• Spending overview
• Policy overview
• Diseases overview

Spending overview

Israel spends a generous share of national income on healthcare by international standards—8% of GDP in 2008, a larger share than Japan but considerably less than the US and Germany. Healthcare spending as a proportion of GDP is estimated to have risen in 2009, reflecting the poor performance of the economy.

Four non-government, not-for-profit healthcare organisations provide medical services. Residents are required to register with one of the funds, which must supply a standardised healthcare package. They also offer supplementary insurance for health services, such as dentistry, which are additional to the basic package. Around 70% of the population take up this option. Around 25% of Israelis also have private health-insurance policies offered by insurance firms. Government expenditure (through health taxes and direct government spending) accounted for 56% of all health spending in 2008, slightly lower than in western European countries such as France and Germany, with the remainder provided by the private sector.

However, overall, healthcare costs are modest in Israel and much of the "private" spending is accounted for by co-payments with the health funds on medications, by dentistry and by the cost of the supplementary insurance, rather than by costly procedures. Nevertheless, this does mean that access to some services is out of bounds to those less well-off. With an ageing population and rising disposable incomes, private cover is likely to rise. The public sector will continue to provide the majority of healthcare services and spending throughout the forecast period, but its share is likely to fall modestly. The role of the private sector in providing care will grow, as the government seeks to gradually introduce greater privatisation as part of a general process of fiscal consolidation. This will, however, encounter considerable political resistance, given Israel's tradition of public healthcare provision, as well as public concerns about relative poverty.

Policy overview

A key piece of healthcare legislation is the National Health Insurance Law, which took effect in 1995 and defines the healthcare services to which Israel's citizens are entitled (subject to membership of one of the four health-insurance funds). The law has encouraged competition by removing obstacles to movement between funds. Nevertheless, the law is widely regarded as having failed to remedy many of the underlying problems of the health sector—although services have improved since it was passed. Further government revisions are likely to encourage more restructuring and improve the quality of care and may involve greater privatisation. Importantly, the government has taken steps to eliminate the operating deficits of the health funds, mirroring its pension fund reforms.

Although the health funds are not obliged to provide preventative care, they are becoming increasingly interested in screening for early signs of disease to avoid the potentially higher costs of treating illnesses at a more developed stage. This has been encouraged by the government, which in 2004 established a publicly funded permanent research project at Ben-Gurion University to compare the performances of the four funds in preventing disease.

Plans exist to reform the state-run hospital system, either by privatisation or decentralisation, turning hospitals into financially self-reliant units in a bid to curtail operating deficits and to increase price and service competition in healthcare provision; these medical institutions may be allowed to provide health services in competition with the health funds. However, progress has been slow so far, and even if these plans are implemented, it will be several years before the effects are felt.

Diseases overview

Life expectancy is high, at 80.5 years in 2007 (78.5 for men and 82.6 for women). The infant mortality rate—at 4.1 per 1,000 live births—is comparable with other developed economies. This is despite the continued higher incidence of birth abnormalities in certain poorer sectors of the population—particularly among the Haredi (conservative Orthodox Jewish) and Arab populations—and poorer access to healthcare facilities in those communities. The prevalence of diseases that are affected by obesity and other lifestyle issues, such as diabetes and heart disease, has risen in recent years; diagnosed cases of diabetes have risen by 10% in the past two years alone.

Life expectancy rates are likely to rise and infant mortality will decline during the forecast period, albeit very slowly, given the already high standards in the country. Although life expectancy is high, the problem of an ageing population is not as acute in Israel as it is in many industrialised countries, where a shrinking working population has to support a rapidly growing retired population. This is partly because of high levels of immigration, as well as above-average fertility rates compared with other developed economies. Population growth averages around 1.8%.