C'tee wants 15% tax on health insurance sales

The health minister thinks revenue should support publicly funded healthcare services.

The Yael German Committee recommends that insurance companies should transfer 15% of their revenue from supplementary health insurance to the government to support publicly funded healthcare services, in order to shorten waits at public hospitals. This is an unprecedented proposal, which will undoubtedly further infuriate the companies against Minister of Health Yael German and her committee. The committee has already made a similar recommendation for healthcare funds.

The recommendation was drawn by the subcommittee on health insurance. Like its recommendation that insurance companies should issue a uniform basic policy that includes choice of surgeon and a second opinion and the proposed bans on medical underwriting and disqualifying people with preexisting conditions, the new recommendation requires approval of the full German Committee. The subcommittee has not yet decided which from part of the insurance companies' revenue should fund the provision to finance the publicly-funded healthcare services, but it is reportedly from health insurance in Israel, excluding nursing insurance.

If the recommendation is implemented, it will add tens of millions of shekels a year to publicly-funded healthcare services. The income from health insurance (excluding nursing insurance) of Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) alone was NIS 1.7 billion in 2013; the income from health insurance of The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) was NIS 1 billion; Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) had NIS 700 million; Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) had NIS 550 million; and Menorah Mivtachim Holdings Ltd. (TASE: MORA) had NIS 420 million.

A source familiar with the recommendations says that while these are private companies, the resources are public. He says that the insurance companies are assisted by doctors at public hospitals whose private practice relies on the skills and reputation of the public health system. "We are talking about a subsidized product. Not paying for use of the public system is like taking the neighbors Mercedes without paying for it," he says.

Sources at the German Committee unapologetically compare the insurance companies' health business with alcohol and cigarettes, which they say justifies levying a special tax on them. "We cannot tell people not to consume this product, but we can say, 'You will pay a price for the good of society," says one source.

According to members of the German Committee, the negative effects of health insurance are the creation of incentives for doctors to work less in the public health system and expand their private practices, which allegedly lengthens waits at hospitals. This issue is one of the committee's main topics, and it is expended to recommend a reward/penalty method at healthcare funds to give them an incentive to use their influence with public hospitals to shorten waits. The committee believes that shorter waits will reduce the public's motivation to use their supplementary and private health policies at private hospitals.

A healthcare fund that shows a high proportion of surgical procedures carried out through the basket of healthcare services will receive a financial reward from the government, but a fund that shows high proportion of surgical procedures carried out at private hospitals will be fined.

Sources at the healthcare funds have complained about this proposal, saying that the German Committee is avoiding the health system's biggest problem: under budgeting. The funds say that without proper budgets, they and the hospitals cannot pay doctors to work in the afternoon, and that there is no other way to shorten waits.

Published by Globes [online], Israel business news - www.globes-online.com - on April 24, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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