Health System Reforms: Past and Future

The 9th Caesarea Economic Policy Planning Forum, June 2001

Policy Paper No. 29

  • Written By:
  • Publication Date:
  • Cover Type: Softcover
  • Number Of Pages: 80 Pages
  • Center: Eli Hurvitz Conference on Economy and Society
  • Price: 60 NIS

This study contains a detailed assessment of reforms in Israel’s health system and proposals for optimizing its efficiency seven years after the passage of the State Health Insurance Law. The successes and failures of the reform and its social and economic ramifications are also considered.

Remarks by Nissim Dahan, Minister of Health

  • This meeting between the health sector and economists and businesspeople is important in and of itself. Israel does not have a sufficient number of health economists.
  • Several factors increase the demand for health services: demographics, technological advancement, and the expansion of knowledge available to the public. As a result, there is public pressure for a large health basket of services, even when there is no apparent source of funding.
  • A central concern is to allow poor populations the opportunity to take advantage of health services. The poor, we must remember, tend to suffer from illness more than other groups, yet they are less able to pay for health services.
  • It is important to adjust the prices of services so that they reflect actual cost.
  • The public must be more involved in determining health policy and setting priorities.
  • Responsibility for psychiatric and geriatric care should be transferred from the government to the health funds.
  • The size and type of human resources in the health field should be adapted to the changing needs in health care.
  • The possibility of adding dental care to the health basket should be examined.
  • Private health services should be supported only if they reinforce the public health care system.

Other points raised in the discussion

  • Private health services are a central issue that will shape the character of the health care system in the coming years.
  • Government discussions about the level of public funding for the health care system are irrational. It was recommended that the Treasury adopt an automatic update system. Some speakers said that flexibility should be maintained and budget priorities set each year.
  • Why do participants have the impression that they are paying more for health now than they did before the National Health Insurance Law took effect? Some speakers said the issue was connected to their socioeconomic status and to the fact that the current health tax is more progressive than the uniform tax that preceded it. It was mentioned that before the Law was passed, high income earners contributed greater amounts to the system than they had previously, since they were the principal tax payers. Tax revenue was sometimes used to pay for expensive health recovery programs. Some speakers mentioned that every major social change demands resources that are derived principally from higher income brackets. However, there is no guarantee that people in these brackets, who claim believe in full equality, would be willing to pay for it out their own pockets.
  • One speaker said that before passage of the National Health Insurance Law, Israel’s health basket was one of the biggest in the world; since then, it has been shrinking. The Treasury Minister mentioned that Health Ministry officials discovered on tours abroad that the Israeli health basket was larger than those in the countries visited.
  • Most speakers praised passage of the National Health Insurance Law as a major social achievement and stressed the importance of the former health minister and special Knesset committee that brought about the legislation.
  • The speakers mentioned the reciprocal relationships between the National Health Insurance Law, the rehabilitation of the General Health Fund, and the Histadrut reform.
  • The speakers noted that although Israel’s National Health Insurance Law is based on similar laws in Europe, it was adapted to the particular conditions of the country (most importantly, the existence of health funds).
  • Some speakers addressed the issue of complementary insurance and questioned the necessity of the services it covers. They also asked if the existence of complementary insurance is a sign that the health basket does not guarantee equal access to essential services.
  • One speaker from the industrial sector pointed to the enormous progress made in recent years in the management of Israel’s health care system. He complained that Treasury employees intervene too heavily in the management of the system and recommended that more decentralized approach be adopted.
  • There is a tendency in the public sector, and in the health care system in particular, to unjustifiably blame employees for every failure to promote organizational change. Through proper management, cooperation with bargaining units can be achieved.
  • Greater progressiveness in the health tax can be achieved without absorbing it into the income tax. Among other things, the health tax ceiling can be eliminated.
  • While the continued growth of private health services may lead to a short-term reduction in public health expenses, it will increase national and public health expenses in the long term.
  • Funding for all private health services will eventually come from salaries, as a result of salary agreements. Employees will not be willing to pay for them out of their own pockets forever. This issue will become central in discussions about salary.
  • The presentation and follow-up discussion did not devote sufficient attention to the subject of the elderly and the health care system. Though they are only 10% of the population, the elderly comprise 40% of health care users. They suffer considerably from the splitting of services.
  • Representatives of the health care system expressed their wish that the government determine the rules of the game for the health care system and its place in the list of national priorities for coming years. Health officials will then be free to operate the system within a pre-determined budget framework.