In February 2016, in another month, the health insurance reform initiated by the Insurance Supervisor, Ms. Dorit Salinger, will take effect. Insurance companies are launching a marketing offensive to recruit as many customers as possible to existing insurance policies before the reform is approved. According to insurance salespeople from the insurance companies, it is advisable to hurry and get the insurance today, before the reform is approved, which will 'greatly" worsen the situation for policyholders.

Before we get to the reform itself, there's a strange issue here. Let's say you were a business and the Treasury intended to raise the price of the product you sell. Would you rush and sell all your inventory before the expected price increase, or would you wait in the hope that no one would buy today and you could sell it for a higher price in a month?

So, no, it's obviously not strange. Insurance companies fought the reform and are now looking to recruit as many clients as possible before its approval, not for the benefit of the clients, but for their bottom line.

What's in the new reform?

First, the reform addresses only one component of health insurance: private surgical coverage. Within this component, the reform changes the rules in three respects:

Insurance coverage – what it includes

Today, every insurance company sells insurance with various surgical components, and the customer has no option to compare between the components, therefore there is no price competition. Obviously, we are more expensive. We analyze you with anesthesia, and with the competitors, you will suffer such pain that you will regret not having paid an additional 200 shekels per month. Think the example is far-fetched? Wait for the rest.

 After the reform, the policies will be uniform and insurance companies will compete on the price at which they can offer these policies.

Choosing a surgeon

Currently, insurance companies work with a list of doctors (each company with a different list) or allow the insured person to choose any doctor. After the reform, there will be a single list of doctors from which the insured can choose. Insurance companies claim that this change harms customers, but it is expected that most currently practicing doctors will be included in the authorized doctor lists (as this is their livelihood), so for the customer, there is no deterioration here.

Deductible in the event of surgery

Today, many surgical insurance policies are sold with no deductible for the insured. The "threat" from insurance salespeople is that after the reform, there will be a deductible in case of surgery. This is true, but it is not an effective threat. Personally, I prefer to pay less each month and then pay a not-so-large deductible in case of an insured event. In fact, in the current situation, I pay the "deductible" every year that I am healthy through the higher insurance premium.

Optin Architect

Whole life insurance or term life insurance

Today, when purchasing health insurance, it is a "contract" that the insurance company is theoretically not allowed to change. After the reform is implemented, the insurance will be limited to two years, and every two years the insurance company will be able to do two things:

1. Change the insurance coverage – uniformly for all insured individuals.
2. Raise the price by 20% – for all policyholders, provided that approval has been received from the Insurance Commissioner.

These changes actually align with the existing situation for those insured through their workplace – group insurance, which covers about half of those with private health insurance.

The argument of "contract" versus the possibility of change is familiar to anyone who has spoken with an insurance agent about pension security in recent years. For years, insurance agents sold us executive insurance policies as "contracts" in contrast to pension funds which have a modifiable "regulations." In general, the "contract" was indeed more rigid, but insurance companies know how to price their risks and they charged significantly higher commissions on executive insurance policies compared to pension funds.

Here too, the claim that having an old insurance policy with a fixed price versus a new insurance policy with a variable price is a claim that stands on an unstable foundation:

• The current "fixed-premium" insurance is significantly more expensive than what insurance will cost after the reform. So far, insurance companies have announced a price reduction of 30%.
• An increase in the tariff will require the approval of the Insurance Commissioner and the "agreement" of all competitors to the price increase, otherwise competition will prevent the price increase. It is precisely this point that the Treasury is building on – competition that prevents a price increase is problematic due to the small number of insurance companies in Israel.

However, it should be noted that insurance companies claiming to offer "fixed prices" on existing policies are not being entirely accurate. The world of medicine is constantly changing and developing. A fixed cost – fixed coverage means that newly developed technologies are not included in the existing insurance. To add coverage for new technologies, the insured person is required to pay more money regularly. Personally, I canceled my health insurance after a conversation with an insurance company salesperson who asked me to add money each month to include non-surgical treatments in the insurance. For example, a herniated disc in the back often required surgery, with all the pain and risks involved. Today, laser treatments can often avoid the need for surgery. Clearly, laser treatment is much cheaper than an operating room, with an anesthesiologist, surgeon, operating room nurse, and a period of hospitalization and rehabilitation after surgery, compared to laser treatment. Why should the insurance company demand additional payment for a treatment that costs them less money and which they actually have an interest in being performed instead of surgery?

Very simply, the consideration is commercial. The insurance company knows that surgery is a painful and dangerous matter and that the insured will prefer to avoid it, so this is a business opportunity to increase revenue. Do you remember the surgery with anesthesia/without anesthesia from the beginning of the article? Alternative surgery is precisely the point.

So when the insurance agent claims that the existing "fixed-fee" plan is, of course, incorrect. There will always be additional features that require an extra fee.

Parts insurance instead of one "package"

Currently, health insurance plans not provided through an employer are sold as packages over which the customer has little, if any, control. Following the reform, insurance companies are required to price each component of the package and allow customers to choose which components they want and which they do not. This is similar to the change that was imposed on cable companies in the past. In the early days, cable companies sold a single package with dozens of channels. Don’t speak Arabic or Russian? That’s your problem—don’t watch that channel, but pay for it anyway. Today, cable companies are required to also sell a small channel package at a lower price.

The discussed change is excellent for customers because it allows everyone to decide what to insure based on their ability and other insurance policies they have. Do you have cheap insurance for surgeries abroad through your workplace? Then, with private insurance, buy insurance for medications but without overseas transplant surgeries. And so on.