On Thursday, the finance and health ministries decided to add about NIS 4 billion to the basket of health services. It represents a real addition to NIS 2b. to the budgets of the four health funds, relative to 2023.
Insurers will receive the money up front as part of an agreement to add money for drugs and new technologies at the start of each year.
This “first in history, historic” decision will allow health funds to deal with certainty, both financially and operationally, said Health Minister Uriel Busso (Chas).
“Today we brought historic news to health funds,” he said. “We are significantly increasing the health basket directly at the base of the budget and ensuring that health funds can perform better and maintain their strength and stability.”
However, health experts outside the ministry were not so sure.
Shas MP Uriel Busso leads a committee meeting in the Knesset, Israel’s parliament, in Jerusalem on February 20, 2023 (Credit: YONATAN SINDEL/FLASH90)“Getting allocations in advance is good for insurers,” a senior health system expert told The Jerusalem Post. “But if the scope of the ‘stabilization agreements’ granted to them continues to be the same as it has been in previous years, we have done nothing. There was no stabilization budget for four or five years, so now the government has added a few billion to the basket for health services.
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Economic Impact of Distributions
“It’s only halfway through now. They should cancel allocations under the health fund stabilization agreement and simply provide an adequate budget with a mechanism to realistically update allocations each year according to population growth and ageing. In this way, insurers will have managerial responsibility and will be able to counter the power and influence that the Treasury has over them. The decision could force health funds to take ‘efficiency measures’ such as layoffs or other things that would be draconian clauses in the agreement.”
About two decades ago, when Prime Minister Benjamin Netanyahu was finance minister under then-Prime Minister Ariel Sharon, he repealed the parallel tax that required all employers to help cover workers’ health costs; the money went directly to the Ministry of Health and the health funds.
When it was repealed, the Ministry of Finance was given supreme authority to budget health funds, forcing senior Ministry of Health staff to go to the Ministry of Finance’s budget officers to beg on their hands and knees every year for money for health. But this has always been an insufficient amount, causing large deficits for insurers.
In October 2022, the Taub Jerusalem Center for Social Policy Research published a study on the health fund cost update mechanism. The study found significant gaps of billions of shekels between the current budget and actual needs.
“There is a cumulative erosion in the value of the basket of health services and there is a strong dependence on the government budget and on decisions made by frequently changing governments and their changing order of priorities,” the study said. “This has led to the growth of a large private healthcare market which has expanded significantly in recent years and which the Treasury is trying to curb. The victims of this situation are Israeli citizens who are entitled to the basket by law.
Busso said: “The reform will be fully implemented from February 2024 and minimum payment rules have been established for [psychiatric care]. A total of NIS 150 million was added to the base of the health basket in preparation for the aging population, which will be spent, among other things, on the expansion of hospital beds and measures to prevent increases in the cost of self-insurance payments.”
Director General of the Ministry of Health Moshe Bar Siman Tov, an economist who previously worked at the Ministry of Finance, said: “Regulating the distributions in the basket of health services and the transfer of funds at the beginning of the year is a necessary step to ensure the financial stability of the insurers.”
Dr. Zeev Feldman, chairman of the State Doctors’ Organization and head of the pediatric neurosurgery department of the Sheba Medical Center, said: “It is good that the health funds will receive funds at the beginning of the year, public hospitals should also plan in advance with a long-term planning.”
