Medical loss ratio as a potential regulatory tool in the Israeli healthcare system

Table 1 Characteristics of the voluntary health insurance market in Israel

Market segment	Health plans	Group commercial	Individual commercial
Legal framework	National Health Insurance Law (1994)	Insurance Contract Law (1981) Insurance Business (Control) Law (1981)	Insurance Contract Law (1981) Insurance Business (Control) Law (1981)
Regulatory Authority	Ministry of Health	Ministry of Finance	Ministry of Finance
Medical underwriting is legally possible	No	Yes	Yes
Eligibility	Health plans’ enrollees	Organization (group) members	Whole population
Premium level	Community rating	Community rating	Risk adjusted
Contractual horizon and flexibility	Short-term, periodically modifiable (both premium and coverage)	Short-term, periodically modifiable (both premium and coverage)	Guaranteed lifetime contract, relatively non-modifiable
Tax status	Nonprofit	For-profit	For-profit
Number of firm	4	6	10
CR3^†	95%^*	95%^**	69%^**
Herfindahl-Hirschman Index^#	0.35^*	0.40^**	0.21^**
Channel diversification	Single contract to a large group	Single contract to a large group	Different contract to each individual
Vertical structure	Partial ownership of most of providers	Contractual linkage with providers	Contractual linkage with providers

^†The index measures the fraction of market income (paid premiums) that is attributed to the three largest firms.
^#The index is calculated as the sum of squared share of all firms operating in the market. The share refers to the ratio of firm’s premiums income in the total income in the market.
^*Computed by the authors following data from 2013 public report of the Ministry of Health [11].
^**Source: 2013 public report of the Ministry of Finance [12].

ISSN: 2045-4015