Deficit coverage is just a patch for the HMOs’ structural diseases

1. About two months ago, some HMO executives asked to express their displeasure and concern about what was developing in their balance sheets: A huge deficit that the corona plague has so far managed to disguise. On Tuesday, the data came in the form of the funds’ financial statements for the first half of 2021 – and it seems that the prophecies of rage that HMO managers made to Calcalist about the worsening financial deterioration did not go unnoticed.

Read more in Calcalist:

The unsupported deficit of the four HMOs – Clalit, Maccabi, Meuhedet and Leumit – amounted to NIS 2.9 billion in the first half of 2021. This is a jump of more than NIS 1 billion from the deficit without subsidies in the corresponding period last year, which amounted to NIS 1.9 billion (52.6% increase). ).

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Right: Clalit CEO Michal Relbag, Leumit CEO Haim Fernandez

(Photos: Yuval Chen Rami Zranger)

During the period under review, the funds received compensation for part Of the extraordinary expenses against the background of Corona, In the amount of more than NIS 1.4 billion, and in addition there is recognition of revenues for previous years, in a significant amount of NIS 540 million that reduced the actual deficit. According to the funds’ financial statements, in the first half of 2021 the deficit without Clalit’s supports amounted to NIS 1.6 billion, of Maccabi NIS 680 million, of Meuhedet NIS 388 million, of Leumit NIS 227 million. But more disturbing is the deficit, including aid at the time – which reached NIS 745 million, compared with the entire 2020 year, which they ended up with a budget surplus.

What happened to the box office in 2021 can be explained. On the one hand, there has been a sharp jump in demand for “routine” community medicine compared to 2020 – including tests, medical medicine, consulting medicine and more, after the corona initially removed Israelis from clinics and institutes. At the same time, the burden of treating the Corona nationals has shifted almost entirely from the hospitalization system to the community – whose bearers are the HMOs.

“In the first half of 2021 the number of corona patients averaged about 66.6 thousand a month, compared to less than 5,000 a month in the same period last year before,” the Ministry of Health concluded in a report, with data showing that the vast majority of treatment was done by The funds, and a few hundred who were hospitalized, so it turns out that the funds carried all the burden (almost) in treating the epidemic.

2. It is important to clarify that unlike business companies and similar to the state budget – expenditure, revenue and especially aid – is not evenly distributed between months so many of the executives we spoke to, including within the Ministry of Health and HMOs, do not attach importance to half data and only look at year end data.

A senior Clalit executive told Calcalist that despite the data, he will end 2021 with a budget balance (without a deficit). For example, the data for the first half of 2021 do not include the stabilization agreements that all the funds receive each year (in 2021-2022, this amount is expected to be NIS 1.9 billion each year, similar to previous years). Stabilization agreements are additional sums of money – outside the health basket – that the Ministries of Finance and Health transfer each year in order to retroactively close the deficits of the HMOs. In return, the funds undertake to take efficiency measures.

However, many factors in the HMOs are troubled by the data and especially by the rate of financial decline of the HMOs in day-to-day operations. Clalit, for example, ended last year with a surplus that already at the beginning of the year became a deficit of about NIS 140 million, which doubled in the second quarter to about NIS 350 million. Meuhedet also ran a deficit: it ended 2020 with a deficit of about NIS 50 million, which doubled in the first quarter of 2021 to about NIS 147 million and jumped again to about NIS 265 million. Leumit ended 2020 with a surplus, which in the first quarter of this year turned into a deficit of about NIS 28 million and in the second quarter jumped to NIS 111 million, when it insures only about 7% of Israelis.

In 2021, Maccabi also switched from a huge budget surplus of NIS 260 million to a deficit of NIS 19 million, but the profits from Assuta’s private operations medical centers (private hospitals) together with the surplus from the ISA hide the real deficit from current operations: more than 56 a million shekels.

In a conversation with senior fund officials over the past day, most of them stressed that the figures are correct for the end of June 2021 and since then the deficit has continued to swell at the same rate. A senior source in the HMO system estimates that 2021 will end with a NIS 2.1-2.5 billion deficit, but he emphasizes that the real problem will arise in 2022.

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Health Minister Nitzan Horowitz. On the collision course with United?

(Dana Kopel)

3. Inside the big picture there are also little stories. For example, in this half as well, the Ministry of Health wanted to emphasize the deficit of Meuhedet, which in 2018 ran into a severe financial crisis that threatened its stability and since then it has been trying to get out of the tangle into which it has fallen. “This is the fourth year that Meuhedet has not met the balance targets. The fund is required to take significant steps to reduce the deficit. Currently, the fund is financing itself by delaying payments to government hospitals on a significant scale,” the health ministry said in a report. The financial dimension – and things are bold and dashed. And as evidence – the fund’s deficit relative to its turnover is also the highest in the system.

Two months ago, the fund’s CEO said, Sigal Regev-Rosenberg (Who took office after the huge deficit at Meuhedet was discovered), “Apparently there seems to be no problem. The Knesset gives us ‘credit’ and pays the hospitals because the funds have no money. “It is convenient for the funds, now the deficit is against the Knesset. The deficit has not disappeared and we are in large deficits, we already owe about half a billion shekels – but this is not only consolidated – but all the funds.” But this time she asks not to address these things she said about two months ago and instead said: “Meuhedet has been in a broad and comprehensive streamlining process for the past three years, with this process including aggressive streamlining measures. “On the other hand, the per capita income from the Ministry of Health’s subsidies in Meuhedet is the lowest among all HMOs by a significant gap, and this gap directly affects HMO revenues in amounts amounting to hundreds of millions of shekels. We hope that the distortion in resource allocation will be corrected as soon as possible.”

It appears that the Ministries of Health and Finance see the state of the fund differently from how it sees itself, and it seems that the explosion between the parties is approaching.

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Maccabi CEO Sigal Dadon Levy and Meuhedet CEO Sigal Regev Rosenberg

(Photos: Kobi Cuenx, Dana Kopel)

4. It can be further argued that the funds are inefficient and that there are pockets of waste, but the large numbers must not be escaped or missed, as reflected in the OECD’s annual report on health systems: National health expenditure (public and private together) in Israel was 7.5% of GDP (2019), compared with an average of 8.8% of GDP in the organization.

In 2020, a change took place, but it came in absolute terms: health expenditure increased by 1 percentage point in Israel to 8.5% of GDP, but also in the other Western countries it increased by 0.9% – 1% (9.7% – 9.8%) – So there is still a difference of 1.3 percentage points of GDP, which in a simple calculation is about NIS 18 billion.

Thus, Israel’s relative position has not changed – and Israel still spends relatively little in health. When examining government spending on health, Israel lags behind the developed world: on the eve of the corona (2019) government (non-private) spending on health stood at 65% compared to an average of 71% in the OECD (Israel in the closing ten).

An equally important point in this context is that although the health budget is size and size, government expenditure on health as part of the total government expenditure (budget) Remained low Compared to other developed countries: 12% compared to 15% in the OECD. Maurice Dorfman, Maccabi’s VP of finance and who served as deputy director of the Ministry of Health’s deputy chairman and deputy chairman of the National Economic Council in the Prime Minister’s Office, raised another issue in the context of budget scarcity: stabilization agreements are not part of the health budget base. This is an off-basket allotment, attached to nothing. This mechanism erodes the regular addition to the health budget. That is, bring the same amount in a stabilization agreement, but demand is only growing because of the aging population and alongside the largest natural increase in the West. In this context it must not be forgotten that the new budgeting model for hospitals, approved in the latest Arrangements Act is a model that benefits the hospitals (transfers more money from the health basket to the hospitals compared to the old model), and therefore benefits less with the funds (leaves them less money).

“Hospitals say they are in deficit and I believe them. But we are all in deficits. It’s just that the deficit in the end is in the citizen’s health services. By the way, it’s always true because it’s a deficit system all the time,” Dorfman explained two months ago.

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