Posted by: New Class Traitor | November 13, 2009

Socialized Medicine. Part 2: Israel

In the previous installment in this series, we looked at the grandfather of all socialized medicine systems, Germany. Today we will consider Israel’s.

Israel has mandatory coverage through one of four authorized HMOs (historically named “kupot cholim”, i.e., “sick funds”): Clalit, Leumit, Maccabi, and Meuchedet. The first three go back to the pre-state period, while Meuchedet (“United”) was formed in 1974 by the merger of two pre-state HMOs (one funded by Hadassah, the other affiliated with the centrist General Zionist party — which later merged into the Likud).

The oldest and largest of them, Clalit (“General”), was founded in 1911 as a mutual aid organization of an agricultural collective, and in 1920 became the healthcare arm of the Histadrut (General Federation of Labor, the local AFL-CIO equivalent). Maccabi (“Maccabee”) was founded in 1941 by German-Jewish refugee doctors as a more market-oriented alternative to the socialist Clalit.  The small Leumit (“National[ist]“) fund, founded in 1931 by doctors who found themselves blackballed by Clalit for being followers of the right-wing Zionist leader Ze’ev Jabotinsky, has always been something of a niche player.

Historically, each of these organizations managed their own risk pool. However, as a result, Clalit (which had/has a disproportionately high percentage of high-liability insurees) nearly went bankrupt. As part of a thinly veiled bailout for Clalit, a joint health insurance tax and joint risk pool were established in 1995. (In fact, health insurance only became compulsory in 1995, but something like 95% of the population was already enrolled in one of the four HMOs anyhow.) Each HMO receives a share of health insurance tax revenue based on its relative membership numbers: this arrangement saved Clalit from bankruptcy but severely downgraded the finances of especially Maccabi (the HMO of choice for professionals etc.). As a result, quality differences between the four HMOs also narrowed.

Coverage and reimbursement rates are set by the government: any true competition between the HMOs is primarily defined in terms of quality of service and accessibility.

Israel’s medical system has solvency problems, but not as severe as the other systems covered in this series. The main reason for that is the “healthier” structure of the population pyramid: Israel still has by far the highest childbirth rate of all developed countries. There are also some unique local factors keeping costs down: for example, the Russian mass immigration included  a large number of medical doctors, many of whom failed to requalify as doctors in Israel. (Medical training in Israel is as demanding as in the USA or Germany.) Under an arrangement aimed at simultaneously providing jobs for new immigrants and improving primary care access in the HMOs, many such people work at low wages as glorified nurse-practitioners in HMO clinics, their official status being something like GP residents.

Access to primary care in Israel is quite good: seeing a GP (especially a GNP ;-)) at an HMO polyclinic on short notice is quite easy. Emergency medical care is available not just at hospital emergency wards, but at larger HMO polyclinics (e.g. regional head branches). Most (but not all) GPs in private practice enroll in the “network” of one or even two HMOs, and see patients of that HMO at least during part of their office hours. Specialists tend to work reduced hours for HMOs at government-set rates, and the remaining hours “sharap” (Hebrew acronym for sherut refu’i prati, i.e., “private medical service”) at market rates. An increased tendency of specialists to scale back their HMO hours in favor of more lucrative sharap hours leads to a situation where the same physician can see you with a 1-month wait on the HMO’s dime — or almost on the spot when paying privately.

As part of cost-containment efforts by the HMOs, the road to access to more and more advanced diagnostic procedures and outpatient treatments is becoming increasingly paved with red tape. In addition, the country is facing a shortage of doctors in certain critical clinical specialties (notably surgery), as — even in a culture where (supposedly) every mother dreams of her son/daughter becoming a doctor — medicine is becoming an ever less attractive career  path due to long working hours and low government reimbursement rates. (Some physicians attempt to build up practices consisting mainly and exclusively of “private rate” patients, or to move into specialties such as cosmetic surgery where HMO coverage is generally a nonfactor.)

Several of the HMOs have since long sold supplementary insurance policies that offer some additional options (e.g., physician choice, semiprivate or private hospital room,…) As quality of HMO-based care deteriorates (and/or people just become choosier), a minority of the better-to-do professionals are opting for private supplemental insurance. For those unable or unwilling to purchase private (super)insurance, protektziya (connections) or lack thereof often determine whether one has access to the best specialists or surgeons in a given field. (This is a general pattern in countries where “money doesn’t determine access to medical care”: access to scarce resources, such as a particularly skilled surgeon, often becomes determined by personal connections. And guess which socio-economic class — who just happen to be the most vocal advocates of socialized medicine — generally has the best such connections?)

Finally, on the margins, medical tourism to Israel by foreigners is bringing in some money. (There is even some medical tourism from countries that have no diplomatic relations with Israel ;-)) The combination of high-quality (in some fields cutting-edge) medicine and comparatively low cost (even at private rates) is quite attractive to some: bypass surgery will cost you a quarter of what it costs in the USA, and in-vitro fertilization one-sixth.

Israel’s system of socialized medicine is often held up as an example of “it can work”. However, one should consider the conditions are uniquely favorable (sound population pyramid, high social prestige enjoyed by doctors, basic absence of a tort litigation/malpractice insurance cost spiral,…) — yet still the system is showing cracks. If it isn’t sustainable in Israel, it probably isn’t gonna work anywhere.

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Responses

  1. I realized early in my medical career that doctors were doomed to be slaves to the government in our socialized medical system. Mutual Fund

  2. [...] Belgium, like Germany (covered in our first installment) and Israel (covered in our second installment), has a hybrid system that is basically state-regulated rather than [...]

  3. [...] have discussed three paradigmatic examples of socialized medicine systems outside the USA: Germany, Israel, and [...]

  4. [...] Part 2: Israel [...]

  5. [...] very good, if critical, essay about Israel’s healthcare system was posted a few years ago by an anonymous but well-informed blogger who notes that Israel’s [...]

  6. [...] very good, if critical, letter about Israel’s medical system was posted a few years ago by an unknown though well-informed blogger who records that Israel’s [...]


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