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Massachusetts health care — wonky, with a healthy dose of reality

A Peek at the Israeli Health System I

A Peek at the Israeli Health System I

March 17, 2007

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