health reform in israel - a model to be followed by switzerland?

Health Reform in Israel -A Model to be Followed by

Switzerland?

Shuli Brammli-Greenberg, PhDMyers-JDC Brookdale Institute and Haifa University

Israel

MSD-EXPERTEN-APERO

25 OKTOBER 2012

בס"ד

Brammli-Greenberg 2012; Health Reform in Israel

2

Acknowledgment

I wish to thank Ruth Waitzberg , Dr. Ephraim Shapiro and Dr. Bruce Rosen from JDC-Myers Brookdale Institute for their valuable input

Reference

All data are 2010 data unless otherwise indicated; all Swiss data are OECD health data / Commonwealth data and all Israeli data are Israeli CBS/MOH / OECD data or findings from the ongoing NHI evaluation research at Brookdale institute

Outline


3

• Introduction• Highlights of key differences between Israeli and Swiss

Systems• Discussion of lessons to be learned• The following aspects of the Israeli health care system

will be covered:– The National Health Insurance– Financing and expenditures– Organizational structure and care delivery– The pharmaceutical market– Inequalities

4

Introduction

Key Features – ISRAEL

• GDP (Bln $US PPPs): 218• GDP per capita ($US PPPs):

28,510• Total population: 7.8 million• Total fertility rates: 3.0• Youth population aged less

than 15: 28%• Elderly population aged 65

and over: 10%

Key Features -SWITZERLAND

• GDP (Bln $US PPPs): 361.9• GDP per capita ($US PPPs):

46,480• Total population: 7.8 million• Total fertility rates: 1.5• Youth population aged less

than 15: 15%• Elderly population aged 65

and over: 17.5%


5

Selected Health Outcomes

ISRAEL

• Life expectancy at birth: 79.7 men, 83.6 women

• Life expectancy at 65: 18.9 men, 21.1 women

• Infant mortality (per 1,000): 3.7

• Low birth weight (per 1,000): 8.1

• Daily smokers among adults: 23%

SWITZERLAND

• Life expectancy at birth: 80 men, 84.9 women

• Life expectancy at 65: 19 men, 22.5 women

• Infant mortality (per 1,000): 3.8

• Low birth weight (per 1,000): 6.6

• Daily smokers among adults: 20%


6

Other Israeli and Swiss Health Systems Similarities

• Both have a Health Insurance Law mandating universal health coverage for all; with a basic benefits package

• Both have access to the latest technology• Both have relatively short waiting times for

appointments and procedures


7

Health Expenditure (HE) Indicators


Israel OECD Average Switzerland0

2

4

6

8

10

12

7.5

9.6

11.4

HE as a % of GDP

8

Health Expenditures as a Share of GDP 1995-2010


19951996199719981999200020012002200320042005200620072008200920107

7.5

8

8.5

9

9.5

10

Israel OECD

9




1000

2000

3000

4000

5000

6000

2165

3268

5270

HE per capita (US $ PPP)

10




1020304050607080

60.1

72.365.2

Public Financing as a % of total HE

Both Israel and

Switzerland have high

rates of out-of-pocket

spending on dental care and long-term care

The Israeli Health Care System (HCS)

12

OECD REVIEWS OF HEALTH CARE QUALITY: ISRAEL

Published: 14 October 2012

• "Israel has established one of the most enviable health care systems among OECD countries in the 15 years since it legislated mandatory health insurance. While most OECD countries have been grappling with rapidly rising health costs, Israel has contained growth in health care costs to less than half the average for OECD countries over the past decade".

• "While low levels of health spending are likely to reflect successive years of tight control over spending, Israel has also made the most of tight budgetary circumstances to build a health care system with high-quality primary health care. “


13

Values Underlying the Israeli HCS

• Strong consensus that government has an important role to play – primarily through financing and regulation

• The system should be fair, accessible and working in the public interest

• A greater reliance on market mechanisms over time



14

The National Health Insurance Law

• National Health Insurance (NHI) Law (1995) mandates universal health insurance for all residents

• Uniform basic benefits package

• Principles of "managed competition“

15

The Israeli Managed Competition Model

• It includes cost containment measures and close regulation of the health plans by the government– In recent years, it is monitoring and publishing

quality indicators to facilitate choice and transfers.

• It allows supplemental insurance to be marketed by the health plans

• There is no price competition (to prevent "cream-skimming“)


16

Last July in Switzerland - 75% voted against managed care

reform



17

The NHI Law (2)

• Four competing nonprofit health plans (HPs) provide services at their own facilities or through contracted providers

• Guaranteed freedom of choice of HP

• Allocation of monies to HPs based on capitation


18

Health Plan Market Shares

53%

25%

13%

9%

Clalit Maccabi Meuhedet Leumit

Total Population Age 65 and Older

68%

17%

8%7%

Clalit MaccabiMeuhedet Leumit

19

The Swiss can choose between plans from nearly 80 different

insurance companies; the top 10 insurer conglomerates

account for 80% of enrolment Brammli-Greenberg 2012; Health Reform in Israel

20

The NHI Benefits Package

• The NHI benefits package includes hospitalization, physician services, pharmaceuticals and many other types of HC services

• It is considered a broad benefits package by international standards

• HPs are required to provide these services under conditions of reasonable accessibility and availability– But the law does not define reasonability


21

The NHI Benefits Package (2)

• Only small co-payments are required (~ 30 NIS for specialist visit; 10%-15% for pharmaceuticals)

• Quarterly ceiling for family co-payments (ranging from 120-300 NIS, exemptions and discounts for chronically ill and elderly)

• Long-term care and dental care for adults are not included in the benefits package

• Mental health was included only this yearBrammli-Greenberg 2012; Health Reform in Israel

22

In Switzerland, health funds are required to offer a minimum annual deductible of

CHF300, though enrollees may opt for a higher deductible and a lower premium.

Enrollees pay 10% coinsurance for all services

Since July 2010 LTC is included in the Swiss basic insurance with 20% co-payment


The Israeli Health Care System Financing and Expenditures

24

The Public System Financing (1)

• The National Health Insurance (NHI) is financed primarily by a health tax and general tax revenues

• Each year there is an automatic adjustment for changes in healthcare prices

• The law mandates annual adjustments to reflect demographic growth, aging and technological advances

• However, the global level of funding for the NHI is determined only after negotiations between the Ministries of Health and Finance


25

The Ministry of Finance (MOF) has multiple, powerful points of

influence over Israeli health care (the NHI budget is one major point); In Israel the MOF has generally been

more influential than the MOH in health care financing


26


• The NHI budget is allocated among the four HPs mainly (85%) by capitation payments (Risk Adjustment)

• The risk adjustment formula reflects the number of members in each plan, their age-gender mix and place of residence (no morbidity adjusters).


27

Switzerland’s risk adjustment (RA) scheme that was similar to the Israeli scheme (based on age, sex, and canton) was improved as of January 2012 so that

inpatient stay of 4 days or longer in the previous year was included. (Reform passed

in December 2007/ effective since January 2012)


28


• A small portion of the NHI funds is distributed among the HPs on the basis of the number of insured with each of five different rare, but expensive, health conditions.

• Another portion of the funds is distributed based on the extent to which the HPs meet fiscal responsibility and efficiency targets set by the MOH.


National Expenditure on Health Care, by Financing Sector 2000-2010 (%)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

10

20

30

40

50

60

70

Public Funding Private FundingGeneral taxes funding

29

The National Health Expenditure 2010 was 61.2 billion NIS (~US$ 15.3 billion)


30

Private Financing

• Consumers pay for services through voluntary health insurance or direct out-of-pocket payments: – Not covered in the NHI package (i.e. alternative

medicine, dental care etc.)– Partially covered (i.e IVF treatments, Para-medicine

etc.)• Patients also pay for services in the private system

(i.e. private hospital)• Patients pay privately if they want increased choice of

providers, faster access to care or more advanced facilities


31

The Voluntary Health Insurance (VHI) Market

• Two types:– Supplementary VHI offered by the HPs to all of

their members;– Commercial VHI, offered by commercial

insurance companies to individuals or groups.

• Since 1995 the number of VHI owners grew rapidly

• In 2010 VHI accounted for 13% of national HE


32

The Voluntary Health Insurance Supplementary insurance

• Most of the adults (81%) have at least one supplementary insurance plan

• All HPs offer two layers of supplemental insurance packages

• The premiums are relatively low– determined solely by age– no medical underwriting or medical exclusions

• No HP member can be denied coverage• This product perceived by the population as part of

the public systemBrammli-Greenberg 2012; Health Reform in Israel

33

The Voluntary Health Insurance Commercial insurance

• 40% of adults have commercial VHI (Almost all also have a supplementary insurance plan)

• Commercial VHI is provided by for-profit insurance companies

• It can cover any medical service – excluding co-payments in the public system

• Individuals must apply for coverage (medical underwriting and exclusions are allowed)

• Premiums adjusted based on risk and relatively high


34

There are many possible reasons why so many people have VHI;

Main reason is the desire to have wide coverage as much as

possible and the possibility to choose the provider.


35

Many purchase supplementary insurance for enhanced benefits or broader coverage ; However, the size

of the market has been reduced since 1995


Israel’s Health Insurance Market


36

National health insurance:Uniform benefits package provided by four nonprofit health plans

Supplemental insurance (SI): Uniform extended benefits package marketed by the health plansCommercial insurance: Benefits package tailored to individual needs; marketed by for-profit insurance companies

SupplementalInsurance

CommercialInsurance

Including LTCI

NationalHealthPolicy

NationalInsurance

(uniform basket)

The Structure ofIsrael’s Health Insurance Market

The Israeli Health Care System Organizational Structure and

Care Delivery

38

The Israeli Health Plans

• All HPs are well established (at least since the 1930s)• All are nationwide in scope• All have sophisticated information technology (IT)

systems– With all primary care physicians working with electronic

health records

• They vary in their historical origins and ideological orientations– While Clalit (the largest) has a more socialist orientation

Maccabi (the second largest) has a liberal, free-market orientation


39

The Health Plans’ Organizational Objectives

The HPs manage care with regard to three key organizational objectives:

1. Cost containment

2. Quality improvement

3. Equity promotion


40

The Health Plans Structure of Supply

• Over the past years HPs have proactively encouraged health professionals to work in teams– Clalit established clinics in which salaried health

professionals and others (i.e clerical staff) work together– Macabbi encouraged independent doctors to work together

and with other professionals

• The average primary care clinic in Israel is staffed by the equivalent of 3.4 general practitioners, 2.6 nurses, 1.5 practice assistants and most have a practice manager

• The HPs set global budgets for regional managers and they interface with the clinics' managers


41

The Health Plans Structure of Supply (2)

• Promoting primary care large clinics provides the HPs a platform to– Implementing system for monitoring utilization and

expenditures– Providing doctors with additional resources – Especially, more resources to support the chronically ill

patients– Easy and efficient way to provide the individual

physician with the information, skills needed and IT infrastructure to contain costs and promote quality of care


42

Cost Containment of the Health Plans

• HP efforts to control costs include: – Review of hospital care utilization – The development of community-based alternatives

to hospital care – Discounted bulk purchasing from hospitals and

pharmaceutical manufactures – Prior authorization requirements in the case of

very high cost medications, treatments and diagnostic tests


43

Quality ImprovementThe National Quality Monitoring Project

• In 2000 all four plans started to work together on a common framework for defining and measuring various quality indicators

• The projects were financed by the government but implemented by an academic team

• The implementing team with HP staff are continuously improving and expanding the quality indicators

• The quality performance results are publicized every year


44

In addition to its regulatory, planning and policy-making

roles, the MOH has a key role in two markets: the hospital market and the workforce

market.


45

Selected Medical Resources and Output Indicators

ISRAEL• Practicing physicians (per 1,000

population): 3.5• Practicing nurses (per 1,000

population): 4.8• Rate of hospital beds (per 1,000

population): 3.3• Average length of stay (acute

care): 4.0• Acute care occupancy rate: 98.8• CT scanners (per million

population; 2009): 9.4

SWITZERLAND• Practicing physicians (per 1,000

population): 3.8• Practicing nurses (per 1,000

population): 16.0• Rate of hospital beds (per 1,000

population): 5.0• Average length of stay (acute

care): 7.5• Acute care occupancy rate: 87.5• CT scanners (per million

population; 2009): 32.8


46

HOSPITALS


Hadassah Medical Organization, Ein Kerem Jerusalem

In Israel, there are 376 Hospitalization Institutions


47

• 46 acute care hospitals (~42,600 inpatient beds)

• 13 inpatient mental health hospitals• 315 inpatient chronic care facilities (including

nursing homes)• 2 rehabilitation institutes

The MOH owns and operates about half of the Israel's acute care inpatient beds.Clalit health plan owns and operates another third of the beds.

48

Hospital Financing

• Hospital revenue derives primarily from the sale of services to the HPs (80%)

• The HPs use a variety of reimbursement including – Per diem charges and lengths-of-stay– Per case payments (DRG)

• The government sets a cap on hospitals' annual revenue from each HP

• Each HP negotiates separately with each hospital for discounting arrangements for its insured individuals.


The Discounting Rate is Increasing Over Time

Brammli-Greenberg 2012; Health Reform in Israel49

2003 2004 2005 2006 2007 20080

2

4

6

8

10

12

14

3.5 4.1 4.7 5.1 46.4

3.7 3.7 3.55

5.5

5.7

% of the discounting rate from total governmental hospitals' revenue from health plans

discounting arrangemnets Capping discounting

50

Hospital indicators and the restrictive financial

mechanisms raise the question whether the system

is efficient or whether the quality of hospital care is

compromisedBrammli-Greenberg 2012; Health Reform in Israel

51

In Switzerland, the involvement of the cantons

and hospital indicators raise the question whether the

healthcare system is inefficient or providing a good and adequate hospital care


52

WORKFORCE


53

WorkforceImmigration

• Until recently, Israel relied heavily on immigration as a source of new physicians– The population of doctors close to doubled during

the immigration wave from Former Soviet Union– To date, only 40% of all licensed physicians up to

age 65 have studied in Israeli medical schools– With a decline in immigration, Israel is now

making efforts to increase domestic medical graduates


54

WorkforcePhysicians

• There are 3.5 physicians per 1,000 (from which 1.76 are specialists)

• Although this rate is above the OECD rate, the MOH projection is that there will be a shortage in physicians in 2020

• This shortage will be greater among primary care physicians, since young Israeli doctors are choosing to specialize and work in hospitals


55

WorkforcePracticing Nurses

• The rate of practicing nurses in Israel is very low– Only 4.8 per 1,000 population– Higher only than Korea (4.6) and Mexico (2.5)

• Government has invested much effort to encourage the training of new nurses– Opening of the nursing school in Nazareth– In 2010 the qualified nurses reached a record of more than 2,000

new nurses having joined the market

• Other efforts were made to strengthen primary care in Israel by encouraging the professionalization of the nursing workforce


56

Swiss work force: the proportion of primary care doctors in the country is

small compared to other OECD countries. migrant health workers

constitute an important proportion of the health workforce. Need to

encourage medical and nursing schools to increase the number of

health care professionals.Brammli-Greenberg 2012; Health Reform in Israel

57

The Pharmaceutical Market

• All new drugs undergo an evaluation process before being included in the NHI package

• Most community-based prescribed medication use is provided under the NHI and financed primarily by the HPs and secondarily through co-payments

• OTC medications, prescriptions by private physicians or medications not included in the NHI are paid out-of-pocket or by VHI


58

The Pharmaceutical Market (2)

• Pharmaceutical expenditures accounted for 20% of total national health expenditure

• Israel has a large, successful and growing pharmaceutical industry

• The most notable company is Teva, the world's leading generics company

• Generic drugs play a major role in the Israeli market


59

Generic drugs make up only about 10% of the drugs sold

on the Swiss market


The Israeli Health Care System Inequality

61

Complex Picture of Health Inequalities

• The main dimensions of inequalities – income level, ethnicity and geography – are significantly correlated

• This make determining underlying causes of the inequalities very difficult

• Israel's periphery (both south and north) has higher rates of poverty and unemployment and have a higher concentration of Arab Israelis


62

Complex Picture of Health Inequalities (2)

• Arabs constitute approximately 20% of the population of the state of Israel

• They are entitled to all the benefits of citizenship in the country (including the NHI coverage)

• Half of the population living in the north and 20% of those in the south are Arabs

• Almost all Arabs (92%) live in low socio-economics level communities


63

Infant mortality rates

North Haifa Center Tel Aviv Jerusalem South Total0

1

2

3

4

5

6

4.8

3.8

2.5

3.3

3.9

5.7

3.7


64

Life Expectancy at Birth

North Haifa Center Tel Aviv Jerusalem South Total75

76

77

78

79

80

81

77.978.2

79.7 79.5

80.1

77.3

78.9


65

While differences between Jews and Arabs are likely to account for

a significant share of inequality, disparities also exist within the Jewish population (according to

socio-economics status and place of residence)


66

Inequalities: the Health Plans

• Arabs and Jews report similar levels of satisfaction with their health plan overall

• Arabs tend to be more satisfied with the HP nurses and specialist physicians

• In recent years both Clalit and Macabbi developed a national-wide annual plan to enhance equity

• Since 2010 the HPs publish annually their concrete steps to enhance equity and the results


67

Inequalities:the MOH

• In 2010 the MOH has chosen reducing inequalities as one of its major goals

• The MOH addresses geographic factors:– Supplementary budget to the periphery hospitals that also

received new MRI scanners

– Financial incentives for physicians to work in the periphery

– Financial incentives for health plans (via the capitation formula and compensation on specific programs)

– New medical school and nursing training in the North

– Directive to promote cultural responsiveness


68

– Expansion of NHI to include mental health

– Expansion of NHI to include dental care for children

– Reductions in co-payments

– The upcoming LTC reform, which will include LTC in the basic NHI benefits package

Other MOH Actions in the last two years


69

Its seems that few Swiss have access and

availability concerns or problems paying bills


Discussion / Policy Issues

71

Key Points - Israel• Strong high-quality primary health care with a unique

managed care model result in good health outcomes• HPs put emphasis on data (IT improvement

monitoring and publishing quality indicators) to make the primary care even better

• Tight budgetary circumstances with strong powerful MOF, make cost containment a primary goal

• Limited choice make strong incentives for VHI• Shortage of nurses with 99% acute care occupancy

rate put a heavy burden on the hospitalized patients' families


72

Key Points - Switzerland

• Switzerland is known throughout Europe for its high-quality medical and paramedic services, and healthcare is always high on the political agenda

• Offering consumers a large choice is an important value in the Swiss health care system – This makes managed care almost impossible to

address• Switzerland is a wealthy country. This narrows the

importance of cost-containment as a primary goal.


73

Key Points - Switzerland

• The system is highly decentralized and each of the cantons play several roles in the system – this makes it hard to implement policies and

strategies developed at the national level – but decreases inequalities by periphery

• Switzerland has a large nursing workforce. This helps to reduce the burden on informal caregivers.


Thank You!

health reform in israel - a model to be followed by switzerland?

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