3.4 Out of pocket payments
In 2013, households financed 40.5% of THE, of which 26% was OOP payments (while the remaining 13% was premiums paid for VHI). OOP expenditure represents a high share of THE in Israel compared with other OECD countries (26% and 19%, respectively) (CBS, 2015; OECD, 2015). The rate of OOP expenditure as a percentage of THE in Israel has been relatively stable since the mid-1990s although it has been increasing in per capita terms (Fig3.8). OOP expenditure per capita in Israel in 2013 was similar to the OECD average (US$ 627 and US$ 601 PPP, respectively).
Survey data from 2012 indicated that health care represented about 5.5% of household expenditure. In that year, households spent about €180 per month on health care, of which 35% was for private health insurance premiums, 25% for dental care, 16% for medications, 5% for glasses and 19% for other services. There were large differences in household expenditure on health by income quintile: while the lowest quintile spent approximately €90 per month, the highest quintile spent about €300, which represent 4.5% and 6.3% of each quintile’s total household expenditure, respectively (Horev & Keidar, 2014).
There are two types of OOP payment: cost-sharing (user charges) for services included in the NHI benefits package and payment for services not included in the NHI benefits package. These are considered in turn.
3.4.1 Cost-sharing (user charges)
In 1998, the Knesset authorized all the HPs to charge their members for visits to specialists and community-based diagnostic centres. The HPs were also authorized to substantially raise their co-payment rates for pharmaceuticals. The Knesset stipulated that details of the co-payments would need to be approved by the Ministry of Health. The co-payments were part of an effort to alleviate the HPs’ financial deficits; the primary motivation for the new co-payments was revenue enhancement. However, the Ministry of Finance insists that it pushed the legislation through the system partly to reduce the frequency of unnecessary visits to physicians, with a view to containing costs. The co-payments for HPs are regulated by the Ministry of Health, and co-payments constituted 6.5% of HPs’ income in 2014 (Table3.5 summarizes the cost-sharing mechanisms and protection for vulnerable populations). The cost-sharing (either co-payments or coinsurance described below) cannot be covered by the VHI.
Co-payments for visits to specialist physicians in the community are structured as follows. There is a flat-rate charge (about €5) for the first visit in any quarter; repeat visits within the quarter to the same specialist are not subject to co-payments. Elderly welfare recipients (aged 65 years and over) and children receiving disability payments are exempt from co-payments for all visits; people afflicted with end-stage renal disease, cancer, HIV/AIDS, Gaucher disease, thalassaemia or tuberculosis are exempt from co-payments at hospital outpatient departments and dialysis centres. There is also a quarterly ceiling on total co-payments at the household level, which is 50% lower for elderly people. Developmental care (e.g. speech therapy, occupational therapy, physiotherapy and mental health care) is exempt from co-payments for children whose parents receive income support from the NII. In 2014, the ceiling for households was about €50 (the ceiling is not a function of family size) and about €75 for individual patients with chronic conditions (Ministry of Health, 2014b).
Key changes in co-payment requirements since 2010 include the following.
- Oral health care for children up to 12 years was added to the health basket, with co-payments of about €5 per visit.
- Co-payments for visits to well-baby clinics (preventive care for children) were abolished.
- Fertility and in vitro fertilization treatments are also made subject to co-payments (at about €40 per treatment).
- Mental health services provided in HP clinics would require quarterly co-payments of about €5 per patient but patients wishing to choose their therapist outside the clinics may do so from a list of independent professionals with agreements, and pay co-payments for each visit; the co-payments rates for individual psychotherapy are about €11 for the first visit and €28 for each of the following visits, and about €13 per visit for group psychotherapy.
Coinsurance for pharmaceuticals is 15% of the purchase price for patent drugs and 10% for generic drugs, subject to a minimum co-payment of around €3 per item purchased (Ministry of Health, 2014g). For the chronically ill, there is a quarterly ceiling of approximately €65, varying according to HP. Those older than 65 years who receive income support benefit from a 50% reduction in pharmaceutical coinsurance, while those older than 75 years benefit from a 10% reduction; veterans of the armed forces receive a 75% discount, and Holocaust survivors are exempt from coinsurance (Office of the Deputy Director-General for Regulation of the Health Plans, 2014).
There is evidence to suggest that co-payments have created financial barriers to access, particularly for people with low incomes (Gross, Brammli-Greenberg & Matzliach, 2007). In 2014, 11% of the adult population refrained from taking medicines or visiting physicians within the NHI because of co-payments or coinsurances. The rates were higher among chronically ill (17%) and the lowest income quintile (20%). Nevertheless, the recent financial protection measures, such as discounts and caps for vulnerable populations, have benefited the population and the rates of people refraining from taking medicines or visiting physicians is lower than it was a decade earlier (Brammli-Greenberg & Medina-Artom, 2015). User charges cannot be covered by VHI.
3.4.2 Direct payments
Another important type of OOP payment is for services not in the NHI and also not provided by the Ministry of Health. Some of these services, such as care in private hospitals (whether inpatient or outpatient), are usually purchased privately. Other services and products that are primarily paid for privately include optical care, dental care for adults, medical equipment, some prostheses and LTC. While these services are sometimes covered – in whole or in part – by VHI, OOP payments also play a significant role in their financing.
In the community setting, there are no legal restrictions on the provision of private care, apart from the stipulation that those physicians who also work in the public sector receive permission from their employer to practise privately. Permission is almost always granted, although often with a limitation on the number of hours that the physician can practise privately. This situation is not monitored closely by the hospitals or the government, but if cases of serious abuse come to light, they are dealt with administratively.
In the hospital setting, physicians can legally practise privately only in private hospitals and in Jerusalem’s non-profit-making hospitals. Private services are illegal in public hospitals. This is primarily for equity considerations; the sentiment is that, at least in public facilities, all patients should receive the same level of care irrespective of their ability to pay. There have been many public debates on whether private practice should be allowed in public hospitals. The last one was in 2014 within the “Commission to Strengthen the Public Health System in Israel”, which decided that private practice would remain forbidden in public hospitals (see section 6.1).
Most government hospitals have established “health trusts”. These are distinct legal entities that engage physicians to work after hours, usually on a per-visit or per-operation basis determined by negotiation between the trusts and individual physicians. However, this activity is not primarily “privately financed” in the sense of being funded by OOP payments or commercial VHI. Rather, the trusts’ revenue comes primarily from the sale to the HPs of surgical and outpatient clinic services carried out during late afternoon, evening and night hours.
3.4.3 Informal payments
There are indications that, despite the existence of universal health insurance coverage and widespread VHI coverage, there continue to be various forms of informal payments in Israel. These include giving cash to particular physicians and making gifts to a hospital ward. The objectives appear to include expressing appreciation with no expectation of future tangible benefit, securing the services of a particular physician in a situation where otherwise a physician would be randomly assigned and getting more time and personal attention from the clinical staff in general. In Israel, long-standing personal connections are also used to secure preferential treatment (Flic & Cohen, 2015).