Roni Gamzu: Insurance cos care only about profits

The Health Ministry director general wants more public funds and less private spending.

Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) chairman Danny Naveh wrote an article in “Globes” this month praising the private health insurance companies. This is not surprising, because as a manager of an insurance company he must look out for the interests of the private health insurance market - the current engine running Israeli insurance companies - and see to it that it continues to race towards its massive revenue targets (with minimal expenses), and finance the massive salaries of the same companies’ managers. In order to achieve this, no holds are barred: he confuses us with partial data, biased OECD comparisons, misleading declarations, warped “international knowledge,” and, most of all, by playing on our emotions by saying that he, like all the insurance companies, “agrees with the necessary goal - strengthening the public health system.”

Naveh claims that the primary failure of Israel’s public health system is a result of steadily decreasing government funding and increased personal spending in its place, particularly through increasing copayments and deductibles for basic and supplementary HMO services. But reality tells a different tale, and spending on copays and deductibles, on basic as well as supplementary services, has not grown!

After the growth trend of the early 2000s, which reached its peak in 2007, we witnessed a reduction in deductible rates, which today reach NIS 2.5 billion (7.5% of the total). The expenditure that has risen since the National Health Insurance Law passed, is that of private spending towards supplementary insurance and private health policies. Payments to private insurance companies are the single expense factor that has grown most rapidly among all household expenses, and stand today at more than NIS 7 billion (an expense that in 2005 was “only” NIS 3 billion - the figure has more than doubled in less than a decade!).

Naveh praises the private insurance companies, which offer their policyholders a range of new, expensive medical technologies, but here, also, the message is clouded and borders on deception. Funding technological advancement is, indeed, a tremendous challenge for all health systems. Most private policies have narrow definitions of technologies, are not updated regularly or transparently, obfuscate information about the technologies to which the insured are entitled, and benefit from the confusion among the insured vis-à-vis undefined slogans such as "serious conditions" and “lifesaving medications."

In contrast to the opacity of the private policies and the public information regarding them, eligibility for new medical technologies in the public health system are updated regularly, professionally, and transparently each year. Since the erosion of the public health policy in the terrible years between 2002-5, in which funding for public health plans grew by only NIS 120 million annually, on average, since 2006, the basic government health plan budget upgrade for new medical technology was more than NIS 3 billion - an average three times more per year than in 2002-5. The addition of dental care for children contributed another NIS 500 million to the expansion on the policy. Therefore, while the public plan is updated suitably despite the difficulties, the contents of the private insurance plans remain a vague concept that no one other than the insurance companies can define, save for a few marketing slogans that the insurance agents use.

While supplementary insurance policies operated by the health funds are run by limiting prices and extraneous services, personal insurance products provide confusing and marginal health benefits, they are expensive, and the profit spreads for the insurance companies are tremendous. The reason for this is that the insurance companies take advantage of the current situation, in which the vast majority of private health insurance consumers also have supplementary insurance policies through their health funds, and, of course, standard policies, which are utilized long before private policies are.

Therefore, the majority of the public does not enjoy or utilize private insurance policies, but purchases them out of fear instilled by the insurance companies, which employ intimidation tactics and irresponsible demagoguery about a failing public health system.

Our public health system is not collapsing! It is among the best in the world! But like many health systems in the world, it is dealing with difficulties that have accumulated due to the unregulated growth of public funding. We must address these difficulties, but not through increased privatization, and certainly not through reliance on business institutions whose primary interest is maximizing profits. Increasing private competition, as Naveh suggests, is not a prescription for strengthening a healthy and egalitarian public health system, but the opposite. Instead, we should limit private funding, and fight to ensure additional public funding to strengthen the public health system so it may face the challenges posed by a rapidly aging population.

The author is director general of the Ministry of Health

Published by Globes [online], Israel business news - www.globes-online.com - on April 23, 2014

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

Twitter Facebook Linkedin RSS Newsletters âìåáñ Israel Business Conference 2018