Was Romney Right About Israel’s Health Care System?

On his visit to Israel on Monday, July 30, Mitt Romney, the presumptive Republican nominee for President, praised Israel’s healthcare system. In particular he noted the how much more expensive healthcare is in the United States, comprising 18 percent of our gross domestic product (GDP), compared to Israel’s 8 percent. And, he said, Israel is “pretty healthy.” Do we have something to learn from Israel?

Israel’s Healthcare System

An individual mandate and managed care. Since the enactment of the national health insurance program in 1995, everyone is required to join one of the four nonprofit associations, sometimes called “sick funds,” which function as health maintenance organizations (HMOs) do here. In fact, on its English site, the Ministry of Health calls the associations HMOs. All plans offer the same mandatory benefits.

Guaranteed coverage. No one can be denied coverage. No one pays more for coverage because of health status.

Government funding. Individuals do not pay premiums to the associations. The government makes capitated payments, which are adjusted for age and health status. The payments come from taxes.

Defined benefits.The benefit package, called a “market basket,” is set by law. It includes professional services for diagnosis and treatment of disease or injury to all body systems. Some services often excluded or limited in the United States are covered, such as outpatient rehabilitation, psychology, social work and mental health, and diagnosis and treatment of infertility. Treatment of children with developmental disorders, including autism, is covered. Adult dental and vision services are excluded from the basic market basket.

Supplemental coverage. The HMOs may offer coverage of additional services not included in the basic market basket. Fees for this “complementary insurance plan” are set by regulation and vary only based on age. They may include a wider choice of providers or more liberal formulary.The HMOs choose the additional services to offer; they may not change charges or covered services without government approval.

Long-Term Care. Rehabilitative services that help people remain in the community are, at least to an extent, part of the basic market basket. Long-term institutional care involves a separate application and functional evaluation. Both the patient and spouse must commit to payment. If the income and resources of the patient and any spouse are insufficient to cover the required cost sharing, the patient’s adult children also must commit to payment. The amount of their contribution is determined in light of their circumstances, for example, single parents, military service.

Differences in Spending Patterns.

Mr. Romney is correct that the United States per capita spending on health care is more than twice that of Israel. According to the Organization for Economic Cooperation and Development (OECD), in 2010, health care comprised 7.9 percent of gross domestic product (GDP) in Israel, and 17.6 percent in the United States. Per capita spending was $2,165 in Israel, and $8,233 in the U.S. In Israel, about 60 percent of the healthcare spending came from the government, while the U.S. government’s share was 48.2 percent. The U.S. spent more in absolute dollars than other governments, however, because our costs are so much higher.

We have many more CT scanners (40.7 per million people) and MRI units (31.6 per million) than most other OECD countries (22.6 and 12.5, respectively), far more than Israel, with 2 CT scanners and 9.2 MRI units per million.

Differences in Health Status

Mr. Romney also is correct that Israelis are, on average, healthier than Americans. A child born in 2010 in Israel has a life expectancy of 81.7 years, but a child born the same year in the United States could expect to live 78.7 years, below the OECD average of 79.8. Similarly, the most recent available U.S. infant mortality rate was 6.6 per 1,000 births in 2008. Israel’s was 3.7. Obesity rates differ, too— 28.1 percent in the U.S., 16.0 percent in Israel, in 2010.

In the end we spend more, but we perhaps we’re not getting what we pay for.