I’m over here in Israel on a delegation sponsored by the Jewish Community Relations Council of Greater Boston. The trip is not about health care, though the 20 participants spent time at the Hadassah Medical Center in Jerusalem learning details of the Israeli health system structure. Difference and similarities are fascinating. In this post, I’ll talk about financing and coverage. In my next, I’ll talk about other issues of concern which connect with US concerns.
Israel last did a major system overhaul in 1995. If it looks like anything, it looks darn like Hilary Clinton’s failed 1993-94 vision of “managed competition.” First, there’s universal coverage (though no employer mandate). Everyone pays an equal proportion income taxes for basic health coverage. Everyone picks one of four HMOs in which they enroll. HMO’s are paid on a capitated (per enrollee) basis by the government. The capitation rate is adjusted only for age – though the government is hoping to correct in the future for health and/or socioeconomic status. Some serious conditions – including ESRD, MS, and AIDs – are outside the capitation formula.
Single payer? You decide. Everyone pays for coverage through taxes. And everyone enrolls in one of four competing private HMOs that manage care and control utilization.
Large numbers of Israelis purchase supplemental coverage for non-covered benefits. And a growing number purchase private insurance outside the structure. There’s also cost sharing/copayments for numerous services, including prescription drugs. The share of health spending paid out of pocket grew from 26% in 1985 to 31% in 2001 and is growing. A recent survey found 23% of those in the bottom income quintile said they avoided treatment because of cost sharing.
Israel resembles Massachusetts on some key variables. Their population is over 7 million while MA’s is 6.4 million. Our land size is pretty close. Then there are differences. They have 23 general hospitals while we have 67. And the biggie – Israel spends about 8.4% of its GNP on health. Don’t have the data for MA, but it has to be bigger than the US rate of 16%. Like most nations, and like MA, their hospital beds per thousand (3.5 in 1950, 2.5 in 2000) and average length of stay (11 days in 1955 and 4 days in 2000) is going down. Unlike MA, the government owns a lot of acute hospitals – about half.
Two general observations. First, on the basics, they put the US system to shame on access and efficiency. They cover everyone at about half the cost. They have a Ministry of Health with the capacity to exert leadership and control with all the controversy that entails in a democracy. Second, despite this, they face many of the same pressures we face – including the impact of cost sharing, what gets covered and what doesn’t, and how to pay for increasing public demands.
Here’s what’s interesting – universal coverage, effective cost control, and a tightly managed/regulated role for private, non-profit HMOs. If we want to get radical, maybe this is a system worth understanding better as a potential model for Massachusetts.
John McDonough
Interesting points by all.
We should further dissect the concept of Israel having achieved a greater percentage of coverage. What is being covered? It is easy to cover everyone if you offer them a very limited and sub-par care, and achieve a better coverage statistic. Are they actually getting better care?
And for those advocates of universal coverage… the full range of what can be considered under the umbrella of the term coverage if exponentially greater than what is feasible given all human and nonhuman resources. Where do you all think the line should be drawn as to what we do or do not cover?
Our Declaration of Independence claims for us “life, liberty and the pursuit of happiness”. The British North American Act, essentially Canada’s constitution, promises citizens of that country “peace, justice and good government”. I wonder what Israel’s foundational documents could offer by way of insight into their system.
Great observations by everyone. I wonder, though, if the Israeli system is so good, why a parallel system of private insurance has arisen, and I note that costs continue to rise, too.
I am guessing that the rationing that occurs — either by diagnosis or by delays in treatment or by some other measure — means that people who can afford better service choose to buy it. This has also happened in England and other countries with a national system of sort or another.
In Denmark, for example, the primary care system is superb, with universal coverage and nationwide electronic medical records and 24-hour availability of doctors standing by at telephone call centers to help you. But you could be out of luck if you need inpatient care in late November of December, when the NHS has outspent its legislatively-approved annual budget and has to delay many new cases until January.
Of course, it would be easy to point out equally important, but different, criticisms of our own system. Please don’t take my comments to mean that we are ideal.
What is interesting to me is that no one in the world seems to have gotten this “right” (if there is a “right”.) Over time their systems start to look more and more like ours, while ours starts to look more like theirs! As John notes, maybe we can eventually take the best of ideas from the various jurisdictions and pull together a plan that is better than all of them. (Might be harder, though, here than there, where they got a fresh start in 1948 by creating a whole new country and where a more socialist system of government and lifestyle was built into the fabric of society.)
To follow up on my last post, I think it is interesting to note that healthcare is expensive in Massachusetts even in comparison to other states though the insurance market in the state is dominated by NON-PROFITS. On the hospital side, the large for profit chains have little or no presence as far as I know. Whatever is driving the high costs, it apparently cannot be blamed on greedy for profit insurers or hospitals. I’m not sure how the state to state comparisons would change if we excluded the money spent on medical research by academic medical centers which Massachusetts has more of than most other states relative to its population. Perhaps Nancy Turnbull could speak to this. I would be interested to hear her perspective.
The WHO report on Israel’s system matches BC’s and my observations that that nation’s system isn’t in great shape. I find myself drawn to questions about how Israel’s system evolved. Israel is such a new nation but populated by such an ancient people. Perhaps John will have some more interesting things to say on this. I also wonder how Israel will keep their system running. It seems to me that Israel is very similar to the US in terms of its embrace of technology as a cure for mankind’s ills and this will hamper them as it does us. And finally, I wonder if there are important lessons for Massachusetts as we push through–especially these next few months–our own healthcare reforms.
All in all, John, you’ve started a nice little fire here. Thanks!
According to the link that Nancy provided, the Health Tax finances 25% of healthcare in Israel. It is set at 3.1% of wages up to half the national wage, 4.8% between 0.51 and 5.0 times the national wage and zero beyond that. This implies that, other things equal (which they never are, of course), to finance 100% of healthcare would require a payroll tax of 12.4% up to 0.50 times the national wage and then 19.2% up to 5.0 times average wages even though the overall system spends only 8.4% of GDP though per capita GDP is half or less of the U.S. level.
In the U.S., I’ve seen estimates that peg the cost of employer provided health insurance at 15% of payroll on average. The bottom line, to me, is that health insurance is expensive any way you slice it because healthcare is expensive. I think would be well served if we put as much effort into figuring out how to safely reduce utilization as we are putting into how to reduce the number of uninsured. My favorite approaches in this regard include: (1) replacing the current malpractice litigation system with health courts to reduce defensive medicine, (2) more widespread use of living wills and advance medical directives to reduce futile and often unwanted care at the end of life, (3) electronic medical records to reduce duplicate testing and adverse drug interactions, especially in hospitals, and (4) more robust price and quality transparency tools to help drive patients to the most cost-effective doctors, hospitals, imaging centers, labs, and drugs.
Hi John, In your next post, would you please tell us something about the ways Israel controls health care spending? Sounds like cost-shifting is on the rise, but at 8% of GDP on health care, the country is doing other things as well.
Gerry, here is a link to a 2003 piece on the Israeli health care system by the European Observatory in London, a great source of information about health care systems in various countries. http://www.euro.who.int/document/E81826.pdf.
Nancy
John, I really appreciate the observations about Israel’s healthcare system, but it feels as though it’s way too easy to criticize that system and your reports on it. It even feels unfair–to them and to you!
I look at the 31% out-of-pocket spending rate and see a quickly-failing system. BC’s observations are equally easy to make.
Perhaps the Israeli system has some elements worthy of study. Maybe someone out there has had more up-close contact with it and comment here.
Just what is that same proportion of income that everyone pays in taxes for health insurance? I’m sure the very wealthy would be simply delighted to pay hundreds of thousands of dollars per year in health insurance taxes for a policy that they could buy here for $15-$20K (for family coverage). How does the malpractice system and associated defensive medicine compare between the two countries? How does their system deal with end of life care? How long do they have to wait for diagnostic tests like MRI’s and non-life threatening surgery like knee and hip replacements? How much do doctors earn there compared to here? Are drugs price controlled and, if so, do they have the same access to state of the art medicines (including biologics) that we do? Like everything else in life, there is no free lunch?