Some Good News and Some Less-Good News about Israel’s Healthcare

June 5, 2019

4 min read

The Taub Center for Social Policy Studies – a prestigious independent, non-partisan research institute in Jerusalem – publishes each year a report called A Picture of the Nation. Written by Taub Center president and Bar-Ilan University economics Prof. Avi Weiss, it holds up a mirror to the face of Israel, showing both its good and not-so-good news and presents up-to-date data on Israel’s society and economy.

The report supplies decisionmakers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in the hope that it will influence the country’s decision-making process and advance the wellbeing of all Israelis. 

The 114-page report paint a complex picture of Israeli society, including improving trends alongside challenges that the next government will face. Israel has a higher birth rate, a high employment rate, and high education levels, as well as an improvement in the standard of living. In contrast, student achievements on international tests remain relatively low (although they have improved over time), the health system is facing difficulties as inequalities in accessibility grow, and it is more difficult for households to lift themselves out of poverty than in other OECD countries.

In the field of health, the report noted that Israel’s fertility rates break records, being unusually high relative to other developed countries, even among Israel’s secular and religiously traditional Jewish population but especially among the Arab and the ultra-Orthodox (Haredi) Jewish sectors.

In 2015, the Total Fertility Rate (TFR) was 3.1 children per Israeli woman, which places this country, by far, at the top of OECD countries.

The source of the rise in TFR is mostly secular and traditional Jewish women; their TFR has never fallen below 2.2 (which is higher than all the other OECD countries) and has actually risen over the past 20 years.

A unique combination of a high standard of living and high TFR: in countries where the per capita GDP is similar to Israel’s, the TFR level is much lower (1.24-2.02 children per woman), while in countries with a similar TFR level to Israel’s, the average per capita GDP is one-fifth of Israel’s. 

Surprisingly, the rise in mother’s age at first birth does not translate into a lower fertility rate among Jewish women in Israel: between 1994 and 2016, the average age at first birth rose by about three years among both Christian and Druse women and by about one year among Muslim women, and total fertility rates showed a corresponding decline (by about 6%, 41%, and 30%, respectively). In contrast, among Jewish women, the expected relationship between age at first birth and TFR is severed: age at first birth rose by about 2.8 years while the TFR also rose, by about 0.4 children.

More educated Jews in Israel do not have fewer children: corresponding to worldwide trends, among Arab Israelis, the highest fertility rates are among those with the lowest education levels, while those with a university degree have fewest children. In contrast, among non-Haredi Jewish women, those who complete high school or college have the same fertility rates.

Unfortunately, healthcare expenditures have increased relatively little: since 1995, the percentage of GDP spent on healthcare remained about 7% while in the OECD countries it increased from 7% to 9% and to 11% in those countries with similar healthcare systems to Israel. The rapid aging of the Israeli population alongside rising physician wages will probably require a rise in the share of government expenditure to prevent the current levels of care from deteriorating. 

However, the relatively low public investment in healthcare has given Israel the reputation of having a very efficient system, while the population enjoys longevity and low infant mortality rates; even the World Health Organization has praised this country for this. But lack of adequate investment does produce too-long queues for medical consultation with specialists and patient beds in hospital corridors, especially during the winter. In addition, residents of the social and geographic periphery often have to go to central hospitals to get specialized care.

Israeli medical schools, all public, teach at a very high level, and exams for Israelis and new immigrants who study abroad are rigorous so that lower-level physicians are unable to enter the system. Physician wages and the costs of healthcare are rising. Between 2011 and 2018, the Healthcare Price Index rose by about 9% while the Consumer Price Index rose by only 4%; the increase was mostly due to rising physician wages.

In Israel, there is a common practice of referring patients from the public system to the private one, and physicians have an incentive to limit their work hours in the public system to have more time for their private practices. This creates wage pressure in the public system: between 2011 and 2017, the wages of physicians in the public sector increased by about 42% (in contrast to an increase of about 15% in the average market wage).

In Israel, there are fewer hospital beds per 1,000 population than in the OECD: Israel has three beds per 1,000 population versus an OECD average of 4.8. The number of beds per 1,000 population is declining – in Israel and in the other countries examined – largely as the result of technological changes.

Israel leads in terms of bed occupancy rates among the OECD countries (except for Ireland): 94% in 2016 (versus 75% on average in the OECD). In contrast, the average length of hospitalization is shorter in Israel: 5.2 days versus an OECD average of 6.7 days. This leads to crowding and long waiting times even in emergency rooms.

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