The Next Hadassah: Israel's National Insurance Institute

The resounding collapse of Hadassah University Hospital, which was revealed to the public in all its magnitude only over the past few days, has been accompanied as usual by a knee-jerk analysis by pundits. Dying is still fighting for its life, but the questions about the failures have surfaced too late. The patients, the employees, not all of whom are greedy millionaires rubbing their hands with glee over public money, and Israelis, who will finance the Grand Extrication – have already been knocked for a loop.

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It might be more interesting to try and look into the future, for the next Hadassah. There is no lack of examples of entities that give essential services and whose situation is problematic – but the most disturbing of these examples also involves Prof. Shlomo Mor-Yosef, who is among those responsible for the failure of Hadassah -- which did not stop him from receiving a retirement package worth 10 million shekels ($2.85 million) and who is now the director general of the National Insurance Institute.

The NII ended 2013 with a current deficit of 2.6 billion shekels and an actuary deficit – its future debts as opposed to its income – are estimated at tens of billions of shekels. A special committee that examined the financial fortitude of the NII in 2012 determined that if significant steps are not take, in about 30 years the NII coffers will be empty, which will lead to a dramatic drop in NII benefits, if not the inability to pay them at all.

The committee recommends, among other things, separating the NII financial resources from the state budget (so that there is a security blanket for future payments and this money does not become a source of loans to the government for its ongoing needs); publishing regular actuarial reports according to reality-based models, that is, separating its allowances into different clusters according to the time period over which they are paid out, so as to provide sources of funding for them.

Except for an updated actuarial report, the first in 15 years, which the NII published following the committee’s recommendation, none of the other recommendations were implemented. The report the NII itself published with regard to its future was even more chilling than that of the committee. The steps it proposed to minimize the damage -- such as raising the retirement age, increasing compulsory NII payments by a much more significant rate and cutting all allowances across the board by 10 percent – were not implemented, and they probably won’t be. The likelihood of finding a minister who will raise taxes and cut benefits is about the same as the likelihood that the security budget will be cut and the money transferred to social services.

As opposed to the case of Hadassah, Prof. Mor-Yosef, who took up his position in 2012, is not to blame for the situation at the NII. That is the fault of the government, which avoids critical decisions. Mor-Yosef, who was appointed by the previous social services minister, Moshe Kahlon, does enjoy a fine salary of 60,000 shekels a month (in addition to the 75,000 shekels he still gets from Hadassah), and it is his obligation to manage that body in the most efficient way possible, that is, not like Hadassah. But it is Finance Minister Yair Lapid who should be tackling the burgeoning crisis at the NII.

Lapid stated over the past few days that the crisis at Hadassah involved a severe management failure. But two weeks ago he chose to ignore a pointed question about the National Insurance Institute from the Knesset plenum directed at him by MK Stav Shaffir (Labor), while his fellow faction member, Social Services Minister Meir Cohen, stood beside him.

Thirty years, even 20, is a span of time that does not exist in the mind of a cabinet minister in Israel. But it is the minimal period required to resolve and prevent a deficit problem of the magnitude of the NII crisis. If the fall of Hadassah is a disaster the state cannot accept – it is appalling to try and fathom the price of the collapse of a body like the NII, the social backbone of the State of Israel.

Here you have it, a potential Hadassah. Deal with it now.