Israel: #12 in the 2024 World Index of Healthcare Innovation

Introduction

In the 2024 World Index of Healthcare Innovation, Israel ranks 12th and leads Asia with an overall score of 50.62. The country demonstrates consistent performance across all measured dimensions, particularly excelling in Fiscal Sustainability, with high marks on national solvency and public healthcare spending. Israel also punches above its weight in Science and Technology,  largely attributed to its strong scientific community and world-class universities.

However, Israel’s rank on Quality slipped to 23rd this year. Despite initiating a robust COVID-19 vaccination campaign, questions remain about the country’s preparedness for the next pandemic. Additionally, Israel has faced challenges in reducing hospitalizations, ensuring patient safety, and maintaining enough medical staff to meet the needs of its residents. And while Israel delivers affordable health insurance, a high percentage of Israelis experience catastrophic health expenditures and high out-of-pocket spending, all while experiencing restricted access to the newest medical treatments and breakthroughs.

Background

Healthcare in Israel is deeply rooted in the country’s history, with its insurance system predating the establishment of the state itself. The nation’s four major health insurers—Clalit, Maccabi, Meuhedet, and Leumit—originated in the first half of the 20th century. These organizations were initially inspired by Germany’s sickness funds and have evolved considerably over the decades. By the early 1990s, over 98 percent of Israeli residents had health insurance coverage.

In 1995, the Israeli healthcare system underwent a significant reform based on the recommendations from a commission led by Shoshana Netanyahu. To cover the uninsured population, the government mandated enrollment in one of the four private insurance funds. This system allows enrollees to switch plans every six months, encouraging healthy competition among the providers. The Ministry of Health plays a crucial role by annually publishing a standardized list of benefits and a baseline prescription drug formulary that all insurers are required to offer. As of 2024, approximately 85 percent of Israelis have opted for supplemental insurance to cover services beyond the standard benefits package.

The structure of Israel’s healthcare system combines compulsory health insurance with a competitive market for supplemental coverage. This hybrid model ensures basic universal coverage while allowing room for additional services tailored to individual needs. The Ministry of Health’s regulatory framework ensures consistency in the benefits offered, maintaining a balance between competition and standardization.

Israel is also recognized for its innovative healthcare sector, led by Teva Pharmaceuticals, the world’s largest generic pharmaceutical manufacturer. Teva contributes significantly to both the local and global markets with an extensive range of over 3,500 generic and branded drugs. Israel’s commitment to healthcare innovation is further evidenced by its high healthcare expenditure, which accounted for approximately 7.6 percent of its GDP in 2023, and a growing number of healthcare startups, which have increased by 20 percent in the past year.

In addition to its robust insurance model and pharmaceutical innovations, Israel’s healthcare system is known for its integration of advanced technologies and a proactive approach to medical research. This forward-thinking stance has positioned Israel as a leader in medical innovation and patient care standards on the global stage.

Dimension Performance

Quality

Israel ranks 23rd in Quality. Initially, Israel received global acclaim for its rapid and efficient COVID-19 vaccination rollout, which effectively controlled the pandemic’s spread early on. However, the virus eventually penetrated the country’s defenses, leading to the implementation of moderately stringent lockdown measures.

Significant improvements have been made in hospital occupancy rates, a key infrastructure metric. Additionally, Israel is a leader in healthcare transparency, topping the rankings in this area. The country also excels in cancer survival rates and receives commendable scores in cardiovascular acute care. Despite these strengths, Israel struggles with a severe shortage of nurses, ranking near the bottom, just above the worst performing health systems in the Index.

Choice

Israel ranks 17th overall for Choice, driven by its score in freedom to choose healthcare services (13th) and an unlimited choice of providers. In addition, insurance premiums are low among the nation’s four insurers, making Israel’s universal coverage system among the more affordable in the Index. It achieves this, in part, by restricting access to the latest treatments (16th), though the country’s score on this element has improved in recent years. Israel ranks the second worst in the Index for the percentage of households that face catastrophic levels of healthcare spending, defined as spending greater than 25 percent of household income.

Science & Technology

In Science & Technology, Israel performs well (11th) for its size. Although the country approves relatively few innovative drugs through its Institute for Standardization and Control of Pharmaceuticals, it nevertheless performs well on medical advances (14th), driven by a robust number of healthcare patents. Furthermore, Israel excels in scientific discoveries (5th), boasting an extensive array of cited research and numerous Nobel laureates, which places it alongside nations like Germany and France. Demonstrating the effective synergy between Israel’s scientific community and its private healthcare system, a notable study by Maccabi researchers in August 2021 tracked COVID-19 incidence among individuals who had previously contracted SARS-CoV-2 compared to those vaccinated with the BioNTech/Pfizer vaccine, gaining widespread recognition. Israel also shows considerable progress in health digitization, ranking 14th, reflecting its integration of technology in healthcare.

Fiscal Sustainability

Israel ranked 8th in Fiscal Sustainability in the Index. The country performs well in limiting public healthcare spending, securing the 8th spot, although its growth in public healthcare spending (16th) has accelerated in recent years. Notably, Israel has shown significant improvement in national solvency, where it ranks 9th. This improvement is partially attributed to Israel’s demographic structure, which supports higher healthcare spending for its aging population. Additionally, proactive measures to curb new debt prior to 2020, coupled with an economy that suffered less contraction during the pandemic than others, have placed Israel in a stronger fiscal position for the future.