Context
More than 80% of Israeli residents covered by national health insurance (NHI) also have voluntary health insurance (VHI). VHI in Israel is mainly duplicative and is used to access care provided by private hospitals and private health professionals, to shorten waiting times or to choose a particular surgeon. VHI may also be supplementary in order to access services not covered by NHI, such as specific pharmaceuticals or dental care. VHI in Israel is not complementary, as it does not cover user charges for NHI-covered services (Sagan & Thomson, 2016).
There are two types of VHI. The first type is a group insurance marketed by HPs to their members, known as HP-VHI, and the second type is commercial VHI (individual or group insurance) sold by for-profit insurers. HP-VHI provides benefits in-kind while commercial VHI reimburses patients in cash, with higher reimbursement rates than HP-VHI. Commercial VHI premia are higher than HP-VHI, which are based only on age. In addition, HP-VHI does not require medical underwriting and must cover any interested individual. About half of the adult population own both types of VHI, resulting in dual VHI coverage for some aspects of care (Laron, Maoz Breuer & Fialco, 2022 ). Dual coverage leads to an unnecessary financial burden on households and in 2018, VHI premiums represented 40% of households’ private spending on health (Central Bureau of Statistics, 2023).
Several reforms have attempted to regulate and reduce inefficiencies in the VHI market (see https://eurohealthobservatory.who.int/monitors/health-systems-monitor/analyses/hspm/israel-2015/changes-to-improve-the-commercial-vhi-market). A change from 2021 attempted to reduce dual VHI coverage, increasing competition among commercial insurers, and enhancing transparency for informed VHI purchase (for example, making policies easier to understand and compare, reducing barriers to switching insurers). A uniform and basic policy for surgical insurance was also introduced, with the option to purchase additional insurance coverage separately, for example, for surgeries abroad, pharmaceuticals or to cover the treatment of severe diseases. (Capital Market Authority, Insurance and Savings, 2018).
Impetus for the reform
The Committee for the Empowerment of Health Services in Israel, and the regulation of the public and private health system, headed by Prof. Nachman Ash, recommended a set of policy changes to reduce inefficiencies in the VHI market in 2023. The government approved the committee’s recommendations.
Main purpose of the reform
To reduce inefficiencies and dual VHI coverage for surgical care, to reduce premiums, and to curb the revenues of commercial insurers.
Content/characteristics
Government decision 198, taken on 24.02.2023 (Ministry of Health, 2023)
- In case of dual coverage for surgery in private hospitals, the commercial insurer will always bear the cost of the surgery. The patient can apply directly to the commercial VHI for reimbursement, or the commercial insurer reimburses the HP-VHI using the surgery (private) tariff set by the MoH’s price list. Reimbursement will be coordinated via an exchange of information between the commercial VHI and the HP-VHI.
- From 11 March 2024, commercial insurers are not permitted to sell overlapping/dual VHI. Commercial insurers can only sell a “HP-VHI complementary commercial policy for surgery” instead of the “regular commercial VHI for surgery”. The HP-VHI complementary policy only covers the costs of surgery beyond the coverage of the HP-VHI. This would include materials and products not covered by the HP-VHI, any out-of-pocket costs due to HP-VHI cost sharing (Capital Market Authority, Insurance and Savings, 2024).
- From June 2024 commercial insurers must automatically move insured persons from the “regular commercial VHI for surgery” to the “HP-VHI complementary commercial policy for surgery” when their current policy is up for renewal. Policies are usually renewed every two years, and there is an option to opt out from the change (Capital Market Authority, Insurance and Savings, 2024)