Health economics is a very important aspect of health in the economic dependent life the world lives. By comparing the newly established Palestinian Health system and its economics; mainly the health insurance system, with other well established systems, we are trying to figure out the advantages and the drawbacks in order to set forward the plans for development. The most important difficulties facing the Palestinian Health system are the Israeli occupation and its destroying effect on people, land and life. Moreover, the lack of efficient financing system in both design and administrative corruption play a major role against the improvement of the health system. Investment in both medical education and health care reform are the main steps in the way of setting forward a modern Palestinian Health system.