The proportion of private financing in national health spending in Israel, which comes directly from the public on top of the health tax deducted from salaries, continues to rise. According to Central Bureau of Statistics figures published today, the proportion of private spending in 2013 was 40%, compared with 38% in 2012. This is one of the highest rates in the Organization for Economic Cooperation and Development (OECD), in which the aggregate rate of private health spending is only 28%.
While the private health market continues to flourish, public spending is declining. The ratio of the state health budget to total national spending on health was 35% in 2013, compared with 36% in 2012. The proportion accounting for by the health tax was 24%, while 1% came from overseas donations.
For the sake of comparison, the rate of private spending on health in 1995, when the Governmental Health Law took effect, was only 30%. The trend is clear and consistent, resulting from an erosion of the system's resources on the one hand, among other things following the elimination of the employer's contribution to the payments of their employees to the health funds. These contributions were taken from the employers' payments to the National Insurance Institute. Meanwhile, the public's spending on health insurance and private medicine in general grew.
Private spending is composed of payments for dentistry (most dentistry in Israel is not included in the state health basket), supplementary and commercial health insurance, visits to private clinics, purchases of medications, deductible payments, purchases of medical equipment, etc.
The growth in private spending has also caused a general rise in national health spending as a percentage of GDP, which was 7.5% in 2012, compared with 7.4% in 2011. For the sake of comparison, the median aggregate proportion of health spending in the OECD was 9.3%. The rate of spending in Israel has been the same since 1995, which many in the health system regard as over-restraint in the system attributed mainly to the Ministry of Finance, which refrains from increasing the health system's financial resources, despite population growth and technological requirements.
Among other things, every purchase of an MRI machine, or a machine used in cancer radiology treatments, requires a special license granted with an especially begrudging hand. The rationale for this policy on diagnostic imaging devices like an MRI may very well be understandable, since increasing the supply can increase the demand, including unnecessary diagnoses. It is doubtful, however, to say the least, whether anyone would perform radiology on someone who does not have cancer.
The Ministry of Finance has always claimed that if the fact that Israel's population is significantly younger than the population in Europe is taken into account, the "real" spending on health would be 9%, not far from the OECD median. Similarly, the Finance Ministry argues that the low spending attributed to Israel in per capita terms ($2,234 per capita in 2012, compared with aggregate OECD per capita spending of over $4,000) is downwardly biased because of the age factor. A younger population uses fewer health services - that is the main rationale. In an accompanying footnote, the Central Bureau of Statistics also admits that national health spending in Israel is higher when the population age is taken into account.
In response to the figures, the Ministry of Health said today, "In the 2014 budget, hundreds of millions of shekels have been added to the public budget for the health system, and we have formulated a blueprint for a gradual rise until 2016. This, together with the budget supplement designed to shorten waiting lines, will change the ratio. At the same time, we won't succeed in our task until a real reform is made in private health insurance, which is the largest element in private spending by households.
Published by Globes [online], Israel business news - www.globes-online.com - on August 20, 2014
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