Israel does care but since the start of this it has had the difficult job of protecting the entire nation of Israel by dealing with Hamas and it cannot be held to ransom by terrorists so it is not as simpler as they kidnap an Israeli and then in exchange loads of Hamas criminals are released from prison.
On the tunnels they may have announced the possibility of using sea water to help ensure Hamas leaves the tunnels. The hostages are valuable so Hamas probably does not want them dead as they are bargaining chips in Hamas' eyes. Sea water is not the ideal weapons to use although I think Egypt used it in Hamas tunnels being used against it for smuggling. It can get into fresh water supplies.
Destroying tunnels longer term is a better solution but there are an awful lot of them and it is not easy to do.