OECD Economic Surveys: Israel 2018

Annex A.2. Progress in structural reform

Abstract

This table reviews action taken on recommendations from previous Surveys, which are not mentioned in the main text of the Issues for Discussion document. Recommendations that are new in this Survey are listed at the end of the relevant chapter.

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

 

1. Pensions
Recommendations in previous Surveys	Action taken since January 2016
Moderate the impact on net current income of relatively high mandatory contributions to pension savings for low-wage workers.	The Earned Income Tax Credit was increased for certain populations as a response to the high mandatory contributions to pension savings for low-wage workers.
Increase employee pension contributions for public employees recruited before 2002-04.	No action taken.
Gradually raise women’s eligibility age for the first-pillar pension to equal men’s (67 years). Index the retirement age to life expectancy at 65, so as to hold constant the share of adult lifetime spent in retirement.	A public committee, appointed by the Minister of Finance, has published its report recommending an increase in women’s retirement age to 64 over eight years, and then indexing retirement age to life expectancy. The issue is being discussed in the Knesset.
Require pension providers to offer low-cost pension funds as their default option, for example, by proposing passively managed (indexed) assets or streamlining distribution channels. Encourage the growth of mutually managed pension funds.	No action taken.
Significantly reduce the implicit tax rate on continuing to work beyond the pension eligibility age by lowering the reduction of first-pillar basic pension entitlements in the presence of work-related income.	No action taken.
Increase transparency of the pension system for defence, police and prison personnel, and transfer its management from the Ministries of Defence (MoD) and Internal Security to the Ministry of Finance (MoF). Increase the transparency of the State’s contingent liabilities for those public entities having independent budgets.	New mechanisms for transparency were introduced as part of the agreement between the MoF and MoD.
Phase out tax breaks on savings in the “advanced training funds”.	No action taken.
2. Health-care policy
Recommendations in previous Surveys	Action taken since January 2016
Governance of the health insurance system
Ensure universal National Health Insurance (NHI) services remain at the core of the system. Provide adequate public funds for it.	NHI remains at the core of the system. In recent years funding has risen by an average annual rate of 7%, one of the highest rates of any public spending area.
Widen the scope of reductions in co-payments to low income households.	The share of co-payments funding public health expenditure fell substantially in recent years from 8% in 2012 to 5.4% in 2015. This trend is ongoing in 2016-17 as well. Moreover, actions were taken to decrease co-payments of certain low-income households such as holocaust survivors and other elderly populations at a cost of over NIS 250 million per year.
Put an end to direct management of government-run hospitals by the Ministry of Health through conversion to independent hospital trusts or by putting them in the hands of the health funds.	A new hospital owned by a firm controlled by a health fund was opened on June 2017 in the city of Ashdod. Furthermore, another similar type of hospital will open in Beersheba. As to the governmental hospitals, no action has been taken.
Policy towards health-care professionals
Further expand medical schools and nurse training. Strive to shorten the time taken to acquire qualifications and specialisations.	Several actions were taken to expand medical and nurse training. A new medical school was opened in the city of Zfat, and a multi-year plan was developed to increase the number of medical and nursing students by another 15%. In total, the number of new medical students is planned to grow from 440 in 2009 to over 900 in 2022 and nursing students from 850 to over 3 100.
Further exploit the potential for shifting tasks between professions, e.g. from doctors to nurses.	A new profession (“Doctor Assistant”) was introduced. These are paramedics employed at hospitals with tasks and responsibilities aimed at reducing doctors’ workload.
Encourage older professionals to continue working, and provide childcare facilities for staff.	No action taken.
Consider extending requirements to work in the NHI system for those that have benefitted from subsidised medical training.	No action taken.
Funding mechanisms
Consider adding further socio-economic variables to the capitation formula that determines government transfers to the health funds.	No action taken.
Further shift payment mechanisms away from input-based measures (such as per diem charging for hospital care) and towards output-based formulae such as Diagnosis Related Group (DRG) mechanisms.	In the past five years over 500 new DRG-based prices were published. This is a work in progress, but already today over 70% of billings between hospitals and HMOs are done on a DRG basis or at ambulatory-care prices.
Quality of care, health promotion and data
Further increase health spending, especially within the hospital sector to reduce hospital overcrowding.	Public health-care spending has increased substantially over the past few years – a 60% increase between 2010 and 2017 – worth over NIS 22 billion. Hospitals have benefited from much of this increase, alongside other public providers. Unfortunately, much of the increase went for wage increases and not better service or care. Currently, Israeli physicians and nurses’ wages are among the OECD’s highest, and health-care wages have risen at a far faster rate than other wages and prices.
Further develop the collection and dissemination of information on the quality of hospital care.	In recent years the Ministry of Health started a programme of measuring hospital quality, indicators of which are published annually.
Long-term care
Simplify access to public support for long-term care (LTC) services. Create a one‐stop shop for assessing LTC needs.	Thanks to additional funding and changes to community LTC, the queues for LTC services both in the community and in nursing homes have been eliminated.