What is the role of Israeli government?
Government, through the Ministry of Health, is responsible for population health and the overall functioning of the health care system (including the regulation of health care insurers and providers). It also owns and operates a large network of maternal and child health centers, about half of the nation’s acute-care bed capacity, and about 80 percent of its psychiatric bed capacity.1
In 1995, Israel passed a national health insurance (NHI) law, which provides for universal coverage. In addition to financing insurance, government provides financing for the public health service and is active in areas such as the control of communicable diseases, screening, health promotion and education, and environmental health, as well as the direct provision of various other services. It is also actively involved in the financial and quality regulation of key health system actors, including health plans, hospitals, and health care professionals.
Who is covered and how is insurance financed?
In 2015, national health expenditures accounted for 7.5 percent of GDP, a figure that has remained stable during the last two decades. In 2015, 62 percent of health expenditures were publicly financed, a share that is one of the lowest among Organisation for Economic Co-Operation and Development (OECD) countries. (The Israeli figure is down from 63.5% in 2010 and 68% in 1995.)
Publicly financed health insurance: Israel’s NHI system automatically covers all citizens and permanent residents (aside from soldiers, who receive health care directly from the army). It is funded primarily through a special income-related health tax in combination with general government revenues, which in turn are funded primarily through progressive income-related sources such as income tax.
Employers are required to enroll any foreign workers (whether documented or undocumented) in private insurance programs, whose range of benefits is similar to that of NHI. Private insurance is also available, on an optional basis, for tourists and business travelers. Nevertheless, there are people living in Israel who do not have health insurance, including undocumented migrants who are not working. Several services are made available to all individuals irrespective of their legal or insured status. These include emergency care, preventive mother and child health services, and treatment of tuberculosis, HIV/AIDS, and other sexually transmitted infections.
Within the NHI framework, residents can choose among four competing nonprofit health plans. Government distributes the NHI budget among the plans primarily through a capitation formula that takes into account sex, age, and geographic distribution. The health plans are then responsible for ensuring that their members have access to the NHI benefit package, as determined by government.
Private health insurance: Private voluntary health insurance (VHI) includes health plan VHI (HP-VHI), offered by each health plan to its members, and commercial VHI (C-VHI), offered by for-profit insurance companies to individuals or groups. In 2014, 87 percent of Israel’s adult population had HP-VHI, and 53 percent had C-VHI.2 HP-VHI premiums are age-related and cross-subsidized, and health plans cannot reject applicants. C-VHI premiums are risk-related, and coverage is tailored to consumers. C-VHI packages tend to be more comprehensive and more expensive than HP-VHI packages. While C-VHI coverage is found among all population groups, coverage rates are highly correlated with income.
Together, these two types of private VHI financed 14 percent of national health expenditures in 2014. The Ministry of Health regulates HP-VHI programs, while the Commissioner of Insurance, who is part of the Ministry of Finance, regulates C-VHI programs. The focus of C-VHI regulation is actuarial solvency, with secondary attention to consumer protection; in HP-VHI regulation, there is more attention to equity considerations and potential impacts on the health care system.3
Israelis purchase VHI to secure coverage of services not included in the NHI package (e.g., dental care, certain lifesaving medications, institutional long-term care, and treatments abroad), care in private hospitals, or a premium level of service for services covered by NHI (e.g., choice of surgeon and reduction of waiting time). VHI is also supplementary to NHI, as it extends coverage of services in the health basket such as more physiotherapy or psychotherapy sessions. However, it does not cover user charges. VHI coverage is also purchased as a result of a general lack of confidence in the NHI system’s capacity to fully fund and deliver all services needed in cases of severe illness.
What is covered?
The mandated benefit package includes hospital, primary, and specialty care, prescription drugs, certain preventive services, mental health care, dental care for children, and other services.