Politics, Values and Interests: the Debate over Supplemental Insurance in Israel

Prof. Revital GrossThe Smokler Center for Health Policy Research, Myers-JDC-Brookdale Institute and Bar-Ilan University

June 2008

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Israel’s Health Insurance Market

National health insurance:Provided by one of four non-profit health plans that provide a uniform basket of services Supplemental insurance: Uniform extended basket marketed by the health plans Commercial insurance: Policy tailored to individual needs; marketed by for-profit insurance companies

SupplementalInsurance

CommercialInsurance

Including LTCI

NationalHealthPolicy

NationalInsurance

(uniform basket)

The Structure ofIsrael’s Health Insurance Market

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Background

• Supplemental insurance was introduced as part of the 1995 National Health Insurance legislation; provides additional services not included in the mandatory basket; premium determined by age only; must accept all applicants

• Perceived as a tool for encouraging competition and responding to consumer demands for expansion of services within the growing constraints on public funding

• Concerns raised regarding effect on equality

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Goal of the Study

Analyze the politics affecting changes in the role of supplemental insurance (SI) in the Israeli health care system

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Methods

The study employed multiple research tools: • Population surveys conducted periodically

between 1995-2005 to assess the rates of SI ownership

• Analysis of SI programs in 1996 and 2006 to examine changes in content of programs over time

• Interviews with stakeholders & Analysis of published documents to understand the political processes affecting changes in the SI programs

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Private Insurance Ownership

%

35

16

37

17

51

24

64

26

72

34

79

34

80

32

0

10

20

30

40

50

60

70

80

90

Supplemental Commercial

1995 1997 1999 2001 2003 2005 2007

Source: Gross, Brammli-Greenberg & Waitzberg 2008

Supplemental Insurance Ownership by Income Quintile

%

59

80 79

88 87

0

10

20

30

40

50

60

70

80

90

100

LOWEST SECOND THIRD FOURTH HIGHEST

Source: Brammli-Greenberg, Gross & Matzliach 2007

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Supplemental Insurance Ownership by Health Status

71

80 8076

80

65

41

39

54

72

63

3025

46

0

10

20

30

40

50

60

70

80

1995 1997 1999 2001 2003 2005 2007

Healthy

Chronically ill

Source: Brammli-Greenberg, Gross & Matzliach 2007

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Expansion of Supplemental Insurance Benefits 1996-2006 • 127 new services added overtime

– 33% preventive (checkups, immunization, life style

counseling, accessories for chronic patients)

– 33% for treatment of chronic and other illness (e.g. second opinion, procedures abroad)

– 16% other services (e.g. sport medicine)

– 10% other medical care (e.g. dental care, IVF)

– 8% diagnostic services (e.g. ADHD)

• About 50% relevant mainly for the ill; 10% for the elderly; 20% for the young

Source: Brammli-Greenberg, Gross & Matzliach 2007

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Strategic Changes in Sick Funds' Supplemental Insurance Benefits

1996-2006• Change in type of services: from "nice to have"

benefits to services with clinical value • Change in target population: from the young and

healthy to the elderly and ill

2007• Sick Funds expanded coverage of SI to include

"life saving" and "life extending" medications not included in the mandatory benefits package

Sick FundsExpanded SI

Coverage

Sick FundsExpanded SI

Coverage

Ministry of Finance

Ministry of Finance

Ministry of Health

Ministry of Health

Members of Parliament

Members of Parliament

Social Advocacy Groups

Social Advocacy Groups

Commercial Insurance

Companies

Commercial Insurance

Companies

Stakeholders' Response

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Sick Funds' Rational for Expanding Coverage of Medications

Rhetoric – Provide better care for ill

members– Public funds are limited;

can improve service with minimal low cost for members

– Increased equality in access to medications

– Shame to see patients at need asking for contributions to buy medications

– Do not believe govt. will update basket overtime

Interests – Increase income from SI

(higher premium; extended coverage)

– Tool to attract more wealthy members (able to purchase more expensive policies)

– Reduce confrontation with patients

– Less dependent on govt. allocation of funds

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Ministry of Finance

Rhetoric• Restricts transfer

between funds (wary to loose eligibility)

• Undermines prioritization process and lead to growth in national expenditure on health

• Conflict of interests if SF manage both public and private insurance

Interests• Want to maintain power

in defining overall health budget

• Do not want to grant sick funds more autonomy in management (maintain power vis a vis sick funds)

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Ministry of Health

Rhetoric– Undermines the

centrally-defined uniform health basket

– Undermines the value of equality & solidarity

– Creates a two tiered system

– Weakens the public health system

Interests• Strengthen position vis a

vis MOF in negotiating yearly budget updates for expansion of health basket

• Improve public image of the Minister (advocating for strengthening public system)

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Social Advocacy Groups, Patients' Organizations, Israel Medical Association

Rhetoric– Undermines the

value of equality & solidarity

– Weakens public pressure for expanding mandatory health basket

– Weakens the public health system

Interests– Improve public image

by supporting consensus values (equality, solidarity, public health care system, update of health basket)

– Increase support among members and sponsors

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Members of Parliament

Rhetoric– Undermines the value

of equality & solidarity– Weakens pressure for

expanding mandatory health basket

– Weakens the public health system

Interests– Improve public image

by supporting consensus values (equality, solidarity, public health care system, update of health basket)

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Commercial Insurance Companies

Rhetoric– SI policies were not

priced correctly– Sick funds do not have

the necessary actuarial reserves for catastrophic insurance

Interests– Safeguard their

market share – SI new policies put

pressure to offer more competitive (less profitable) policies

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End of story – December 2007

A rare coalition between stakeholders achieved a compromise which enabled them to reject Sick Funds' initiative

– Regulation prohibiting health plans to offer life- saving medications approved by parliament

– Yearly funding for updating the mandatory basket of services increased significantly (2% of budget for three years)

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Reflection

• The rhetoric used framed the debate as an ideological value-based confrontation defining the future of the public health care system

• However, a political analysis of the process reveals the role of underlying organizational interests and power struggles among stakeholders as crucial in shaping health care policy

• Has the public truly benefited from what was achieved in the name of equality? Or is it simply that now more people are unable to purchase certain life-saving medications?

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What does the future hold? Will the public benefit?

– Will the extended update of the health budget continue over time?

– Will the new funds suffice to include necessary new medications to meet medical needs?

– Without coverage of medications in SI, will only the rich and healthy have access to new medications?

– Time will tell…

Thank you!