The political economy of healthy system reform in Israel

On June 15, 1994, the Israeli Parliament voted to enact the National Health Insurance bill (NHI). The bill marks the end of a process that lasted for virtually as long as Israel's almost 50 year history. Israel's attempts at health reform began long before the current spate of reforms in many Western countries. Faced with many of the same problems of access, equity and cost control common to many of its counterparts, Israel initiated a reform process based on the recommendations of a prominent State Commission of Inquiry into the Israeli Health System (the Netanyahu Commission) which reported to the Government in 1990. The Commission's proposals were based on a diagnosis indicating that the major problems of the system stem from the lack of clarity regarding the rights of citizens to health care, the lack of a clear allocation of responsibility and accountability among government, insurance or sick funds, and providers in the system, and undue centralization of system operations. This diagnosis led to three major planks for reform: (1) enactment of national health insurance legislation granting a basic package of care to each citizen and hence bringing most of the system's finance under public auspices; (2) divesting the Government from the organization, management and provision of care; hence integrating the management of preventive and psychiatric services provided by the government with the primary and other services provided by sick funds, and granting financial and operational independence to at least government hospitals; and (3) restructuring the Ministry of Health. As is often the case in public policy, more consensus surrounds the diagnosis than the solutions. As a result, nearly four years of implementation efforts have only recently resulted in a major breakthrough. In this paper we make an effort to outline the inherent weaknesses of the Israeli health care system that have led to the crisis in the mid 1980s, summarize the recommendations of the State Commission for structural change in the system, and review the politics of implementing the recommended reforms.