Healthcare in Israel: An Overview
Author: Dov Chernichovsky Policy Research

Israel’s current health indicators are quite good, but they reflect past investments in the healthcare system. Today, there are signs of a worsening in the relative health of Israel’s population, and the situation is likely to deteriorate further unless changes are made in the level of health funding and in the system’s public-private mix and its regulation.

  • The share of national expenditure on health out of Israel’s GDP was about 7.4% in 2017, compared to an average of nearly 9% in the OECD and 11% in European countries with health systems similar to Israel’s. The share of public expenditure out of total expenditure on health stands at about 63% in Israel, compared to 73.5% in the OECD, and 78% among countries with similar systems.
  • Since 1995, per capita health expenditure in OECD countries has increased on average by 2.5 times, and in countries with health systems that are similar to Israel’s, they have increased by about 3 times. In Israel, however, per capita health expenditure has barely doubled over the same time period. The growth in health expenditure was similar to the growth in GDP per capita – about 1.7% a year, on average, since 1995. However, when taking into account changes in healthcare prices relative to the Consumer Price Index and increased consumption rooted in changes in the age structure of Israel’s population, the growth was only 0.9% per age-adjusted standardized person.
  • The low level of funding, as well as the high share of private funding, inhibits Israel’s ability to maintain its good health status among the developed countries. In addition, the rising share of private health funding widens gaps in the accessibility of medical services for various population groups and increases health costs.
  • The relative increase in health prices is high, and stems, at least in part, from the public-private mix that has developed in the system, and the effect of this public-private mix on physicians’ wages. Physicians’ wages rose by about 42% between 2011 and 2017, compared to an increase of about 15% among other salaried employees in Israel. This increase also stands out in international comparison. One main reason for this is that doctors can refer patients from the public system to their own services in the private system, where they can charge higher prices for treatments that could largely be administered through the public system as well. At the same time, this phenomenon means that doctors are spending less time working in the public system.
  • Israel can improve the state of its healthcare system by regulating the provision of privately funded medical care relative to publicly funded care, based on existing models (already in effect in various countries) of either separating the two systems or unifying regulations across them. The two models do not deny access to private healthcare, however, at the same time, they do not allow the two parts of the system to overlap for the same treatment, as is the case today.