Analysis / Leumit HMO Customers Should Be Worried

A few months following the investigation into offenses allegedly committed during his tenure as chairman of the National Workers Labor Federation (NWLF), which controls the HMO Kupat Holim Leumit, Abraham Hirchson announced his resignation as finance minister. Thus seemingly ended the Hirchson era in the Israeli economy, as well as the questions about preferential treatment of certain organizations with close ties to the minister.

"Seemingly," because for the 600,000 insured by Kupat Holim Leumit, the questions raised during Hirchson's office remain valid. In fact, those insured by Leumit can and should be concerned about the future of their health insurance, in light of the HMO's poor performance.

Kupat Holim Leumit completed the first nine months of 2006 with a steep deficit of NIS 58 million, accumulated in its entirety during the first nine months of 2006. Although Leumit's spokesman has announced that performance has been improved and stability regained since publication of its September 2006 financial reports, the HMO has issued no further audited financial statements to substantiate these claims.

What is particularly worrying about this deterioration is the fact that it is unique to Leumit; other HMOs are showing far better results, ruling out the possibility of a sectoral crisis. Leumit is also finding itself in financial straits only a short while after implementing a comprehensive recovery plan signed in 2003, which included government assistance totaling NIS 380 million. And although it was denied at the time, the generous funding of Leumit was in large part attributed to the close connection to Hirchson.

Hirchson reigned over the Knesset Finance Committee at the time, and it is safe to assume that the treasury was easily persuaded to pour taxpayer's money into the HMO. But connections with Hirchson proved to be a detriment to the insured in Leumit's HMO. The recovery plan supervised by the finance and health ministries failed to ensure the promised restructuring, which called for appointing one-third of its directors from outside of the federation and loosening the NWLF's hold on Leumit. The HMO remained under the NWLF, headed by Micky Zoller, a Hirchson crony.

And now, three years later the HMO is sinking again. Perhaps this is the price the state and Leumit's insured are paying for the treasury-Leumit connection.