this tax rises, the public will receive more through expanding the basket of services.
However, he added that according to the wording of the proposed legislation, the increased income from the increase in health insurance premiums is offset by a reduction in the participation of the state budget so that the total sources of the law, as well as the rights of the residents, do not change. In addition, due to the salary ceiling required for health insurance, the tax increase is regressive and harms the poor.
He wondered why another, more progressive tax source, such as the income tax, was not selected as a source of financing the huge costs of the Gaza war.
Health Ministry Director-General Moshe Bar Siman Tov told the committee that with the difficult reality after the brutal Hamas massacre on October 7, the war, and the need to prepare for the battles in the North, a dedicated budget was needed for the emotional health of the victims and their families, the evacuees and their families, and rescue forces.
He detailed the mental and physical rehabilitation plan that his ministry is preparing that will be launched at Hadassah Medical Center on Mount Scopus and Poriya (Padeh) Medical Center in Tiberias.
He also discussed preparations for protecting Israel’s hospitals against hostile cyberattacks and for treating evacuees and those returning to their homes.
Daniel Padon, the welfare and social security liaison in the Treasury’s budget division, said that the NIS 1 billion increase from the rise in health taxes was earmarked for the psychiatric system. Yael Lindenberg, the health liaison, added that the increase will allow an immediate boost to the expansion of the mental health system in hospitals, health funds, and public associations dealing with this, including the recruitment of psychologists, psychiatrists, and social workers.
Dr. Yitzhak Berlovich, a former Health Ministry deputy director-general and now at the Association for the Rights of the Patient, emphasized that at the time of the 1999 cancellation of the parallel (employers’) tax by then-finance minister Benjamin Netanyahu, this was accompanied by a government promise to supplement the income from the tax – to finance the health basket. “As the income increases, the tax should be higher and not create a tax ceiling,” he declared.
Nir Kedar, director-general of the Taub Center for Social Policy Studies in Jerusalem, maintained that the more Israelis earn, the less they pay in health taxes and called for more tax brackets to change the tax ceiling and to increase the state’s participation.