Private Expenditure on Healthcare in Israel

National healthcare expenditures can be split into two categories: public expenditures, funded by the state, and private expenditures funded by individuals (either via out-of-pocket payments or insurance premiums). The average monthly household expenditure on healthcare in Israel is NIS 906 (in 2014 prices), which represents about 5.9% of average household income, as compared with 3.9% in 1997.

The public health expenditure per capita rose from NIS 4,819 (in 2014 prices) in 1995 to NIS 6,377 in 2014, with an average annual growth rate of about 1.3%. In contrast private expenditures rose during the same period from a total of NIS 2,247 (in 2014 prices) to NIS 3,634 – an average annual growth rate of 2.6%; in other words, double the growth rate of the public expenditures.

Private spending on supplementary care that is not included in the universal health basket (mainly dental care) and for parallel services (i.e., private services for care that is also available through the publicly funded health basket) is higher in places where the availability and use of public services is lower – namely, among Arab Israelis and also to some extent among Haredim. On the other hand, the higher relative spending on parallel and supplementary services among those with higher incomes supports the hypothesis that the public system is insufficient, according to them, either in the type or quality of care provided.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016, edited by Prof. Avi Weiss.