In Dramatic Decision, Private Medical Care Banned in Israel's Public Hospitals

Although committee headed by Health Minister Yael German banned private services, medical tourism is still allowed, though it is unclear to what extent.

Yael German.
Michal Fattal

Private medical services, popularly known by the Hebrew acronym sharap, would no longer be permitted at government hospitals if the recommendations of a committee headed by Health Minister Yael German are adopted. The panel released its conclusions Wednesday.

“As we bring Israeli citizens back into the public health system, private medicine will shrink as will private spending on health,” German told a press conference. “Our goal is to turn the clock back and to increase public spending on health at the expense of private medicine.”

Eliminating sharap, which had been under fire as depleting the public health system, was the most dramatic of a series of proposals.

The committee backed the proposal by a vote of nine to four, after the Finance Ministry agreed to budget some 1 billion shekels ($290 million) to the public health system in order to shorten waiting times for doctors’ appointments and surgical procedures.

Sharap was introduced with the idea of allowing people to choose their own doctors, in exchange for additional payment on top of health insurance premiums. But as spending on public health lagged and access to doctors grew more difficult, sharap evolved into a way for people who could afford it to “jump the line” and arrange to see a physician or schedule operations sooner than people who relied solely on the public health system.

Asked by TheMarker if the panel had set maximum wait times, Health Ministry Director General and committee member Prof. Arnon Afek said the goal was two months, but he warned that it would take a long time to reach that target.

In addition, the treasury agreed to increase its allocations to Israel’s health maintenance organizations in accordance with the state’s 1.9% annual population growth. That will add hundreds of millions of shekels to the HMOs’ annual budgets.

The Health Ministry committee also recommended raising the budget for the “basket” of state-subsidized drugs and medical services by 0.8% every year, a measure that would add up to another 300 million shekels annually. The Finance Ministry has not agreed to this recommendation so far.

The treasury only agreed last week to fund the program to cut wait times, and until the panel’s meeting Wednesday morning German was the only committee member who knew about it.

“What other government committee has ever gotten a budget approved before it completed its work?” German said, noting that Finance Minister Yair Lapid, the chairman of her Yesh Atid party, has been “involved and supportive” with regard to the spending hike.

The committee rejected a prominent proposal to tax private supplementary health insurance, according to German in order to avoid saddling citizens with additional financial burdens.

The committee did recommend imposing a 15% tax on foreign medical tourism. In addition, it recommended requiring hospitals that provide medical services to foreign citizens to set up, within six months, a computerized, real-time reporting system that sends the Health Ministry data on ward occupancy levels and on waiting times.

The ministry would use the information to determine the extent of hospital resources that can be allocated for medical tourism. In any event, such services could not exceed 6% of the hospital’s total revenue — a ceiling that exceeds current limitations.

Regarding health insurance, the committee proposed that HMOs be required to offer their members three types of insurance.

The first, basic package would cover only surgery and related medical services and offer the same coverage under the same terms nationwide. Insurance companies would underwrite the policies, but HMOs would be required to offer it to all their members, regardless of their medical condition.
The second type would cover pregnancy, medicines generally and dental care, while the third would offer a “lifestyle” package of covered services.

For supplementary policies sold by insurance companies, the insurers and HMOs would divide the costs evenly. That would mark an improvement for the HMOs that in the past have often shouldered most of the cost when supplementary policies provided redundant coverage to what the HMOs offered.

The German committee recommendations will be implemented through a combination of items put into the government’s Budget Arrangements Law and by cabinet decisions.

But the recommendations are likely to first encounter opposition from the HMOs, insurance companies and private hospitals, including appeals to the High Court of Justice.