Navigating Fiscal Strains: Israeli Health Funds Post-COVID

The Israeli healthcare system, renowned for its comprehensive coverage and high-quality services, is currently grappling with significant financial challenges. A recent analysis attributes the burgeoning deficits in public health funds primarily to the aftermath of COVID-19, posing a serious threat to the system’s long-term viability and its ability to continue providing top-tier medical care to its citizens.

Escalating Financial Shortfalls

The financial health of Israel’s public health funds took a sharp turn for the worse in 2022, as detailed in the Health Ministry’s annual fiscal report. From a manageable surplus of NIS 82 million in 2021, the funds plummeted into a severe deficit of NIS 1.5 billion a year later. The decline in financial stability is largely due to a decrease in support income, exacerbated by heightened healthcare demands during the pandemic and a simultaneous drop in regular patient visits.

2023 was a deepening financial quagmire, painting an even bleaker picture, with projections indicating that the health funds could face even more severe liquidity issues by the end of 2024. Forecasts suggest an impending annual deficit of around NIS 3 billion, nearly doubling the previous year’s shortfall. Without the NIS 2 billion in government stabilization aid, the deficit could skyrocket to an alarming NIS 5 billion. These figures underscore an urgent call for government intervention to avert a fiscal crisis within the healthcare system.

A Plea for Sustainable Solutions

Moshe Bar Siman Tov, the Ministry’s Director-General, has called for immediate and effective regulatory measures to fortify the financial health of the health funds. He advocates for budget transparency, service adaptation to an aging demographic, and an increase in chronic disease management. Notably, the report identified a significant rise in compensation for independent physicians, with salary expenses surging by about 7% from 2021, highlighting a critical area for policy attention. 

Despite these financial woes, there’s a glimmer of hope as expenditures on medications and medical devices have decreased by 3.2%, thanks to lower drug prices. Nevertheless, this was offset by a 4.3% increase in patient contributions for prescription medications. The report also touches on the innovative use of CBD cream in certain treatments, illustrating the healthcare sector’s adaptability to new therapeutic options.

Examining Health Insurers’ Financial Health

The financial outcomes for Israel’s major health insurers in 2022 further illustrate the pandemic’s impact. Clalit Healthcare Services faced a significant setback, ending the year with a NIS 1.045 billion deficit, reversing its previous year’s surplus. Maccabi Healthcare Services managed a NIS 39 million surplus, albeit bolstered by support income from prior years. Meuhedet and Leumit, the third and fourth largest funds, reported deficits of NIS 414 million and NIS 116 million, respectively, marking a drastic departure from their previous surpluses.

The COVID-19 pandemic has undeniably strained Israel’s public health funds, leading to record deficits and financial instability. This critical situation demands strategic policy reforms, financial injections, and innovative healthcare solutions to ensure the sustainability and resilience of Israel’s healthcare system, enabling it to continue serving its population effectively in the face of ongoing and future challenges.