The revolution in health insurance that will save the public and shake up companies

1. The health team of the budget department wants to revolutionize the worlds of private health insurance, which is already rolling in NIS 13 billion and reaching the insurance companies. as per The proposed amendment“The insurance companies (private – AP) will be required to pay first, so that in any case where a person claims insurance coverage in the field of surgeries or consultations, and has the same insurance coverage in a private insurance company and other health insurance services of the HMO (known as Shban – “For example, Clalit Perfect, Maccabi Gold, etc.), the private insurance company will activate the policy before the HMO’s additional health services program.”

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Head of the Budget Division Yogev Gardos

(Photo: Uriel Cohen)

Simply put, if a citizen has both private insurance from an insurance company and a mortgage from the fund, this will be the first insurance company that must handle the claim and pay for the service (surgery or advice). A net of tens of shekels per month, and no less important: this will shorten the queues of those who pay private insurance, and indirectly also for those who do not.To understand the size of the event, one must understand the background and know the two most important data.

The first is that Israel is the peak of double insurance in the West (we buy insurance on insurances that actually cover the same insurance events). According to the Capital Market Authority, out of about 3.9 million Israelis who held private health insurance, over 1.3 million Israelis held double policies, which did not provide them with benefits on the one hand and cost them money on the other. According to the Capital Market Authority, since 2018, households in Israel have paid about NIS 760 million without any consideration due to double insurance.

The second and no less important statistic is that the loss ratio – which tells how much money the member paid back to the same member in the form of health services – is double the NIS compared to private insurance.

In the ISA, the loss ratio was 77% in 2020, and in the insurance companies only 40%. NIS 60 was slipped into the pockets of CEOs, insurance agents and company owners).

There are several reasons for this phenomenon but one is not intuitive: Unlike what is happening in other markets, in the health market public health funds are much more efficient and know how to provide health services much better than private insurance companies.

By the way, starting in 2017, there is a sharp decrease in the loss rate of the ISAs (it was about 84%) and this is precisely for good reasons: the government has taken on some of the costs (Shortcut program). This is the reason why in previous years the funds, together with the director of the health funds in the Ministry of Health, decided to reduce the membership fee by NIS 875 million (cumulative), since compared to private insurance, children can not earn: the money must come sooner or later. This is the reason why it is worthwhile for a citizen to put a shekel in an ISA much more than in a private insurance company. It is estimated that starting in 2022, the loss rate will rise again to levels of 84% (after reductions in income as a result of the reduction in membership fees).

2. Having understood these two data, one can begin to understand the event that the Treasury seeks to create: a division of burden between insurance companies and HMOs in a more logical and equitable manner. After all, according to the Central Bureau of Statistics, 95% of private policyholders are also Owners of Shaban.

For every NIS 100 that the Israeli consumer paid to the ISA, he received back NIS 77 in the form of health services, compared to only NIS 40 he received from private insurance companies.

Therefore, as the Treasury explains, “In the field of surgeries in Israel, which constitutes about 70% of the premiums charged by the commercial insurance companies, the overlap between the coverage provided by the ISA plans and the commercial insurance companies is greatest. In practice, when an insured with a parallel policy with the ISA and a commercial insurance company needs surgery, he finds himself tormented between the two parties, with each of the insuring entities having an interest in the insured exercising his rights by contacting the other insurer, thus saving his insurance costs.

How exactly does it save and how does it shorten queues? Members of the law are not allowed by law to make a profit, so every shekel that is not spent on the insured’s health services is returned to the insured in the form of a reduction in premiums (membership fees), just as in the past year, or alternatively, The fund, is ahead of the next queue. Therefore, it is a fairer step since the citizen purchases another insurance layer and pays the best of his money so that it becomes a health service and not a bonus for the CEO (the HMO CEO has no bonus and no profit from unused UAV money).

Naturally, the insurance companies will not let this reform raise its head as there is NIS 2.2 billion on the table (of which NIS 700 million is channeled directly into the companies’ coffers).

Their claims are known. First, they will say that if the amendment goes into effect, “then they will raise the premiums.” Well, insurance companies do not need any repair to want to raise the premiums, and they try to do so at all times. They have plenty of excuses. There is simply one person – the head of the Capital Market, Insurance and Savings Authority, Moshe Barkat – and he does not sign up for them to raise premiums.

The argument would have been plausible if the loss ratio of the insurance companies had approached that of the ISAs. But Barkat does not seem to think that 60% profit on every shekel is a sufficient excuse to raise premiums.

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The Commissioner of the Capital Market, Insurance and Savings Authority, Moshe Barkat

(Photo: Amit Shaal)

And there is the extreme argument: if the amendment goes into effect, “we will stop marketing private insurance policies.” This is simply an idle threat, since the insurance companies will not give up NIS 700 million so quickly. Neither about 500 million nor about 100 million. Easy and material when it comes to free money.

3. To understand the purpose and prospects of this important amendment one must also understand the broad political context. This patch comes into the world a few weeks after thatThe great reform Barkat’s private insurance was launched. Barkat’s reform, which is intended to minimize insurance doubling and give more power to the consumer, is moving in the right direction and produces a uniform private policy (for new insureds), but still offers an option for surgeries in Israel that overlaps with the ISA.

It is also less effective in eliminating the duplication between personal and group private insurance (private insurance from the workplace). Therefore, it is not certain that Barkat is very satisfied with the repair, otherwise he would have already put it in himself. Calcalist has learned that the amendment is not Barkat’s opinion and that negotiations between the department’s officials and the PA are in progress, although it does not look promising.

Equally important, this amendment seeks to strengthen the Fire Commission which also seeks to address private insurance. Health Minister Nitzan Horowitz, who has already had a quarrel with all the elements in the health system and his popularity is declining sharply, together with the director of his office, Prof. Nachman, set up a committee, which has meanwhile been ignored.

One of the committee’s hidden goals is to take from the insurance companies the chapter on surgeries that does not really contribute to the citizen and costs him a lot of money and leave the IBAs alone. Fire Commission.

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Health Minister Nitzan Horowitz

(Photo: Dana Kopel)

There is at least one issue that the Ministry of Health, the Ministry of Finance and also senior officials of the system agree on: Private medicine is harmful to the public health system. This is how the officials of the budget department write: “The private system weakens the exclusivity of the public system in purchasing health services, and therefore causes prices to rise in the system. In particular, the private system creates competition for manpower and therefore increases medical staff salaries “In Israel, it is certainly exacerbating the phenomenon.”

In stark contrast to what is commonly said, the medical market is not a free market because it maintains almost none of the axioms of a free market: there are extreme information gaps between the consumer (who knows almost nothing) and the manufacturer (who knows almost everything); The consumer does not purchase of his own free will nor does he know what is the necessary quantity of that service and that is why health is the ultimate case for an extreme need of government intervention.