Insured or reassured? Medical insurance reform under the microscope

Last June, the French Ministry of Health introduced a reform of supplementary health insurance designed to finance surgical operations. Scam or necessary correction?

In this article:

Deciphering a product: supplementary health insurance ⚕️

Wallet: why are we prisoners of El Al? ✈️

Smart conso: a good reflex 🛒

An area in which we're better than California ;-)

In Israel, we are fortunate to have a law providing universal health coverage for all the country's inhabitants, including a basket of treatments, access to local clinics and to general practitioners and specialists. This system is so successful that many countries envy it, and it is about to be applied in California. Health insurance funds (koupot holim) are required by law to provide their policyholders with the services included in the basic healthcare basket, such as hospitalization, examinations, treatments, medicines and medical equipment. But as in every country in the world, some treatments, consultations or services are not financed by the public service and require additional coverage at the policyholder's expense (a bit like a mutuelle in France, but individualized).

To obtain better coverage or access to additional services not included in the basic basket, policyholders have two options. The most widespread, chosen by 80% of koupot policyholders, is the Shaban (Sherout Briyut Nosaf) or Supplementary Health Service, offered by each koupa to its members. Although commonly referred to as “supplementary insurance”, Shaban are not insurance in the traditional sense. They are open to all, regardless of health status, and are not compulsory. What's more, they are strictly supervised by the Ministry of Health. The koupot administer the programs via partnerships with private insurance companies, provide the services, collect the contributions and must maintain a strict separation between their core business and that linked to the Shaban. Since basic services are identical in all kupot, Shaban are the main area of competition between them, and serve to attract new patients based on their profile or medical habits. Each kupot offers three levels of services not included in the basket: the first, fairly basic, includes dental care or eyeglasses for children; the second gives access to treatment abroad or to private specialist consultations and wellness treatments such as osteopathy, dietetics or Chinese medicine; and the third adds services ancillary to hospitalization or childbirth, ambulance services and comfort surgery.

It's very easy to join, most koupot offer portability of a Shaban's seniority in the event of a change of fund, and some of the more attractive services come with a waiting period (such as orthodontic care for children or pregnancy-related comfort care). On the other hand, Shaban do not provide discounts on services already included in the basic basket, nor vital drugs not included in the basic health basket, nor direct financial compensation, nor long-term care insurance (si'ud, provided as a separate service). Basically, if you choose the best level of Shaban for a few dozen to 150 shekels a month, depending on age, and carefully read the list of services provided, you'll discover that the coverage is very correct and varied.

If so, why do 2.3 million Israelis who are already members of a Shaban also have much more expensive private health insurance, which in many cases provides the same service as the kupa? That's what the reform is all about.

What exactly are they? These are private, commercial insurance policies, by no means compulsory, taken out with Israeli companies such as Phenix, Harel, Menora or Migdal. These companies offer a variety of packages, the main focus of which is on surgical coverage. These policies are particularly lucrative for insurers: in 2021, policyholders paid 2.3 billion shekels in premiums, while the cost of surgery was only 940 million shekels. Brokers, too, are in for a treat: they receive monthly commissions calculated as a percentage of premiums. Insurers are also offering one-off commissions to encourage brokers to keep customers on these so-called “Premier Shekel” policies.

Are these surgical insurances useful?

The first thing to remember is that surgical procedures are covered by the basic basket of health insurance in Israel. If you need surgery, you don't have to pay anything, and the operation is covered by the Ministry of Health via your health insurance fund. What is not directly covered by koupa are mainly comfort procedures, which are covered by Shaban, sometimes with a deductible: eye operations, a mind-boggling range of cosmetic surgery procedures including facelifts and liposuction, hypersudation, laser hair removal, etc. Note that the overwhelming majority of Israeli surgeons operate in koupa, basic or Shaban.

So what are private insurance companies selling to 1.8 million people? Essentially, a list of surgeons and their availability. There's also the possibility of extending the search for a transplant if one is needed, of carrying out the operation abroad, or even of using a treatment intended for a certain pathology for another disease (in the case of certain cancers, for example). These are relatively rare cases. Basically, what remains is the possibility of choosing a surgeon from a list that is supposedly more extensive, and sold as being of higher quality. We can clearly see here the intersection of the interests of superstar surgeons - whose salaries are among the highest in the country, at several million shekels a year, according to data published annually by the Ministry of Finance's salary officer - with private hospitals, which will receive additional fees in the afternoon, and of course with insurers, who know that their coverage will only be used in a fraction of cases, since 95% of people who take out private insurance already have a Shaban in a koupat holim.

Policies sold by insurance companies are called “from the first shekel”: policyholders choose their surgeon from a list, and all bureaucratic procedures are handled directly by the insurer. But the stock of surgeons is not infinite either, and it's obvious that there is a lot of duplication.

The system therefore offers three possibilities:

1. The procedure is covered by the basic basket and performed by the koupa surgeon, and everything is free or very inexpensive.

2. This is a comfort procedure, covered in the vast majority of cases by your kupa's Shaban.

3. The operation is not covered by either of these two providers, but only by the private insurer (I haven't managed to find any examples, but perhaps more advanced technologies in comfort operations), or the koupa and/or Shaban surgeon isn't enough for you for one reason or another, or you've heard of a scalpel superstar (often, bizarrely, only operating privately or with a very long waiting list - inevitably, demand creates demand) and you only want this one and no other, and he's on the insurance list.

And above all, health!

Does option 3 justify paying thousands of shekels a year, when you obviously don't want to go under the knife every year? And what benefit do insurance companies derive from selling policies that will be little used, since Shaban is the most frequent recourse? You only get reimbursed once, by paying twice. So the insurance company collects premiums for nothing. Amazing. You can check this by entering your ID number on the Ministry of Finance's Har Habituach website, which lists all your policies and automatically identifies duplicates.

The number of duplicates is so great that the Ministry of Health simply decided in June 2024 to automatically switch private policyholders who already have a Shaban to this single Shaban, and cancel their useless and redundant policies. Policyholders need take no further action. Their private insurance policy is updated and the premium reduced automatically. People wishing to return to the “First Shekel” policy can contact their insurer and opt for this coverage until June 1, 2025. This reform applies only to surgical insurance policies taken out since February 2016; holders of older products, as well as beneficiaries of group insurance (offered by employers, for example), are not affected by these changes.

However, this reform is accompanied by an increase in the cost of all policies, even though only one policy will be taken out, which will remain more economical for former double policyholders. Premier Shekel” policies for those who decide to keep them are increasing by an average of 39%, with particularly sharp rises for young people (under 20) and seniors (over 66), where the increase is 45%. Shaban policies are increasing by an average of 2.3%, with a 5.6% rise for policyholders over 66, or 8.5 shekels a month, 100 shekels a year.

Why are private policies increasing so much? Because the law now requires insurance companies to reimburse the kupa when a policyholder chooses to undergo surgery via the Shaban while paying private contributions. And insurers, who pocket a billion shekels a year in margins on surgical insurance, have decided to pass on all the extra costs to policyholders.

n conclusion, we'll have to wait a few years to see if the reform bears fruit and enables households to save thousands of shekels a month without degrading the service provided. The question arises as to whether the koupot will be able to absorb all the new requests via Shaban, as well as waiting times. The Ministry of Health hopes that the gradual drying-up of private insurance income will encourage surgeons to give priority to Shaban (where they also receive private fees). Indeed, the legislator has required insurance companies to ensure that 50% of the surgeons on their list are affiliated to the Shaban, while the remainder are unaffiliated partner surgeons. This has prompted the companies to cut out the more expensive non-Shaban surgeons, a kind of double Kiss Kool effect that prevents the creation of that caste of super-star surgeons with hallucinatory incomes, supposedly alone justifying the use of private insurance, which itself costs thousands of shekels a year.

Fly? If you have a private jet 🛩️

I don't know if you're one of those people who have recently tried to get a plane ticket out of Israel. Going on vacation, attending a family event or even going to a business meeting abroad. The prices are simply insane. Finding a ticket has become a real sport, between those who swear by El Al because “the pilots were all fighter pilots”, and those who are determined not to be cheated and are prepared to make three or four stopovers. And then there are all those who give up, but who are sad and above all offended. Because we're not the only country in the world at war, but we seem to be the only one being punished. Have foreign airlines decided to stop flying to Israel just because they don't like us? The answer is more complicated, and has to do with El Al's monopoly position and the political policies of the Ministry of Transport.

Israel is not part of the EU, and has its own very consumer-protective legislation, the Aviation Services Law, 2012. It's great, except in times of war. Because this law obliges any airline that cancels a flight, for whatever reason (except force majeure), to get the passenger to his or her destination by other means, i.e. to finance a ticket with another airline (follow my gaze), to provide several nights' hotel accommodation if necessary, or to pay damages in the legal amounts in the event of default. This applies even if the cancellation is due to the security situation in Israel.

As you never know when your friends in Beirut, Gaza or Teheran may attack, low-cost carriers like Wizz Air, Ryanair and EasyJet, which sell tickets at knock-down prices, may find themselves legally obliged to pay out large sums. As a result, they logically prefer to cancel their flights to Israel. And so do the others.

The Civil Aviation Authority has already proposed amending the law to lighten the obligation for airlines to prove that they have done everything possible to avoid flight cancellation, and to give the Minister of Transport the power to limit the number of hotel nights to be paid for by the airline. Foreign airlines consider this legislative amendment (which has not yet been implemented) to be insufficient.

But the main problem is the replacement flight they are forced to finance. El Al has become a de facto monopoly, charging exorbitant prices, and there's almost no supply. Airlines that have cancelled their flights for X or Y safety reasons (there are also crews who refuse to sleep in Israel - I can't justify it, but it does happen) are struggling to find a replacement flight, and when one does exist, the price is exorbitant. Would the airlines also like a helping hand from the government in the face of skyrocketing insurance premiums? Not a chance either, as the State of Israel only insures national airlines.

It's as if there were collusion between the Minister of Transport and El Al, an ex-national company whose union, it should be remembered, is in the hands of the all-powerful Histadrut, which calls the shots. It's better to piss off hundreds of thousands of passengers than voters in the next Likud primary. Besides, all those millions stuck here boost consumption (and supermarket prices and VAT revenues).

🛒Consume right from the cradle

Tired of having to explain the value of money to your children? PayBox Young, the new app launched by Israeli giant PayBox (Bank Discount group), has been specially designed for 8-18 year-olds. Connected to the parents' app, it allows them to manage their children's spending “while teaching them financial management”. Of course.

Parents sign up from their own PayBox app, provided they already have a virtual credit card, and voila, your child too has a virtual or physical card to choose from. Parents can top up the card and set limits. it costs a whopping 4.90 ₪/month for the virtual card and 7.90 ₪/month for the physical card (not so far from a normal credit card fee). Following the methods of koupot holim (but by no means swimming pool or cinema) it's free for the 3ᵉ child and up, and for members before the end of February 2025, the first six months are free. To make up for the fact that children as young as 8 are forced to buy a payment card, unable to distinguish between two transactions and reacting above all to the impulse to buy dictated by brands and advertising, we are promised that educational tools for budgeting and saving will follow. Of course.

KashCash, another app dedicated to young people, is already on the market. The regulator? The last thing it wants to do is upset the banks, which have raked in a staggering cumulative profit of 20 billion shekels in 2023.

🎙️For more information

Did we have to dig into the pockets of Israeli families to find the 40 billion shekels needed to balance the 2025 budget? Not at all. Olivier Granilic explains on Radio Qualita.