The Israeli government has announced plans to include some drugs not reimbursed under the health basket in supplementary health insurance, thereby increasing the scope for obtaining reimbursement approval in a previously challenging market. The government also plans to pay the premiums of poor patients wishing to purchase cover, and standardise the benefits offered to patients.
IHS Life Sciences perspective | |
Significance | Supplementary health insurance packages are to be standardised across Israel's four sickness funds. In addition, the government planned to include as yet unreimbursed drugs in supplementary health insurance cover. The government is also planning to pay the premiums of poor populations wishing to acquire supplementary health insurance. |
Implications | Pharmaceutical companies have faced increasing challenges obtaining reimbursement under the country's overstretched health basket, therefore the announcement of an additional avenue to reimbursement is likely to be warmly welcomed by the industry. The standardisation of insurance packages and controls on price increases to premiums may provide an important source of additional funding for the funds. |
Outlook | Details of the mechanism for the inclusion of drugs in supplementary health insurance remain limited, making it challenging to determine the potential impact these provisions could have on the Israeli pharmaceutical market. |
The Israeli deputy health minister Ya'acov Litzman (note that the post of health minister is held by the Israeli prime minister and is largely a ceremonial title) and the Ministry of Finance have separately announced a range of reforms to the country's system of supplementary health insurance.
Under the current system, all citizens are required to register with one of four sickness funds, each of which provide a set basic level of medical cover for free, known as the health basket. Although the contents of the health basket is set by the government and does not vary between the sickness funds, the funds are allowed to provide optional additional levels of cover on top of the basket for a fee. These supplementary health insurance packages vary between schemes and come in many levels, with benefits such as choice of doctor, but cannot include drugs not reimbursed under the health basket.
Under new regulations issued by the Ministry of Finance's Capital Market, Insurance, and Savings Division, services offered under supplementary health insurance are to be set by the government and standardised across the funds from February 2016. According to Globes, there will be a set level of supplementary health insurance that will allow enrolees the opportunity to choose hospitals, doctors, surgeons, and seek second opinions. Enrolment in the policy will be on a two-year basis, with insurance providers being permitted to raise premiums at point of enrolment without prior permission of enrolees where this increase is up to ILS10 (USD2.63) a month, ILS120 a year, or less than 20% of the most recent premium. The regulations also require that from January 2016 sickness funds must standardise any nursing insurance packages to allow patients to switch nursing insurance provisions free of charge and allow enrolees to maintain any rights they may have accumulated when switching.
The inclusion of drugs in supplementary health insurance
In a major speech to an Israeli medical conference, included in coverage by the Jerusalem Post, the Israeli health minister put forward a range of proposals to reform the supplementary health insurance system. Crucially, these include placing drugs not reimbursed under the country's health basket into supplementary health insurance. The exact mechanism for deciding which drugs would be included in the policies remains unclear at present.
The minister has also announced plans for the government to pay the premiums of poor populations wishing to obtain supplementary health insurance cover. The minister suggested that around 80% of the population already hold supplementary insurance, with the remaining 20% or so probably not doing so because of poverty. Levels of enrolment in supplementary health insurance have long raised questions in Israel over the potential of a 'two-tier' healthcare system.
Outlook and implications
Government funding for healthcare has traditionally been somewhat constrained in Israel, with the country's sickness funds struggling to meet the costs of providing care mandated under the health basket (see Israel: 8 September 2014: One-off treasury allocations reduce Israeli health funds' deficits in 2013). Sickness funds have therefore used supplementary health insurance as a means of supplementing funding, which is why many of the perquisites offered through supplementary insurance are often high-margin items – some would even describe these as 'gimmicks'.
Although, by standardising insurance policies and limiting price increases, the government may be ensuring that consumers obtain good value for money in their insurance, it may be unwittingly strangling much-needed funding from the schemes. This funding shortfall may be offset somewhat by the increase in holders of supplementary insurance, through government payment of premiums for the poor. However, with no word from the government on how it would fund the payment of premiums, there is the risk that this money may be recycled from somewhere else.
One might also question the logic of standardising schemes. Patients are already allowed to switch between schemes if they do not feel that they are getting value for money, and the National Insurance Institute's website allows enrolees to switch providers quickly and easily. Indeed, evidence suggests that this website has already had significant traffic, with many enrolees choosing to change their sickness fund this way (see Israel: 26 March 2014: More Israelis choose to switch healthcare fund).
Turning to the provisions for inclusion of drugs in supplementary health insurance, this is undoubtedly great news for the pharmaceutical industry. Israeli's ageing and expanding population has led to difficult reimbursement decisions for the Public Committee for the Update of the Basket during its annual discussion of reimbursement decisions (see Israel: 5 April 2013: The current environment and future potential of pharmaceutical pricing and reimbursement in Israel). Indeed, obtaining inclusion in the healthcare basket has becoming increasingly complex, with limited transparency adding to the woes of the pharmaceutical industry. However, excitement over the announcement may be tempered should inclusion in supplementary health insurance lead the government to conclude that it should reduce the scope for reimbursement under the health basket – a goal that would remain the preferred option for market access in Israel. A further note of caution should be raised that it remains unclear how drugs would be included in supplementary health insurance, especially when insurance provisions are standardised.