As part of the public discussion in Israel in recent years about the erosion of public expenditure on health services, it has been argued that the relatively young composition of Israel’s population is the main reason for the relatively low health expenditure in comparison to that of other countries. This policy study examines Israel’s place in the ranking of OECD countries by national health expenditure, taking into account the differences in the age composition of the population and the differences in the expenditure profile by age. The expenditure profile by age reflects not only the rise in medical needs with age, but also the influence of unique institutional and sociocultural factors in each country on the supply of health services and the demand for them.

The findings show that Israel’s relative ranking by health expenditure has improved to some degree, if the relatively young composition of the population is taken into account, but even then Israel usually remains in the lower third of the scale. The findings also show that correcting for the differences in the age distribution of the total national health expenditure does reduce the variance between the countries in terms of health expenditure, but it does not substantially change Israel’s relative ranking. These findings demonstrate that the erosion in public expenditure over time must be ascribed to other factors on the supply side of health services and in the demand for them, including government policy.

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