For profit Health plan

• Abstract
• Characteristics of this policy
• Purpose and process analysis
• Expected outcome
• References

Abstract

Under proposed Ministry of Finance legislation (2004), a for-profit organization would be allowed to operate a new health plan under the terms of the National Health Insurance Law, but with reduced funding, in order to increase competition in the health plan market. When the Labour Party joined the coalition (January 2005), this legislation became contingent on re-approval by the new cabinet members. Given the current composition of the coalition, it is unlikely to be approved.

Neue Entwicklungen

Innovationsgrad	traditionell		innovativ
Kontroversität	unumstritten		kontrovers
Strukturelle Wirkung	marginal		fundamental
Medienpräsenz	sehr gering		sehr hoch
Übertragbarkeit	sehr systemabhängig		systemneutral
current    previous

Innovation: The proposed policy is innovative, since to date, the health plans in Israel have been not-for-profit organizations; this was anchored in the NHI Law.

Controversy: The proposed policy has been presented only recently, and not very vocally; there has not been much public debate about it, but as noticed above, the Labor party opposed the policy and stopped the legislative process. The Ministry of Finance still supports the policy, while the private insurance company that apparently initiated the idea is now less enthusiastic to promote it.

If the legislation will pass at a future time it will impact the status quo, but the extent is as yet unclear, since it is too early to foresee how the system would react.   The impact on the status quo will depend on several parameters, such as rate of transfer to the new health plan and how it would operate (cream skimming, etc.). It is yet unclear whether the new health plan would  in fact induce more competition and, consequently, change the other health plans' strategies and behavior.

Visibility: Low. The media hasn't exposed the idea or the controversy around it.

Transferability: Apparently high, to other systems with not-for-profit health plans.

Purpose and process analysis

Current Process Stages

	Idee	Pilotprojekt	Strategiepapier	Gesetzgebung	Umsetzung	Evaluation	Veränderung/Richtungswechsel
Implemented in this survey?

Initiators of idea/main actors

• Regierung

• Leistungserbringer

• Patienten, Verbraucher

• Bürgergesellschaft

• Privatwirtschaft, privater Sektor

• Andere

• Politische Parteien

Stakeholder positions

Labor Party:  The Labor Party recently entered the policy arena regarding this issue, and actively opposed the policy. It is rumoured that the Labour Party made joining the coalition (January 2005), conditional upon removal of the proposal from the 2005 Budget Reconciliation Bill.  It demanded that the policy be discussed by the cabinet and re-approved, in effect stopping the legislative process and postponing its consideration indefinitely. The 2005 budget and Budget Reconciliation Bill are expected to be approved by the Knesset by the end of March; if not, the government may fall. If  a new, for-profit health plan were to be is approved, it would only be included in next year's budget bill.  The current cabinet, (without the liberal Shinui Party and with the Labor and religious parties), which has a socially-oriented platform, is likely to reject the proposal.

It is not clear which of the actors had lobbied to include this issue in coalition negotiations to make this proposal a necessary part of coalition negotiations. However, the main reason for forestalling this legislation appears to be the Labor Party's concern that the formation of an additional health plan would lead to latent cream skimming, and thereby  endanger equity.  In addition, the Labor Party is still ideologically identified with Clalit Health Services, and may also have delayed legislation to support the interests of Clalit:  If a new health plan were to succeed in cream skimming, it could make a profit at the expense of the other health plans. 

Ministry of Finance:  This ministry  initiated the proposal and still supports it, believing it will give all of the health plans an incentive to operate more efficiently,, and thus reduce overall expenditures.  Therefore they do not support the postponement of the legislation process. However, once the issue became political,  the ministry could no longer do anything to promote it.

Ministry of Health:  Private communication reveals that some of the officials in this ministry still support the proposal (believing in the advantages of privatisation and increased competition). However, most ministry professionals still oppose it, because it might compromise the equity of the system: If the new health plan were to offer services in affluent urban areas only, for example (thereby instituting a subtle form of cream-skimming), it might in time politically or otherwise create pressure to change the health plans' terms of operation, freeing itself to become "the health plan of  the rich". Concern also remains about the technical ability to regulate a for-profit health plan.   The Ministry of Health therefore welcomes the delay, and hopes the new cabinet  will reject this proposal.

Health plans: The health plans have yet to express public support or opposition to the idea. However, a survey recently conducted by the Myers-JDC-Brookdale Institute revealed that 75% of  the top directors in the health care system  opposed the idea of a new health plan. . This corroborates private communication with health plan and Ministry of Health  officials, who expressed concern that a new health plan could easily select members (cream skim) by providing services in chosen areas, and/or by offering additional benefits that would attract mainly young and healthy members, who more readily transfer among health plans. If the new health plan indeed succeeded in cream skimming, it would make a profit while the other health plans would encounter financial difficulties.  Although the health plans are still keeping a low profile, they, too, apparently welcome the removal of this proposal from the Budget Reconciliation Bill.

Insurance companies:  As previously reported, it was apparently one of the leading insurance companies that initiated the idea, believing that it would ultimately be able to persuade the Ministry of Finance to change the health plans' operating conditions (e.g., allow them to operate in selected cities only), such that  a new for-profit health plan could become profitable. In the meantime, it became clear to private sector entrepreneurs that the Ministry of Finance has no intention of "bending the rules" regulating the activities of the health plans as delineated by the National Health Insurance Law. This made the initiative less economically viable; as a result, pressure on the legislation process was stopped.

The Israeli Medical Association: The IMA is opposed to the policy, and therefore also supports the delay in legislation. It has expressed concern about the future of public medicine, cream skimming, equity, quality of care, and an increase in health expenditures.  Informally, the IMA has also expressed concern that health plan efforts to cut costs would result in layoffs of  employees or reductions in their wages.

Patient organizations: These are opposed to the policy, and therefore support the delay in legislation. They feel the addition of a new health plan to the system would induce competition not over quality of services, but over reducing the costs of operation. Thus  a for-profit health plan may  offer lower quality of care (e.g., longer waiting times, less choice) and restrictions on access to medical care which, they believe, would be the only way it could be profitable. They have also expressed concern that a for-profit health plan would find latent ways to cream skim patients, thereby  compromising equity. 

The public: Advocacy groups have opposed the policy, and therefore support the delay in legislation. The Adva Institute, which advocates for equity, has vehemently opposed the proposal. It claims it is based on a neo-liberal ideology that undermines the principles of public medicine. Furthermore, given the known market failures in health care markets, privatization will only lead to increased costs and greater inequity (as in the US system).  They also raised concern that a new, for-profit health plan would strive to select the young and healthy in order to make a profit, thereby negatively affecting the membership mix of  the other health plans.

Actors and positions

Regierung
Ministry of Health	sehr unterstützend		stark dagegen
Ministry of finance	sehr unterstützend		stark dagegen
Leistungserbringer
Health Plans	sehr unterstützend		stark dagegen
Patienten, Verbraucher
Zvi	sehr unterstützend		stark dagegen
Bürgergesellschaft
Adva	sehr unterstützend		stark dagegen
Privatwirtschaft, privater Sektor
Insurance companies	sehr unterstützend		stark dagegen
Andere
Israel medical association	sehr unterstützend		stark dagegen
Politische Parteien
Labor Party	sehr unterstützend		stark dagegen
current    previous

Influences in policy making and legislation

Labor Party: The Labor Party has actively opposed the policy, and stopped the legislative process. It made the proposal's removals from the 2005 Budget Reconciliation Bill a condition of its joining the coalition. It demanded that the idea be discussed by the cabinet and re-approved, and this in fact has delayed legislation indefinitely. The 2005 budget and Budget Reconciliation Bill were approved by the Knesset at the end of March, with out this item. Therefore, if the idea of a new, for-profit health plan were approved, it could only be included in next year's budget bill.  The new cabinet (without the liberal Shinui Party and with the Labor and religious parties), with its social orientation, is likely to reject the proposal.

Actors and influence

Regierung
Ministry of Health	sehr groß		kein
Ministry of finance	sehr groß		kein
Leistungserbringer
Health Plans	sehr groß		kein
Patienten, Verbraucher
Zvi	sehr groß		kein
Bürgergesellschaft
Adva	sehr groß		kein
Privatwirtschaft, privater Sektor
Insurance companies	sehr groß		kein
Andere
Israel medical association	sehr groß		kein
Politische Parteien
Labor Party	sehr groß		kein
current    previous

Positions and Influences at a glance

Adoption and implementation

The policy was not implemented. Legislation postponed indefinitely.

Expected outcome

Impact of this policy

Qualität	kaum Einfluss		starker Einfluss
Gerechtigkeit	System weniger gerecht		System gerechter
Kosteneffizienz	sehr gering		sehr hoch
current    previous

No change from previous report.

References

Sources of Information

Personal communication officials in Ministry of Health and Ministry of Finance.

Reform formerly reported in

For-profit Sick Fund Process Stages: Gesetzgebung

Author/s and/or contributors to this survey

Authors: Revital Gross Alec Aviram Reviewer: Gabi Ben Nun

Empfohlene Zitierweise für diesen Online-Artikel:

Authors: Revital Gross Alec Aviram Reviewer: Gabi Ben Nun. "For profit Health plan". Health Policy Monitor, April 2005. Available at http://www.hpm.org/survey/is/a5/5