Insurance Firms Push Group Drug Policies Amid Profit Challenges and Corruption Probe

A recent corruption investigation involving the Histadrut union has brought attention to a group drug insurance policy called "Healthy Together," which is at the center of the probe. Drug insurance policies are part of broader "medical expense" insurance plans, covering surgeries, transplants, and life-saving medications not included in Israel's health basket. These policies are considered a looming challenge for the insurance sector, following long-term care insurance, due to their dependence on health basket committee decisions and the pace of new drug approvals.

Insurance companies must cover medications outside the health basket but cannot freely adjust premiums, leading to shrinking profit margins as medical technology advances faster than regulatory updates allow for price changes. Despite these challenges, drug policies have strong marketing appeal because they are relatively inexpensive, often costing just a few dozen shekels, and protect against potentially catastrophic financial costs from expensive life-saving drugs.

Unlike critical illness insurance, which pays a fixed sum upon diagnosis, drug policies reimburse actual expenses, meaning that if a person holds multiple drug policies, they do not receive double payments. In the case of "Healthy Together," about 300,000 Histadrut members were insured without direct cost to them, and many may be unaware they hold this coverage. For insurers, this scenario is ideal: theoretical double insurance rates rise, but actual claims decrease as insured individuals tend to use the private insurance they actively pay for, boosting insurers' profit potential.