In recent years, dissatisfaction with aspects of the Israeli health care system has grown. Labor conflict and unrest, long waits for elective surgery, increases in out-of-pocket payments for health care, and declining government investment have given rise to a new phenomenon: the increasing use of private services. This has led consumers to seek financing sources for their private care and created opportunities for commercial insurers and sick funds to offer new insurance packages to meet this demand. As a result, over the last five years more than twenty commercial health policies and four mandatory supplemental policies provided by the sick funds are currently on the market. The market for these policies is small but growing, with consequences for the cost and quality of care, access, the level and composition of national expenditures, and the allocation of resources to both the public and private health systems. As the balance between private and public financing changes, so too do the trade-offs between differing objectives. Greater private pluralism and competition at the financing level have many advantages but also make it more difficult for government to manage the tradeoffs that occur. Thus, a changed emphasis in government regulation and policy-making is required.