Israel's HMO Deficit Drops 44% in 2025 Amid Rising Government Subsidies

The combined deficit of Israel's four health maintenance organizations (HMOs) decreased by approximately 44% in 2025, totaling about 194 million NIS compared to 346 million NIS the previous year. This is according to the Ministry of Health's summary report on HMO operations for the past year. Despite the improvement in financial results, the report highlights the HMOs' growing dependence on government subsidies, rising hospitalization expenses, and a persistent gap between budgetary resources and the system's needs.

Government Subsidies and Structural Deficits

To illustrate the depth of this dependence, report authors note that without government subsidies, the HMOs would have ended the year with a staggering deficit of 4.9 billion NIS, compared to 4.4 billion NIS in 2024. In practice, the total government support transferred to the HMOs in 2025 amounted to about 4.6 billion NIS, representing roughly 5.7% of the health basket's cost. This growth stemmed partly from substantial additions in mental health and support funds designed to stabilize the system.

Performance varied among the funds: Clalit Health Services, the largest HMO in Israel, was the only one to end the year in a deficit, standing at roughly 364 million NIS. However, this represents an improvement from a deficit of about 542 million NIS in 2024. Conversely, other HMOs recorded budget surpluses thanks to subsidies. Maccabi Healthcare Services ended with a surplus of about 111 million NIS, while Meuhedet recorded a significant surge to roughly 53 million NIS. Leumit Health Services registered a surplus of about 6 million NIS.

Rising Health Basket and Hospitalization Costs

The cost of the health services basket continued to climb, crossing the 80 billion NIS threshold in 2025 to reach approximately 80.6 billion NIS—a 6.2% increase from the previous year. This growth is driven by the expansion of the medical technologies basket, demographic growth, and index updates. Meanwhile, hospitalization expenses continued to rise at a real rate of about 3.5%, now accounting for 43% of total HMO expenses.

"The report testifies to an encouraging trend of financial stabilization. Government investment alongside HMO efficiency proves our commitment to the system's resilience, but we must continue adapting the budget base to demographic challenges." — Ministry of Health Director-General Moshe Bar Siman Tov.

Clalit responded that the report reflects responsible management that reduced the deficit despite operating during wartime. The fund emphasized its unique structural challenge as the operator of 14 public hospitals without adequate reimbursement, as well as the need to invest heavily in repairing the Soroka Medical Center following a rocket strike.