Press Release: State of the Nation 2019

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The Taub Center’s Herbert M. Singer Series Annual Report, being published today, offers a socioeconomic snapshot of Israel for 2019. The report contains seven new researches addressing topics in the fields of macroeconomics, employment, education, health, and social welfare – providing an overview of Israel’s present status, policy changes, and challenges – alongside other studies published by the Center over the past year.

The editor of the Report is Professor Avi Weiss, President of the Taub Center and Professor of Economics at Bar-Ilan University.

Selected findings from the State of the Nation Report 2019, by chapter

The Israeli Economy: An Overview
Professor Benjamin Bental and Gilad Brand

In recent years, the Israeli economy has displayed relatively stable growth and a tight labor market. However, the country’s GDP per capita is growing relatively slowly, the fiscal system is subject to increasing pressure, and the budget deficit amounts to nearly 4% of GDP. At the same time, there are signs that domestic competition is intensifying, and that Israeli price levels are approaching those in other developed countries.

In 2019, Israel’s gross domestic product (GDP) is expected to climb by 3.2% – an increase reflecting per capita growth of 1.2%. This is a slightly lower growth rate than in previous years; it reflects low labor productivity and does not allow Israel to bridge gaps vis-à-vis other developed countries.
GDP per worker in Israel relative to other countriesFor the last several years, Israel’s GDP per person employed has, for the last several years, stood at 65% of the comparable US figure, and at 85% of the OECD average. Israel’s poor labor productivity is also related to its low levels of public capital, reflected in a dearth of transportation, education, and healthcare infrastructure.

Half a century ago, Israel’s public capital relative to GDP was almost equal to that of the OECD countries, but it has steadily eroded over the years, and the ratio is now half that of the OECD average. Based on the assessment methods commonly employed in economic research, if Israel’s public-capital-to-GDP ratio were similar to that of the OECD countries, its GDP per person employed (and, as a result, its wage levels) would be about 16% higher, reaching the OECD average.

Israel’s fiscal policy in recent years has caused the country to surpass its legally-mandated deficit and spending limits. The deficit is expected to reach approximately 4% of GDP, a high level that increases the debt-to-GDP ratio at a time when the economy is in good shape and there is no economic justification for a deficit or debt increase.

“The deficit increase and the deviation from spending rules entail budgetary adjustments. However, there are indications of an opposite trend, stemming from the intention to increase defense spending to 6% of GDP. Accordingly, there are concerns that the government’s civilian and social spending will be reduced significantly in the coming years,” says Professor Benjamin Bental, Chair of the Taub Center’s Economics Policy Program.

Recent years have witnessed a steep rise in the income of households in the middle and lower portions of the income distribution. During the period 2012-2017, the net income of households in the middle and lowest quintiles rose at an average annual rate of 4%, versus just 2.6% for the highest quintile.

This trend indicates that growth is “trickling down” to the weaker socioeconomic strata, in contrast to other developed countries, where income growth is concentrated in the upper portion of the distribution. This is due to a rapid increase in labor income in the lower income deciles, owing to a rise in wages and an increase in employment rates. As a result, the past decade saw a steady decline in income inequality in Israel. The creation of vocational training courses and other tools would promote continued labor-market integration and expand employment options, thereby helping to bridge economic gaps.

There is growing evidence that Israeli prices are slowly nearing those in other developed countries. Since 2014, Israeli consumer prices have fallen by about 5% compared with the G7 nations. There also seems to have been a welcome reversal in the way global price level changes manifest in Israeli prices. Up until 2015, price increases abroad raised domestic prices within a few months’ time. By contrast, price reductions abroad lowered Israeli prices to only a limited degree, and quite slowly.

Such asymmetry characterizes many countries, but is more pronounced in Israel. Since 2015-2016, we can discern a change in this pattern; domestic prices now appear to be reacting relatively quickly to foreign prices, with no evidence of asymmetry. “Apparently, the trend reversal stems from growing competition in the economy, following reforms implemented in recent years. However, Israeli price levels are still about 12% higher than what would be expected of an economy with income levels similar to Israel’s,” researcher Gilad Brand explains.

Returns to Skills in the Israeli Labor Market
Gilad Brand

This Taub Center study considers the question of where to focus efforts to improve Israeli labor productivity. Should the aim be to enhance the capabilities of lower-skilled workers, or to realize the potential of higher-skilled workers, for example by promoting high-tech training? International comparison suggests that higher-skilled Israelis are already using their skills to a great extent and are well compensated. In contrast, for those at the lower skill levels, the situation is different: their skill level is very low relative to their peers in other countries, and their integration into the labor market is also less good.

When we compare the hourly wage gap between workers in Israel and in selected OECD countries, we find that, at the lowest skill levels as measured by the PIAAC, the disparity reaches 50%, while at the highest levels it drops to about 15%. That is, the income level of highly-skilled workers in Israel is closer to that of their counterparts in the other comparison countries, while the income of less-skilled workers is very low compared to that of less-skilled workers in other countries.

The smaller disparity at the higher skill levels stems from the fact that Israel’s labor market compensates workers with particularly strong skills (both in high-tech and outside it) to a greater degree than do other countries. For example, the income gap between a very highly-skilled worker and a worker with lower skills in Israel is 33% for men and 27% for women – nearly twice the OECD disparity (16% and 17%, respectively).

About 95% of Israel’s higher-skilled, “exceptional” workers are non-Haredi (non-ultra-Orthodox) Jews – a sector that constitutes less than 70% of the total population. Although the skill and education levels of exceptional Israeli workers are not high in international comparison, these workers are employed in high-paying jobs to a greater degree than exceptional workers in other countries – women and men alike.

Among low-skilled workers the situation is different: their skill level is much lower than that of their counterparts in all other OECD countries (except for Turkey and Chile), despite the fact that their education rates are relatively high – that is, despite their education levels their skills are very low, relatively speaking. For the lower-skilled half of Israeli workers, the return on academic education is close to zero, an unusual finding in international comparison. According to Brand: “This indicates the difficulty of bridging income gaps by expanding access to higher education. The problem probably lies in gaps that emerge at earlier stages of education, meaning that skills need to be improved at younger ages.”
Wage development by experience on the jobWhile the Israeli labor market compensates Jews well for their skills, the Arab Israeli population is characterized by low returns to skill. Beyond that, Arab Israeli workers appear not to be remunerated in accordance with their seniority in the labor market. For example, among non-Haredi Jews, each additional year of seniority translates into an average wage increase of 2.5% (women) or 2.8% (men), while in the Arab Israeli sector the return amounts to only 0.1% (women) or 1.3% (men).

Possible partial explanations may be: the opportunities to obtain skills in occupations that are common in the Arab population are limited, hence their wages do not rise substantially over the years; the Arab population is not appropriately compensated for their skills; the measurement for the returns for experience may be downward biased due to a cohort effect – an ongoing improvement in the employment characteristics of the Arab population which may be masking the true returns for experience. In any case, these findings raise considerable concern that the Arab population is not realizing their skills in the labor market

“The high degree to which the potential embodied by Israel’s higher-skilled workers is realized indicates that attention should be directed toward the country’s less-skilled workers, and to the Arab Israeli population, which does not seem to be fully using its skills  in the labor market – though the fact that Arab Israeli women seem to be integrating more extensively into higher education and employment is cause for cautious optimism,” says Brand.

The Labor Market: An Overview
Hadas Fuchs and Professor Gil Epstein

In 2019, labor force participation and employment rates were high (81% and 78%, respectively) and similar to their 2018 levels and the real wage continued to climb, although at a slower rate than in previous years.

The employment rate of Arab Israeli women has risen in recent years, but in 2019 it remained nearly unchanged. Given this population’s improved education levels and enrollment in higher education, its employment rates can be expected to rise in the coming years. By contrast, the employment rate of Arab Israeli men has remained relatively low, partly because these men retire from the labor market at a relatively young age, and there was an additional decline since 2017.

Haredi women are employed at high rates as well, despite their high fertility rates, and the rates are similar among married and unmarried women. The employment rate of Haredi men (51%) is lower than it was in 2015, and for Haredi men who have studied in kollel (full-time Torah study frameworks) the figure is 31% lower than for those who have not.

Compared with the OECD countries, Israeli men’s and women’s employment rates are close to the median, but with large differences between sectors. Non-Haredi Jewish women and men rank high, but Arab Israeli men and women are near the bottom of the employment-rate scale. Particularly striking are the high employment rates of non-Haredi Jewish women (82%) and of Haredi women (74%), despite relatively high fertility rates (2.6 and 7 children per woman, respectively).

“Women’s employment rates have risen in recent years, especially among mothers of young children. The high employment rate and long work hours of non-Haredi Jews, alongside their high birthrate, make it very hard for Israeli parents to balance work, family, and leisure. Israel ranks fourth from last with respect to work-life balance,” notes researcher Hadas Fuchs.
Average cumulative weekly work hours of parents with children, 2017 Half of Israelis between the ages of 25 and 64 live in households with children under the age of 18; 71% of these households are headed by couples. The share of single-parent households within the population as a whole is small (8%). As of 2017, in 40% of couple-headed households both partners were employed full-time, while in 37% of these households the father worked more hours than the mother.

When we look at the breakdown by sector, we find that in 51% of non-Haredi Jewish households both parents work full-time, versus 25% in Arab Israeli households, and only 13% in Haredi households. In 43% of Haredi households neither partner works full-time, compared with 15% of Arab Israeli households, and just 11% of non-Haredi Jewish households. In Haredi households, the average number of work hours of both parents combined amounts to less than one full-time job, while in non-Haredi Jewish households the number of work hours of both partners combined is nearly double that in Haredi households.

Commuting times also add to the burden borne by working parents; in 2017, the percentage of men who worked outside their localities of residence was 64%, while for women it was 48%.

Given the combination of large numbers of children, long work hours, and lengthy commuting times, only 56% of female workers and 59% of male workers expressed satisfaction with their work-life balance. Overall, work-life balance satisfaction levels of people without children under the age of 18 were found to be higher, while those of non-Haredi Jews with young children were the lowest.

When we look at the age breakdown, employment rates for those ages 25-40 in the population as a whole rise, and fall thereafter. The employment rate of non-Haredi Jewish men increases up to ages 35-39, then drops, especially around ages 65-69, close to retirement age.

Arab Israeli men, many of whom engage in physical labor, leave the labor market at younger ages; their employment rate drops across the entire age range, while that of Haredi men rises to age 50. The employment rate of non-Haredi Jewish women is quite stable until around age 54, while the employment rates of Haredi and Arab Israeli women begin to decline at earlier ages, with a sharp drop from age 50.

The Risk of Automation in the Israeli Labor Market
Shavit Madhala

A mapping of the Israeli labor market shows that, as in other OECD countries, about 15% of existing jobs are at high risk for automation, 54% at moderate risk, and 31% at low risk (a higher percentage than the OECD average). Computers have trouble with certain tasks: ones that require an ability to perceive and manipulate, creativity, and social intelligence.

A large percentage of the jobs at high risk of automation are in the construction and manufacturing sectors, transportation and storage services, postal and courier services, and food and lodging services. By contrast, in sectors such as the arts and entertainment, information and communication, education, and security, which generally require creativity and the ability to solve complex problems, a low percentage of jobs were found to be at great risk of automation.

An assessment by age group reveals that a higher percentage of young people ages 16-24 work in jobs at high risk of automation. This, apparently, is due to the fact that most people in this age range hold temporary jobs. Among Jewish males there was a decline in the percentage of at-risk jobs for men of prime working age, 25-54, versus an increase for the age range approaching retirement, 55-65. Arab men in all age groups hold the highest percentage of higher-risk jobs, compared both to Jews and to the OECD average.

When controlling for sociodemographic variables, we find that the higher the education level, the lower the automation risk. A high school education reduces the risk of automation by 5 percentage points compared to below-high-school education, and higher education reduces the risk by 15 percentage points compared with below-high-school education.

This inverse relationship also holds true when controlling for occupations. Regarding gender, women, especially non-Haredi Jewish women, are at higher risk than men, and when controlling for occupation the gaps widen to women’s disadvantage. This may indicate that women tend to make less use of the skills required for the future labor market than do men in the same occupations.

The employment distribution by occupation indicates large disparities between Arab Israeli and Jewish men; about half of the Arab Israeli men are employed in manufacturing, construction, and machine operation – fields characterized by high automation-risk levels. Also, Arab Israeli men and women were found to have relatively high employment rates in unskilled occupations that do not require high skill levels or training. The Haredi population stood out for its large share of occupations requiring academic training – mainly in the field of education, where automation risk is low.
For the Arab Israeli population, the frequency with which a worker uses skills identified as ones required by the future labor market is low compared to Jews and to the OECD average. Non-Haredi Jewish males use these skills more than do women from all population groups, and more than do males in the OECD and in other Israeli population groups – especially skills related to solving complex problems and planning for others. It was also found that the frequency with which skills required by the future job market are used increases with age, peaking in the 36-54 age range.

There are also gaps between Arab and Jewish Israelis in the propensity to use a computer, an important skill for the future labor market. Only about 43% of the Arab Israeli population use a computer for their work, compared with 77% of non-Haredi Jews.

Present trends and anticipated changes place less-educated and lower-wage population groups, as well as employed persons in the Arab Israeli sector, women, and employed persons in Israel’s southern district, at risk of job loss. One of the main policy tools for accessing and acquiring skills, particularly among vulnerable populations, is the array of state-run vocational training courses.

“In order to create an effective vocational training course system, reliable information is needed on the required skills. The skills survey helps provide a current snapshot from the workers’ point of view; but to complete the picture we need employer surveys that will indicate employer needs, with an emphasis on identifying the skills required by the market,” says Taub Center researcher Shavit Madhala, adding, “Learning new skills is important across the life cycle, but it’s even more crucial at the early stages, through the education system. That’s the optimal point in time when we can work to bridge future gaps and implement policies aimed at preparing human capital for the future labor market.”

The Education System: An Overview
Nachum Blass

Since 2010, Israel’s education budget has grown faster than the number of teachers; the number of teachers has grown faster than the number of classes; and the number of classes has grown faster than the number of students. These developments have made it possible to increase per-class and per-student allocations, improve student achievements, and bridge gaps within the system. In the latest PISA exams there was a decline in the achievements of Arab Israeli students. However, since this result is in direct contrast to other positive developments, the reasons for this decline need to be closely examined.

The past twenty years have witnessed demographic shifts in Israel’s education system: following a decline in the share of students enrolled in the Jewish (secular) state-education system, the share increased during the past decade from 37% to 40%. This was due mainly to a rise in the birthrate and to secularization processes in the religious population.

The state-religious education system maintained its share of students, despite high birthrates, while the Haredi sector’s rapid student-population growth rate decelerated. However, the most striking changes occurred in the Arab Israeli sector, whose share in the primary education system dropped from 28% in 2010 to 24% in 2019 following a decline in Arab Israeli women’s fertility rates.

According to Taub Center researcher Nachum Blass, “The changes point to the difficulty of predicting demographic developments in the education system, and indeed all forecasts have proven to be wrong. In every forecast there is an element of uncertainty, in this case – school choice. Movements of members of the four main groups that make up the system from more to less religious institutions appears to be the principal factor behind the gap between the forecasts and what has actually occurred.”

Another interesting process taking place in Arab Israeli society (still limited in scope), is Arab Israeli citizens sending their children to Jewish educational institutions, in Jewish or mixed localities. As of 2018, there are 24 Jewish schools in which over 10% of the student body is Arab Israeli. The reason for this is a combination of it being difficult for young Arab Israelis to find housing in the Arab Israeli localities, due to a lack of building plans, and their desire to give their children what they perceive to be a higher-quality education.
Total budgets, june 2015 pricesDuring the years 2015 to 2018, the Ministry of Education’s budget increased by 21%. An examination of the budget implementation indicates that few programs grew in 2018 more than the general budgetary increase. The program that showed the highest growth rate was the long school day program (229%), followed by computer, technology and science programs (64%), informal education and Jewish culture (45% each), and Ma’ayan HaTorah education (that serves the Haredi Sephardic population – Shas – 37%).

Between 2014 and 2017, the per-student budget grew by 17% at the primary school level, by 24% at the middle school level, and by 30% at the high school level. The percent increase in the Arab education system was higher than in the Hebrew system, but the Jewish sector budget remains substantially larger.

Students in the state-religious system enjoyed the largest budgets. Israel’s rate of increase in per-student expenditure was higher than that of the OECD (25% versus 9%), and the result is that in primary education, Israel’s per-student expenditure is equal to, or even slightly greater than, that of the OECD. However, it is still considerably lower at the secondary level.

Between 2010 and 2018, the number of teachers increased at twice the rate of the increase in the number of students, and by 50% more than the increase in the number of classes. The average monthly salary rose by 63% and the hourly wage by 34% (there was a hike in the number of teacher work hours). Compared with other academic degree holders, teachers’ wages are low (for example, preschool teacher wages stand at about 85% of the average wage for other degree holders).

Regarding teacher quality, while the percentage of bachelor’s and master’s degree holders rose, the average teacher psychometric exam score remained low. In recent years there has been a rise in both number and share of general college graduates and a decline in the number of university graduates, but there is no evidence that one type of teacher training institution has qualitative advantage over the other.

An important issue examined in the Taub Center study is whether there is a teacher shortage. The data indicate that, except for in specific localities or subject areas, there is no such shortage. The number of teachers increased at a higher rate than the number of students and classes; the percentage of non-certified teachers dropped from 18% in 2009 to 6% in 2018, while the average education level rose; the average number of hours of employment has remained unchanged; the number of students per class dropped; and the number of teacher work hours per class climbed from 52.5 hours in 2006 to about 76 in 2019.

The percentage of math and English teachers teaching “outside their subject areas” also dropped, though the percentage of Hebrew teachers teaching outside their subject areas actually rose.

The Welfare System: An Overview
Professor John Gal and Haim Bleikh

Despite the persistent severity of social problems facing Israel over the past two years, including high rates of poverty and the large number of people in need of social services, Israel’s social spending – which amounts to 17.5% of GDP – has not increased, and remains lower than that of other welfare states. Moreover, this period was characterized by a dearth of new social policy initiatives in the sphere of social security and in social service agencies.

An analysis of social spending according to the division commonly used by researchers in the past decade – social protection (e.g., income support and old age pensions), social investment (e.g., development of individuals’ abilities and skills), and “other expenditures” (such as healthcare system spending) – provides insight into the government’s approach to social policy.

Social spending grew in all three categories over the past two decades, with social investment expenditures showing an increase since 2015, particularly for early-childhood daycare centers and the Saving for Every Child program. This highlights the government’s orientation toward long-term measures aimed at preventing future social ills, rather than merely addressing the current situation.

A comparison conducted by Taub Center researchers between Israel and other countries found that Israel is similar to social democratic welfare states, such as Sweden and Denmark, which emphasize social investment. The Israeli welfare state has a greater tendency than others to invest in improving citizens’ skills, with the aim of improving their situations in the future.

However, an international comparison of social investment spending as a percentage of GDP suggests that Israel’s spending in this sphere is relatively low, ranging from 6.5% to 8% of GDP, versus over 11% in Denmark and Sweden, resulting in a low Israeli ranking. The explanation for this is Israel’s low taxes, alongside high expenditures in other areas, such as defense, which translate into relatively low social spending.
Share of individuals below poverty line, 2015-2017An analysis of the incidence of poverty in Israel shows that the poverty rate, calculated in terms of market income, is lower than the average for other OECD countries (23% versus 28%). However, when the poverty rate is examined in terms of disposable income, Israel tops the chart (together with the US) at 18%, versus 12% for other welfare states. It is clear that Israel’s tax and social security systems keep people out of poverty and reduce the incidence of poverty to a lower degree than in most other OECD states.

Differences in Israel’s financial structure and demographic makeup is a possible explanation for the gap between it and other countries in the degree to which the incidence of poverty is being reduced. In most developed countries, the percentage of senior citizens in the population is high, and pensions depend mainly on public funding, while Israeli seniors’ incomes encompass both public and private components, such as occupational pension funds.

Thus, while Israel succeeded in lowering the percentage of seniors living in poverty between 2015 and 2017 only from 42% (per market income) to 20% (per disposable income), the percentage of seniors living in poverty in the OECD dropped from 69% to 13% during the same period. “These findings, in conjunction with the high percentage of seniors in the population, indicate that, compared to Israel, a larger share of the decline in poverty in the developed countries can be attributed to the senior population,” Taub Center researcher Haim Bleikh explains.

Among the non-elderly population, the generosity of social security programs like income support and child allowance benefits is limited. Despite a rise in the average wage and in the poverty line over the past decade, the sum total of these two benefits has remained stable, and its distance from the poverty line has increased. “The gap between the standard of living of people living in poverty who receive benefits, and the standard of living enjoyed by society as a whole is growing,” says Professor John Gal, Chair of the Taub Center’s Welfare Policy Program.

In 2018, National Insurance benefit spending grew in real terms by nearly 5% compared with the previous year. In the wake of public outcry, the general disability benefit rose by 8 percentage points during the period 2017 to 2019. Spending on this benefit increased by 16% in real terms, even while the change brought about no increase in the percentage of benefit recipients.

Another major change is the universal Saving for Every Child program, which has been in operation since 2017. However, a failure of this program to focus on people living in poverty could potentially weaken its contribution to social mobility among those who grew up in low-income families. Less than a third of parents in the lowest income quintile add money to the state contribution, versus 65% of parents in the highest quintile, who also choose to put the money in higher-yield investment channels. This could perpetuate inequality between the populations and suggests that changes be made to the program.

In 2018, Israel passed the Supervision of Daycare Centers Law, which sets standards and conditions for operating daycare facilities, but the conditions for subsidy eligibility and the limited supply of daycare centers leads to a restricted and differential accessibility to daycare. Even so, spending on this item dropped in 2018 after growing over the last decade.

According to the researchers, this translates into the limited participation of children, especially Arab Israeli children, in the country’s early childhood education systems. If this investment continues to decrease, it will likely have negative consequences for the development of Arab Israelis’ human capital and future prospects for social mobility.

The Healthcare System: An Overview
Professor Dov Chernichovsky

The Israeli population is relative healthy; life expectancy has continued to rise over the past decade and is higher than the OECD average and similar to the average in Belgium, Germany, the Netherlands, and Switzerland – countries that have similar healthcare models to Israel (“similar countries”).

Life expectancy, though, is not sufficient to tell us about function levels and quality of life. Indices of loss of function due to premature death and disease burden paint a more complex picture. Although Israelis fare relatively well with regard to heart disease, stroke, and dementia, with regard to the disease burden due to headaches and diabetes, Israelis are at a relative disadvantage.

In 2018, national expenditure on healthcare out of GDP stood at about 7.45% – lower than the OECD average and lower still than the average in those countries with similar healthcare systems (11%). Even after adjusting for Israel’s relatively young population, expenditure is still low at about 8.4%. In monetary terms, average health expenditure per capita (age-adjusted) in similar countries is $5,700, versus $3,300 in Israel. The public portion out of all health spending is also relatively low – about 64% versus about 78%.
index of healthcare basket prices in 2017The relatively high share of healthcare that is privately financed and the rise in the share of private commercial health insurance expose the system to increased disparities and market failures that manifest themselves in a rise in healthcare prices relative to other prices. “We see a rise in expenditures on voluntary insurance coverage of about 3 percentage points, most of it commercial insurance, alongside a decline since 2014 in the share of supplementary insurance through the health funds,” says Professor Dov Chernichovsky, Chair of the Taub Center’s Health Policy Program.

The majority of insured individuals, primarily those with private commercial insurance and multiple insurance providers, indicate that they use insurance to cover surgeries and their choice of physician (mostly to shorten waiting times) as well as the financing of medicines not available in the healthcare basket. This translates into better health for those who hold voluntary, especially commercial, insurance coverage as well as greater health gaps between those in the center of the country and those in the periphery.

Rising medical prices exacerbate this reality and indicate a decline in the efficiency of the system. In the current decade, per capita expenditure on healthcare rose faster than GDP per capita by about 2 percentage points. This increase compensated for the aging of the population as well as the high fertility rates such that the rise in adjusted per capita healthcare expenditure was about the same as the growth rate in GDP per capita.

Nevertheless, when taking into consideration the rise in medical prices relative to GDP price rises, the adjusted per capita rise is about 13 percentage points less than the increase without this consideration. That is, in real terms, the real adjusted expenditure on healthcare per capita has fallen. The OECD has ranked Israel in fifth place in terms of level of healthcare prices – with prices that are 10% more than the US level, 26% more than the average in similar countries, and 53% more than the OECD average.

“The data break the myth that healthcare prices in Israel are low and present a challenge to policy makers facing systemic failures in the public-private mix,” says Professor Chernichovsky.

In addition, Israel faces a challenge in the field of long-term care. Contrary to the Ministry of Finance’s stance that long-term care insurance can be managed through the commercial market, but in line with earlier research by the Taub Center, as of October 2019 commercial insurers in Israel decided to stop offering long-term care policies outside of those offered by the health funds.

According to this research, based, among others, on international experience, commercial long-term care insurance is not viable because the client base is insufficiently large to accommodate paying out claims and there is actuarial difficulty in predicting the rise in long-term care needs.

“Israel’s achievements in health are impressive, especially in terms of mortality and longevity, but they are likely linked to past investments. The portion of healthcare expenditure is low, with a problematic public-private mix that requires fundamental treatment. The healthcare system in its current situation presents challenges to the national priorities, primarily due to the aging of the population, increasing fertility rates, and a slowdown in the rate of resource allocation by the state,” says Chernichovsky.

The Taub Center for Social Policy Studies in Israel is an independent, nonpartisan, socioeconomic research institute. The Center provides policymakers and the general public with studies and data on some of the most important issues facing Israel with regard to education, healthcare, social services, the labor market, and economic policy. The Center aspires to influence Israeli decision-making processes and to improve the wellbeing of all Israeli citizens.

For additional information, or to schedule an interview, please contact Anat Sella-Koren, Director of Marketing, Communications, and Government Relations at the Taub Center: 050-6909749.