Israel's 2010 capitation reform and the widening of regional health disparities: A difference-in-differences analysis

Israel's National Health Insurance system exhibits persistent regional disparities in health outcomes. In 2010, the government reformed its capitation formula to allocate additional funding to Health Plans (HPs) serving peripheral communities, aiming to reduce these disparities.

This study evaluated the effectiveness of the 2010 capitation reform in narrowing regional health gaps, as measured by self-reported health (SRH).

Using a DiD research design and longitudinal panel data, we analyzed SRH data from the Israeli Social Survey, which includes approximately 7500 individual respondents annually. Aggregation across 15 sub-districts over 21 years (2002-2022) yielded 315 sub-district-year observations for the DiD analysis. The CBS peripherality index served as the treatment variable. Regression models included sub-district and year fixed effects and controlled for relevant sociodemographic characteristics.

Regional differences in self-reported health between peripheral and non-peripheral areas widened during the post-2010 period. Prior to 2010, disparities had shown signs of narrowing, but this pattern reversed thereafter, with non-peripheral regions experiencing relatively greater improvements in SRH.

The findings indicate that regional disparities in self-reported health, which had narrowed prior to 2010, widened again during the post-2010 period, suggesting that capitation adjustments alone may be insufficient without broader workforce, infrastructure, and effective policy implementation.