Health Reform in Israel - A Model to be Followed by Switzerland?

1. בס"ד Health Reform in Israel -A Model to be Followed by Switzerland? Shuli Brammli-Greenberg, PhD Myers-JDC Brookdale Institute and Haifa University Israel MSD-EXPERTEN-APERO 25 OKTOBER 2012

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 Brammli-Greenberg 2012; Health Reform in Israel

3. Outline • 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 Brammli-Greenberg 2012; Health Reform in Israel

4. Introduction Key Features – ISRAEL 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% • 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% Brammli-Greenberg 2012; Health Reform in Israel

5. Selected Health Outcomes ISRAEL 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% • 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% Brammli-Greenberg 2012; Health Reform in Israel

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 Brammli-Greenberg 2012; Health Reform in Israel

7. Health Expenditure (HE) Indicators Brammli-Greenberg 2012; Health Reform in Israel

8. Health Expenditures as a Share of GDP 1995-2010 Brammli-Greenberg 2012; Health Reform in Israel

9. Health Expenditure (HE) Indicators Brammli-Greenberg 2012; Health Reform in Israel

10. Health Expenditure (HE) Indicators Both Israel and Switzerland have high rates of out-of-pocket spending on dental care and long-term care Brammli-Greenberg 2012; Health Reform in Israel

11. 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. “ Brammli-Greenberg 2012; Health Reform in Israel

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 Brammli-Greenberg 2012; Health Reform in Israel

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“ Brammli-Greenberg 2012; Health Reform in Israel

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“) Brammli-Greenberg 2012; Health Reform in Israel

16. Last July in Switzerland - 75% voted against managed care reform Brammli-Greenberg 2012; Health Reform in Israel

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 Brammli-Greenberg 2012; Health Reform in Israel

18. Total Population Age 65 and Older Health Plan Market Shares Brammli-Greenberg 2012; Health Reform in Israel

19. The Swiss can choose between plans from nearly 80different insurance companies; the top 10 insurer conglomeratesaccount 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 Brammli-Greenberg 2012; Health Reform in Israel

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 year Brammli-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 servicesSince July 2010 LTC is included in the Swiss basic insurance with 20% co-payment Brammli-Greenberg 2012; Health Reform in Israel

23. 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 Brammli-Greenberg 2012; Health Reform in Israel

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 Brammli-Greenberg 2012; Health Reform in Israel

26. The Public System Financing (2) • The NHI budget is allocated among the four HPsmainly (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). Brammli-Greenberg 2012; Health Reform in Israel

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) Brammli-Greenberg 2012; Health Reform in Israel

28. The Public System Financing (3) • 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. Brammli-Greenberg 2012; Health Reform in Israel

29. National Expenditure on Health Care, by Financing Sector 2000-2010 (%) The National Health Expenditure 2010 was 61.2 billion NIS (~US$ 15.3 billion) Brammli-Greenberg 2012; Health Reform in Israel

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 Brammli-Greenberg 2012; Health Reform in Israel

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 Brammli-Greenberg 2012; Health Reform in Israel

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 system Brammli-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 Brammli-Greenberg 2012; Health Reform in Israel

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. Brammli-Greenberg 2012; Health Reform in Israel

35. Many purchase supplementary insurance for enhanced benefits or broader coverage ; However, the size of the market has been reduced since 1995 Brammli-Greenberg 2012; Health Reform in Israel

36. Israel’s Health Insurance Market The Structure of Israel’s Health Insurance Market National health insurance: Uniform benefits package provided by four nonprofit healthplans Supplemental insurance (SI): Uniform extended benefits package marketed by the healthplans Commercial insurance:Benefits package tailored to individual needs; marketed by for-profit insurance companies Commercial Insurance Including LTCI Supplemental Insurance National Health Policy National Insurance (uniform basket) Brammli-Greenberg 2012; Health Reform in Israel

37. 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 Brammli-Greenberg 2012; Health Reform in Israel

39. The Health Plans’ Organizational Objectives The HPs manage care with regard to three key organizational objectives: • Cost containment • Quality improvement • Equity promotion Brammli-Greenberg 2012; Health Reform in Israel

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 Brammli-Greenberg 2012; Health Reform in Israel

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 Brammli-Greenberg 2012; Health Reform in Israel

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 Brammli-Greenberg 2012; Health Reform in Israel

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 Brammli-Greenberg 2012; Health Reform in Israel

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. Brammli-Greenberg 2012; Health Reform in Israel

45. Selected Medical Resources and Output Indicators ISRAEL 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 • 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 Brammli-Greenberg 2012; Health Reform in Israel

46. Hospitals Hadassah Medical Organization, EinKerem Jerusalem Brammli-Greenberg 2012; Health Reform in Israel

47. In Israel, there are 376 Hospitalization Institutions 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. Brammli-Greenberg 2012; Health Reform in Israel 46 acute care hospitals (~42,600 inpatient beds) 13 inpatient mental health hospitals 315 inpatient chronic care facilities (including nursing homes) 2rehabilitation institutes

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. Brammli-Greenberg 2012; Health Reform in Israel

49. The Discounting Rate is Increasing Over Time Brammli-Greenberg 2012; Health Reform in Israel

50. Hospital indicators and the restrictive financial mechanisms raise the question whether the system is efficient or whether the quality of hospital care is compromised Brammli-Greenberg 2012; Health Reform in Israel