Bruce Rosen Ronni Gamzu

Myers-JDC-Brookdale Institute Israel Ministry of Health

Phase 1: confusion

PRIVATE

PRIVATE

PUBLIC

DELIVERY

FINANCE

FINANCE

PUBLIC

DELIVERY

Phase 2: separation

The public-private mix in financing

The public-private mix in delivery

Key directions along which the literature in the field developed

Finer gradations on the finance side

Finer gradations on the delivery side

Identification of additional dimensions of the public-private mix

But no change with regard to the separation issue…

The public-private mix in financing

The public-private mix in delivery

The financing/delivery matrix: A typical layperson's perspective

Private financing Public financing

Private delivery XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Public delivery XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

The financing/delivery matrix: Scholars' point that all options are open

Private financing Public financing

Private delivery

Public delivery

The financing/delivery matrix: An historically significant policy position

Private financing Public financing

Private delivery ******

Public delivery

Has the time come for phase 3, reflecting a more sophisticated and more integrated approach?

Three reasons to develop a more integrated approach

Iterative relationship between finance and delivery

Common causes (alongside distinct causes)

Common effects (alongside distinct effects)

The Israeli case

What do we usually include in "private financing" in the Israeli context?

Supplemental insurance

Commercial insurance

Out-of-pocket payments Note: Some "private financing" goes for the types of services included in NHI, and some for other types of services

Composition of private financing, 2009

Supplemental insurance

19%

Commercial insurance

11% Out of pocket

payments 70%

Composition of private financing, 2009

Private insurance

30%

Dental care 25%

Medications 19%

Other 26%

Key facts regarding the growth in private financing in Israel since 1995 1. Major growth in the private share of total financing

(from 30% in 1995 to 42% in 2009)

2. Private per capita spending grew rapidly while public per capita spending was relatively stable

3. Growth in share of health in household expenditures (from 3.8% in 1997 to 5.1% in 2009)

4. Major growth in per capita spending on private insurance (Increase of 280% between 1997 and 2008)

Per capita spending on health in shekels, 1995 and 2008 (1995 prices)

Total expenditure

Publicly financed expenditure

Privately financed expenditure

1995 6,148 3,982 2,163

2008 7,128 3,956 3,172

Absolute change +982 -27 +1,009

Percent change +16% -1% +47%

What do we usually include in "private delivery" in the Israeli context?

For-profit hospitals (but not voluntary hospitals) and other for-profit institutions

Services of physicians and other professionals that are provided "outside" of public frameworks

Other for-profit services and providers

Note: Some "private delivery" is for the types of services included in NHI, and some for other types of services

Key facts regarding the growth in private delivery in Israel since 1995 1. Share of for-profit producers in National Health

Expenditures up from 24% in 2004 to 28% in 2009

2. Major growth in private medical services in Jerusalem's public hospitals; categorization issue

3. Major growth in the number of operations in for-profit hospitals

4. Public hospitals and health plans increasing involved in for-profit ventures

In comparison with financing, apparently less change and harder to monitor

The financing/delivery matrix (2010; in NIS billions)

Private financing

Public financing

Total

Private delivery

?? ?? 17.1 (28%)

Public delivery

?? ?? 44.1 (72%)

Total

23.4 (38%)

37.8 (62%)

61.2 (100%)

Is there an iterative relationship?

Growth of private

financing

Growth of private delivery

How growth in private financing might contribute to growth in private delivery

Private insurers more willing than health plans to pay the high rates demanded by private providers

Private insurers might cast aspersions on the quality of public providers

Private insurance coverage of expensive privately provided services makes them more affordable to the middle class

How growth in private delivery might contribute to growth in private financing

When for-profit provision becomes more available, visible and normative, households have a greater incentive to purchase private insurance packages

If there an iterative relationship, what is its significance?

Growth of private

financing

Growth of private delivery

Why might we care about the growth in private financing? Equity:

Unequal access to important services Possibility of reduced access to important services

Increased prices and demands for publicly financed services

Erosion of public support for public financing - Less need - Less confidence

Diversion of resources to uses that contribute relatively little to population health

Possible contributor to growth in private delivery

Why might we care about the growth in private delivery?

Drawing away scare manpower from public providers

Cream-skimming: Focusing on profitable services, regions and population groups

Erosion of confidence in public providers

Possible contributor to growth in private financing

But important not to forget:

1. Private financing and private delivery can also provide important advantages

2. The slowdown in economic growth may make privatization more attractive

3. The key question is not whether there should be private elements, but rather what should be their scope and nature

Issues for further consideration How much do private financing (PF) and private provision (PP)

influence one another and what other influences are important?

How much does PF trouble us and why? How much does PP trouble us and why? Of the two, which is the more troubling?

Empirically, what really are the impacts of PF and PP?

If we want to constrain PF, what are the best ways to do so?

If we want to constrain PP, what are the best ways to do so?

Issues for further consideration: Complementary formulation

How much do private financing (PF) and private provision (PP) influence one another and what other influences are important?

How much does PF attract us and why? How much does PP attract us and why? Of the two, which is the more attractive?

Empirically, what really are the impacts of PF and PP?

If we want to expand PF, what are the best ways to do so?

If we want to expand PP, what are the best ways to do so?

What is the broader picture with regard to causes?

Growth of private

financing

Growth of private delivery

Public delivery

Public financing

Demography & health status Economy

Culture Politics

Common causes

Distinct causes

What is the broader picture with regard to impacts?

Growth of private

financing

Growth of private delivery

QUALITY EFFICIENCY

COST EQUITY

Common impacts

Distinct impacts

Summary: A more integrated, phase 3 approach is needed for at least three reasons

1. Iterative, synergistic effects

2. Common causes

3. Common effects And perhaps also common interventions….

Bruce Rosen Ronni Gamzu

Myers-JDC-Brookdale Institute Israel Ministry of Health

The Democracy Index: Five distinct, but related components

1. Electoral process and pluralism

2. Civil liberties

3. Functioning of government

4. Political participation

5. Political culture

If there an iterative relationship, what is its significance?

Growth of private

financing

Growth of private delivery