This paper describes the current situation of health care services in Israel. Major problems are discussed and analyzed in terms of the dualism of the main health organizations (the Ministry of Health and the General Sickness Fund), the multiplicity and discontinuity of health care delivery, quality-of-care problems, and the uneven geographical distribution of facilities. A proposal for a reform of the health care system is outlined, and its principles enumerated. This reform, suggested by the Ministry of Health, reflects a new approach of separating the direct provision of care from the executive functions of planning and control of services. The Ministry's proposal is analyzed, and its implications are discussed in relation to the American health care system.