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The Israeli healthcare system has a few choice lessons for South Africa

By Tim Cohen
28 Mar 2021 2

Tim Cohen is editor of Business Maverick. He is a business and political journalist and commentator of more years than he likes to admit. His freelance work has included contributions to the Wall Street Journal and the Financial Times, but he spent most of his life working for Business Day. After a mid-life crisis that didn't include the traditional fast car, Cohen now lives in the middle of nowhere in the Karoo.

The Covid-19 pandemic constitutes among other things a grand test of global health care systems, and one country stands out as a real winner: Israel.

First published in the Daily Maverick 168 weekly newspaper.

Whether it’s fair to single out the Israeli system as a model for the rest of the world or even as the stand-out successful system when it comes to the pandemic will no doubt be argued until the cows come home. But just looking at the data available now, you have to say, it’s massively impressive.

It isn’t that Isreal has managed to avoid the pandemic – in fact, by some measures, it was one of the hardest-hit countries in the world. Daily new Covid-19 cases during peak weeks in September and January were 700 per million and 940 per million respectively, which was substantially higher than even the world’s worst-hit large countries like Italy, Spain, the UK and the US.

But two aspects of the Israeli system stand out. Hospitals were never overwhelmed, and the Israeli government claims no patient received less than the best possible care. (There is an election on currently, so these claims do need to be taken with a pinch of salt). But the functionality of the hospital system reflects in a death rate which at its peak was 7.49 per million, which is about three times better than the UK and about 40% better than the US. This performance was obviously assisted by the comparative youth of the Israeli population, which is about 30, but even compared to like countries, the achievement is noteworthy.

But the real standout performance has been vaccine roll-out. Currently, half the population of roughly nine million in Israel have received both jabs, which is calmly twice as good as the next best performer, the United Arab Emirates, never mind the rest of the world currently averaging about 5% of the population vaccinated. Citizens report getting sms’ed their vaccination appointment without any registration process at their local clinic and getting the jab within five minutes.

How did they do that?

Oddly, if you were to ask the average Israeli citizen about their healthcare system, many would claim it to be near collapse – and in fact there are some parliamentary reports that back up this claim. But, like the NHS in the UK, it’s a system citizens love to hate – but perhaps ultimately support because it perceived to be fair and more or less effective.

The interesting thing about the Israeli health system is that tries to combine a competitive system with tax-funded universal coverage. It constitutes a rare example in the world of a hybrid system that is neither entirely private nor entirely government-run. It is funded off a standard 4.8% payroll tax which is distributed to the four healthcare companies according to the number of patients each has on its books. The four main healthcare companies are not allowed to turn away clients, even if they may have pre-existing conditions, which provides the universal coverage aspect.

The companies, therefore, compete only on the basis of service, which has been finely honed now over years since the system was introduced in the 1960’s. The four providers do have their own clinics, and doctors are affiliated to one or the other of the systems. Hospitals are either private or government-run but are paid by the health insurance companies according to the services they provide, which introduces another dimension of competition.

“It’s really a unique structure,” economist Moshe Bar Siman Tov, told the Wall Street Journal recently. “ It’s a mixture of socialist fundamentals and entrepreneurial spirit.”

Isreal does have some special characteristics which probably assist the functionality of the system; it is a rich society, which is of course always a huge advantage. It’s also a society under threat that has been through several wars in fairly recent history, and that might intensify the political demand for an effective healthcare system. It’s worth noting that the NHS in the UK and many of the European state-run healthcare systems originated in the Second World War. Often it does take a huge health challenge to force a big system change.

But it’s worth contrasting the fundamental ideas that lie behind the system and comparing them with the SA’s government idea of a National Health Insurance system. In SA, the NHI is really an attempt to grab existing health savings and subsume them into a competition-light, state-dominated system.

The ANC’s grand idea is that since roughly R220-billion is spent per year in the public system, and R240-billion is spent in the private sector system, it will just take hold of all of that and distribute it theoretically more evenly, but more essentially, the way it wants to. Add another R165-billion from roughly 2026, and you could theoretically have a more or less universal coverage system.

Yet, typical of ANC systems, competition and accountability are nowhere to be seen in this system, outside of notional declarations of grand intent. The big flaw in the idea is that people who currently pay Discovery, for example, enormous sums of money every month, will willingly do so if the state becomes the organising force. Government’s credibility as an organising and managerial entity has taken multiple hits in almost every sphere, most recently as it happens in the very same health department which wants to control the whole system.

There is almost nothing more complicated on the planet earth than conceiving the economics of healthcare system; it’s a morass of special interests, of unintended consequences, informational disparities, and of terrible need versus a limited facility. All healthcare systems have critics from almost every direction.

But the overall spectrum is simple: private systems are pretty good but extremely expensive and intrinsically unfair since the rich get the best treatment. Here is looking at you, USA. Public systems are pretty bad, but they are comparatively cheap and satisfy the important requirement of fairness, which is so much more vital in healthcare than in many other spheres of human life.

As it stands in SA, we get somewhat the worst of both worlds, but in some respects, the best of both worlds. Our private system conforms to the general rule of private systems: good, expensive, and unfair. The difference is that our public system is bad, expensive and dysfunctional. But at least, the public and private systems do compete against each other, and the private system does provide a standard to which the public system could and should aspire. The ANC’s idea would diminish that competition and threaten the little that we have.

If nothing else, the Israeli system shows it is possible to build accountability and competition into a healthcare system; that should the central aim of NHI – but it is not. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for free to Pick n Pay Smart Shoppers at these Pick n Pay stores.


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  • Thanks Tim. Good perspective. Israel is not unique in its blend of private and public serves or in instilling competing forces. The NHI proposal, on the flip side, is quite unique. So much so, that the only developing economy with a similar structure is Cuba. And that speaks volumes of the ruling party’s intent. Just take a look at the train wreck that is the E Cape’s public health system – that has NHI writ large all over it.

  • Given the unrelenting focus within the ANC on supporting & praising the most useless, totalitarian states (e.g. Cuba or Palestine) the likelyhood of any functionary in SA bothering to discover why the Isreali system is very good indeed, is zero.

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