Knesset Health Committee approves reform of private health insurance market
Changes aim to eliminate duplicate costs for consumers who pay for both commercial policies and premium-level HMO coverage, garnering praise from some activists
Renee Ghert-Zand is a reporter and feature writer for The Times of Israel.
The Knesset Health Committee on Sunday approved a reform aimed at eliminating the duplication of health insurance coverage, reducing costs for consumers and bolstering the public health care system.
The reform will be entered into the Arrangements Law and voted on with the national budget beginning next week, and, if passed, will come into effect on September 1.
Health Committee chair Shas MK Uriel Busso said the planned changes will be a boon to Israeli citizens.
“We have achieved a meaningful reform, along with complimentary budget allocations that will strengthen the public medical system,” he said.
The reform addresses the fact that more than one-third of Israelis carry private (no-deductible) “insurance from the first shekel” medical insurance, as well as premium-level compulsory national health insurance. This creates a duplicative situation, as both insurances allow a person to opt for surgeries and medical procedures with a doctor of their choice — as long as the doctor is on the HMO or insurance company’s list.
With the option to submit only one claim — usually first to the HMO — consumers have spent NIS 2,000 ($546) annually on average for private insurance premiums for which they received no benefit and which went straight to the companies’ bottom line.
The new regulations are designed to eliminate this duplication by flipping the tables and ensuring that private insurance companies reimburse HMOs for surgeries. A special online interface between the commercial companies and the HMOs will be created for the sharing of information and transfer of payments.
But such a system has sparked a warning from some medical professionals.
“This kind of sharing of information raises questions about the privacy of information regarding patients and doctors,” warned Israel Medical Association chair Prof. Zion Hagay at a May 1 meeting of the Knesset committee.
These payment transfers are expected to funnel funds to the public healthcare system and help alleviate the long wait-times for surgeries through the HMOs. The Health Ministry has been pushing for such a reform for close to 15 years.
The reform is also slated to include an allocation from the Finance Ministry of NIS 260 million (nearly $71 million), with NIS 75 million (some $20.5 million) specifically toward reducing wait times for surgeries in public hospitals. The rest of the money will go towards the renovation and protection of hospitals against attacks, medical residents’ training, resilience centers in the south, and other activities.
The reform requires insurance companies and agents to switch customers over to less expensive supplementary health insurance policies when current duplicative policies expire. These supplementary policies will cover only benefits that are not offered by the premium-level national health insurance. These may include coverage for surgeries in Israel or catastrophic coverage for medical consultations or surgeries (including transplants) abroad, or expensive medications that are not in the Health Ministry’s basket.
Should customers choose to switch back to duplicative commercial policies within a year, they may do so without having to undergo additional medical exams. Anyone wishing to stay with duplicative policies from the outset is free to do so.
Activists who have long pushed for such a reform praised the current plan.
“This is a big win for the public lobby. For years, insurance companies have been selling the Israeli public ‘duplicate’ insurance policies that the ordinary consumer can’t get any benefit from,” Rachel Gur, director of policy at Lobby 99, told The Times of Israel. “It is estimated that the reform will save the Israeli consumer millions of shekels collectively each year.”
According to Shabtai Cohen of Egert & Cohen Insurance, many people already have supplementary insurance, but most opt for duplicative “from the first shekel” policies.
“If they need surgery, they don’t want to have to deal with their HMO. They are happy to pay an additional NIS 100 ($27) month in premiums so they can bypass the lines at their HMO and be scheduled more quickly with a top surgeon,” Cohen explained.
Cohen said he believes the most important reason to get insurance beyond what the HMO premium levels provide is to ensure that you have catastrophic coverage.
He said while some may seek the ability to be able to schedule surgery in Israel more quickly with a chosen doctor, it is even more important to be able to have access to consultations, surgeries, or transplants abroad, or to rare or expensive drug treatments.
“I don’t think most people have private insurance that only covers surgery in Israel,” he said.
IMA chair Hagay, however, expressed disapproval toward changing the health insurance ecosystem.
He claimed that the reform would not necessarily lead to lower premiums and that as a result, many Israelis would choose not to buy policies, thus resulting in unbearably high out-of-pocket expenses in the event of unforeseen medical emergencies.
“The proposed reform severely negatively affects the insureds’ rights and freedom of choice that they have today. It falsely claims that by dealing a blow to the health insurance market, the public health system will be strengthened,” he told the Knesset committee.
“Only direct and significant allocations of resources to the public health system will strengthen it. This needs to be done without shortcuts and without throwing sand in the eyes of the public and their elected representatives,” he said.
Dr. Zeev Feldman, pediatric neurosurgeon at Sheba Medical Center and chair of the Government Employed Physicians Organization, praised the reform after its passage in the committee.
“This is another achievement in the struggle for excellent medicine for all. From now on, Israeli citizens will be able to choose more freely the hospital where they want to receive treatment and the HMOs will be required to be transparent and let them know about all the possibilities that are available to them,” Feldman said.
“I hope that in light of this reform, the hospitals will focus on competition and outstanding medical treatment. Citizens deserve excellent treatment in the public system,” he added.