War in Israel creating deficit crisis for health funds

The cost to the four health funds of nearly a month of treating their members, evacuees, soldiers, and others during the war has been about NIS 200 million, the Knesset Health Committee was told this week.

Of this figure, about NIS 170m. was spent by Clalit Health Services, which is the largest health maintenance organization and serves about half of all Israelis. The rest has been spent by Maccabi Healthcare Services, Meuhedet Health Maintenance Organization, and Leumit Health Care Services.

Knesset Health Committee chairman Yonatan Mishraki (Shas) said the Health Ministry must transfer advance payments to the public health funds to cover their costs.

In response, Treasury officials said they would cover all the ministry’s extraordinary expenses for allocating to the insurers.

Mishraki called on the Health and Finance ministries to present to the committee an orderly proposition for reducing the deficits of the health funds given the costs imposed on them during the war.

“To protect the health funds and their members so they won’t be harmed, they must create budgetary certainty so the insurers can perform optimally during the war,” he said.

Erez Levy, director of Clalit’s Jerusalem district, said the health fund estimated that the cost of treating its members as a result of the war would reach at least NIS 500m. by the end of 2023. The cost would be the result of investment in infrastructure and protection, a significant increase in hospitalizations, the need to increase its stock of equipment, and expanding online services and clinic hours, he said. This is together with the huge deficit of Clalit and the other health funds, he added.

So far, the insurers have not received compensation from the Treasury for what they are spending to treat evacuees, mainly in hotels and guest houses.

Hanan Cohen, Maccabi’s budget director, said the government’s failure to compensate it for the expenses for the treatment of evacuees has caused budgetary uncertainty.

Itai Platnik, head of the budget department at Meuhedet, said the deficits of the past make it very difficult to run the health fund now, and it is having trouble paying suppliers.

"Insurers to be reimbursed"

Health Ministry Deputy Director-General Lior Barak praised the activities of the health funds immediately after the outbreak of hostilities and said the insurers would be reimbursed.

According to Flora Koch-Davidovitz, a researcher at the Knesset’s Information and Research Center, in addition to the budget that can finance the cost of the basket of health services, the health funds may also receive support funds from the Health Ministry for balancing their budgets or for the development of services that are not included in the basket.

These allocations, which are distributed based on support tests and determined in the various circulars and procedures, are generally transferred at the end of the budget year.

According to Health Ministry data, the deficit of the four insurers last year was about NIS 3.2 billion, but after receiving “stabilization support” from the state of more than NIS 2b., the deficit was reduced to 1.5b.

A report published on the Health Ministry’s website predicted that the insurers’ deficits will worsen and lead to a problem with cash flow in the fourth quarter of this year. Consequently, the scope of the annual deficit in 2023 is expected to be approximately NIS 3b. after stabilization supports, or about double last year’s deficit.

These estimates were published at the beginning of 2023 based on the data of the first quarter of 2023 only, so they did not yet include the effects of the war in Gaza, the Health Ministry said.