Reforming the Israeli Health System: Findings of a 3-year Evaluation

Israel, like many other European countries, has recently reformed its health care system. The regulated market created by the National Health Insurance (NHI) law embodies many of the principles of managed competition. The purpose of this paper is to present initial findings from an evaluation of the first 3 years of the reform (1995-1997) regarding the implementation of the reform and the extent to which it has achieved its main goals. The evaluation was conducted using multiple quantitative and qualitative research tools: interviews with key informants; analysis of documents and sick fund financial statements; analysis of trends in sick fund membership; and population surveys conducted in 1995 and 1997 to assess the impact of the reform on outcome measures related to level of services to the public. Data from the evaluation show that the NHI law achieved a considerable number of its goals: to provide insurance coverage for the entire population, to ensure freedom of movement among sick funds, and to standardize the way resources are allocated to sick funds. The incentives that are embodied in the law have encouraged the sick funds to improve the level of services provided to the average insuree, and to develop services in the periphery and for some of the weaker populations. From the financial perspective, concerns that NHI would lead to a rise in the national health expenditure were not realized as of 1997. In the wake of NHI, there has been a decline in the age adjusted per capita expenditure in three sick funds, with no reports by insurees, at least through 1997, on a decline in satisfaction or level of service. However, the Israeli experience shows that regulating competition does not necessarily lead to economic stability and equality. Regulating the competition also did not solve some of the major policy issues in the Israeli health system including level of resources allocated to health, organizational structure of the hospital system, manpower planning and the extent of government involvement in system. Additional policy changes may be needed to resolve these issues. Up-to-date information is essential in helping policymakers track the process of reform implementation and results, and identify problems which need to be addressed in the future.