State Auditor Warns Israel's Elder-Care System and National Insurance Fund Are Nearing Crisis

A State Comptroller report on Israel’s preparedness for population aging says the government has failed to build a national plan, hold cabinet discussions, or appoint a central coordinating body. The report says the most severe failure is in National Insurance Institute nursing-care benefits, where costs have tripled from NIS 7 billion in 2018 to NIS 21 billion in 2025, mainly because eligibility was granted without face-to-face examinations.

According to the report, this policy has pushed the National Insurance Institute’s actuarial balance toward collapse and moved the date of insolvency, meaning the reserves held by the Treasury would be exhausted, forward by 6.3 years to 2035. The number of seniors receiving nursing-care benefits more than doubled, from about 180,000 in 2018 to 392,000 in 2025, while the retirement-age population rose only 17% between 2018 and 2025 and benefit recipients rose 118%.

Claims for long-term care insurance jumped from 91,000 in 2018 to 135,000 in 2024, and the annual growth rate rose from 2.5% to 8%. Approval rates climbed from 52% in 2018 to 71% in 2019, then slipped to 58% in 2024. The report also criticizes a rule allowing only benefit increases, never cuts, on deterioration requests, which encouraged filings. Such claims rose from 49,000 in 2018 to 163,000 in 2024.

The comptroller says nursing-care beneficiaries now make up 30% of retirement-age Israelis, compared with 16% before the reform, about 2.5 times the OECD average of 12%. While the Budget Division had estimated the extra cost at NIS 1.3 billion a year, the increase has reached NIS 14 billion. The report forecasts that without policy changes, about 34% of seniors will be classified as needing care by 2030 and spending could reach NIS 40 billion annually.

A major reason for the surge was the National Insurance Institute’s switch to paper-based dependency assessments instead of in-person examinations, the only such practice in the OECD. The comptroller found the institute was 1.7 care levels more generous on average than one health fund, a gap worth NIS 9.5 billion a year, and called it “an enormous excess cost.” He also criticized the option to take part or all of the benefit in cash, used by 81% of eligible recipients. The report says the reform was advanced without actuarial advice, the government did not address the crisis, and financial strength has been damaged, increasing the risk of deep cuts or higher insurance contributions later.