Obamacare in Israel: 'America Is Here'

Israelis are used to nationalized health care. But what if the doctor's not in?

Meirav Arlosoroff
Meirav Arlosoroff
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Meirav Arlosoroff
Meirav Arlosoroff

Studies in the United States to determine the single most important factor within the health care system for increasing longevity found their holy grail. Choosing among effective diagnosis, consistent long-term follow-up and guidance in maintaining a healthy lifestyle - oddly, this factor is the bottom link in the medical food chain: the family doctor.

Yet the inferior status of general practitioners in Israel adds to these physicians’ frustration with the lack of resources at their disposal.

Not only are family doctors forced to see too many patients every day, which in itself hampers their diagnostic and follow-up capabilities: they are often stymied when they seek to reach a definitive diagnosis. “America’s already here,” an experienced GP told us last week in frustration.

He meant that patients he refers to a specialist may have to wait between four and eight months for an appointment, as more and more physicians leave the health maintenance organizations for private practice. Have an urgent problem? “I tell all my patients that if they want to see a specialist within a reasonable time frame, of less than a month, they have to consult a private doctor,” he said.

Spending little yet giving the goods

According to the Israeli health system’s own figures, it is an exception to the rest of the world in a number of ways. On one hand, at just 7.4% of gross domestic product in 2012 (74 billion shekels, around $21 billion), spending on health care in Israel is among the lowest for developed nations. The average for Organization for Economic Cooperation and Development member states is 9.3% of GDP.

But even with that relatively modest expenditure, Israel’s health system is superlative. When measured by many performance indicators, including life expectancy and infant mortality rates, it is among the best in the world. That means it is very efficient.

But while state spending on health in Israel is among the lowest in the world, at just 61% of the total, the level of private spending is a high 39%. In 2009, Israel was fifth in private spending on health care, following only Chile, the United States, Mexico and South Korea.

Less efficient, less equal

The efficiency of the Israeli health system coincided with its rapid privatization. Between 1996 and 2012 the proportion of private spending on health increased from 30% to 39%, as Israelis signed up for private health insurance and supplementary insurance from the HMOs in order to guarantee a reasonable level of services. Along the way, health care became more expensive, efficiency fell and equality was all but forgotten,

The only ones profiting from this situation are the doctors who left the HMOs and their low fees for the greener fields of private practice.

No one questions the shift in Israel away from the public health system and its egalitarianism and toward a privatized, “American-style” system. Taking the long waits to see an HMO specialist as an example we can ask, which came first? Did the long wait times in the public system lead to more private medicine, or did the rise of private medicine in Israel cause the long waits?

The Health Ministry blames the Finance Ministry, saying that for years it has squeezed the public system so tightly, demanding more and more “efficiency,” as to starve it, creating a chronic shortage of resources – a shortage is now being filled by private medicine.

Over the past two years the Health Ministry’s claims have received support from leading economic institutions, including the Bank of Israel and the National Economic Council.

Who’s at fault, the Health Ministry or the Finance Ministry?

Prof. Gabi Ben Nun of Ben-Gurion University of the Negev, formerly the chief economist of the Health Ministry, has calculated that as a result of intentional distortions in the measures the Finance Ministry uses to calculate the HMOs’ budgets, the “basket” of state-subsidized drugs and services is underfunded by between 5 billion shekels and 9 billion shekels. In practice, the treasury only pays for some of the expenses of the hospitals and HMOs. This is intentional, to give the health funds an incentive to be more efficient, but when it becomes excessive it can mean deep cuts to services.

While the list of the treasury’s detractors in this battle continues to grow, the Finance Ministry continues to claim – now pointing out Hadassah Medical Center’s problems as proof – that underfunding is not the problem. In fact, resources in the private medical system went mostly into doctors’ pockets, including salaries of millions of shekels a year for a number of star doctors – and not to the hospitals. The treasury believes private medicine bloomed because the Health Ministry allowed it to do so, in two main ways.

The first, Finance Ministry officials say, was the rapid growth of the supplementary insurance offered by the health funds, which 73% of Israelis now have and which is the main source of funding for private medicine today. It pay for consultations with specialists and private operations, for which the patient can choose the surgeon. That choice, while only one provision in the supplementary insurance policies, accounts for 42% of spending through them.

The second event that institutionalized private medicine, says the treasury, is the opening of Israel’s first large private hospital, Assouta Medical Center in Tel Aviv, owned by Maccabi Health Services. This two-pronged attack created an infrastructure of private medicine, supplementary insurance and the hospital to exploit it. This is what broke the barrier of the demand for private health care, claims the treasury. It further accuses the doctors of intentionally exploiting the lack of resources in the public system to shift the demand into the private medical system.

Once again, Hadassah serves as an example: A study conducted at Hadassah a year ago showed that the average wait for treatment in the hospitals’ private medical services, known by the Hebrew acronym, Sharap, was seven days as opposed to 55 days through the HMOs. In extreme cases, the wait reached 240 days, or about eight months, compared to a maximum wait of 30 days in Sharap.

By creating such long waits, physicians pushed their patients toward seeing them privately, at the same hospital.

The question of who’s to blame for the rapid rise of private medicine in Israel, the treasury or the Health Ministry, is currently being discussed by a committee headed by Health Minister Yael German and appointed to examine the future of Israeli public medicine. The answer, presumably, is that both are to blame, which complicates the attempt to prescribe a remedy.

American malaise in the Israeli health care systemCredit: Illustration by Marina Zlochin
MK Yael German.Credit: Michal Fattal

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