Private Expenditures on Healthcare: Determinants, Patterns and Progressivity Aspects

Background: The mixture of public vs. private financing of the healthcare system has important fiscal and economic welfare implications. The consequences of this mixture for access to health services and for equity have become highly debated policy issues. In the first decade of 2000s, Israel experienced a continuous upward trend in the proportion of private financing, reaching a peak of 37-38%, which has subsequently leveled off. The 38% level is significantly higher than the 26% average across the Organization for Economic Co-operation and Development (OECD) countries.

Main Text: A recent paper by Tur-Sinai et al. in this journal shows that private spending by Israelis on health care is positively related to the income of individuals and to the socioeconomic status of their place of residence. This commentary draws attention to studies that integrate into one model both demand-side and supply-side determinants of private expenditures on healthcare. It also discusses inequity.

Conclusions: Overall, the financing of national health expenditures in Israel is slightly regressive, but the progressivity of public financing is almost enough to offset the regressive effect of out-of-pocket payments and payments for voluntary complementary insurance.