Israeli Health Insurance System Faces Criticism for Double Payments
Israel's "Har Habituach" (Insurance Mountain) online service, designed to centralize all insurance policies held by an individual, is failing to fully disclose overlapping health coverage, particularly concerning "Shaban" supplementary health plans offered by HMOs. This omission prevents users from identifying instances where they are paying twice for the same coverage. Approximately 3.4 million Israelis, or 37% of those covered by national health insurance, hold private commercial insurance alongside their HMO's Shaban plan. Crucially, about 95% of individuals with private commercial insurance are also enrolled in an HMO's Shaban plan, leading to significant overlap.
The primary overlap occurs in coverage for surgeries, which constitutes 40% to 70% of the cost of a private policy. Section 56 of the Insurance Contract Law dictates that holding two indemnity policies results in double payment rather than double coverage; a policyholder receives only one payout even with multiple policies. Section 59, which addresses duplicate insurance and mandates cost-sharing between insurers, is explicitly excluded from disease insurance. There is also a lack of reimbursement between insurance companies and HMOs, except for expensive treatments abroad, meaning each entity collects its premium separately without offsetting costs.
Policy cancellations take effect after three days, and individuals can cancel at any time. Retroactive refunds for premiums paid over years are rare, leaving previously paid money with the insurance company. Canceling a policy can lead to a 40% increase in premiums if one wishes to rejoin later, as the cancellation breaks insurance continuity, requiring new underwriting based on current health status. A 60-day window exists to reverse a cancellation and preserve continuity; missing this window means starting over. For HMO transfers, a 90-day window preserves seniority in Shaban plans, which differ significantly from private insurance as HMOs must accept all members regardless of age or health, making Shaban plans potentially less risky to forgo than private policies.
New regulations prohibit insurance companies from issuing new policies that duplicate existing coverage, requiring a specific disclosure field for duplicate insurance. However, this rule applies only to new policyholders, leaving those with older policies unprotected. The State Comptroller recommended extending this rule to existing policyholders. An automated interface between insurance companies and HMOs updates quarterly to detect duplication, and a reform last year mandated advance notification and automatic transfer of policyholders. The Capital Markets Authority previously estimated unnecessary payments due to duplication at NIS 760 million annually, though the State Comptroller later stated the authority possessed incomplete data on the phenomenon.
Private policies offer distinct advantages in three areas: ophthalmology, gastroenterology, and plastic surgery. They also cover transplants outside the national basket and treatments abroad, and waive co-payments and closed provider lists. Complementary Shaban policies are designed from the outset to avoid overlap and are recommended as a primary option to consider.
