Improving access to essential health care services: the case of Israel.

In a recent article in this journal Simon-Tuval, Horev and Kaplan argue that in order to improve the protection of consumers there might be a need to impose a threshold on the medical loss ratio (MLR) for voluntary health insurance (VHI) in Israel [1]. Their argument is that VHI in Israel covers several essential services that are not covered by the mandatory benefits package due to budget constraints, while there are market failures in the VHI market that justify regulation to assure consumer protection such as high accessibility to high quality coverage. In this commentary it will be argued that in addition to market failures there are also government failures. It is doubtful whether imposing a threshold on MLR is effective because of government failures. It can be even counter-productive. Therefore, alternative regulatory measures are discussed to promote the protection of the beneficiaries. If essential services covered by VHI are unaffordable for some low-income people, government can extend the current mandatory basic health insurance so that it covers all essential services. If there is a budget restriction, the amount of government funds could be increased, or the health plans could be allowed to request an additional flat rate premium, set by them and to be paid by the consumer directly to their health plan. Also, effective out-of-pocket payments could be introduced. Subsidies could be given to low-income people to compensate for their additional expenses under the mandatory health insurance. If these changes are adopted, then the government would no longer be held responsible for access to benefits outside the mandatory health insurance. Accordingly, all VHI could be sold on the normal free insurance market, just as other types of indemnity insurance. In addition, the Israeli health insurance and healthcare markets could be made more competitive by introducing procompetitive regulation. This would increase the efficiency and affordability of healthcare.