How Does the Japanese Healthcare System Work?

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Healthcare In Japan: The Government Takes Good Care Of You

Nearly every industrialized nation, and a few which are not, provides some form of universal, national health insurance, other than the United States.

Instead, in America, people either pay enormous sums for care, or can’t afford much at all. The limited experiment in broader healthcare coverage tried, so-called Obamacare, changed very little in practicality and despite even that, has been under constant attack. Listening to the current group of presidential candidates’ debates, you’d think providing health care for our citizens was an impossible task.

It is not. Let’s look at what Japan has been doing for its own people. Successfully. Since 1961.

Japanese Hospitals: Managed by Physicians, Not By Corporations

The premise in Japan is simple: healthcare is an obligation of government, the same as national defense and picking up the trash. People pay for their health insurance via taxes and reasonable fees, and the government takes responsibility for regulating costs.

The basics are that all residents of Japan are required by the law to have health insurance coverage. During their working years, most people get their insurance through their employer as a benefit, similar to the U.S.

People without insurance through an employer join a national health insurance program administered by the government. The programs all are regulated to provide the same basic benefits for the same prices. People cannot be denied coverage, and pre-existing illnesses are irrelevant.

The programs all are regulated to provide the same basic benefits for the same prices. People cannot be denied coverage, and pre-existing illnesses are irrelevant.”

The key to making this work is that the government regulates costs. Hospitals must be non-profit organizations that are managed by physicians, not corporations. Doctors can operate small, for-profit, family-medicine style clinics, though they are also bound by set fees. Depending on the family income and the age of the insured, patients pay 10-30 percent of the (low, regulated) fees with the government paying the remaining fee. As an example, a routine office visit can be as low as US$10.

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Image Source: JapanTimes

There are waiverable yearly caps on how much care one can receive, in place basically to prevent abuse. There are also caps on personal expenditures based on income and age.

Regulation is handled by the Japanese Health Ministry. Every two years, the healthcare industry and the Health Ministry negotiate a fixed price for every procedure and every drug. Balances are sought between reasonable costs and reasonable income for healthcare professionals.

The results are amazing. The average Japanese person sees a doctor 14 times a year, more than four times as often as Americans, and surveys show they are almost always seen on the day they want. Because of the low costs, Japanese people tend to get more preventive care and more frequent checkups.

Though there are other factors, the Japanese do live longer than any other people on Earth while enjoying one of the world’s lowest infant mortality rates. Meanwhile, healthcare costs eat up only eight percent of the Japan’s gross domestic product, half as much as in the United States. In additional to direct regulation of costs, insurance prices stay low because administrative costs are four times lower than they are in the United States, in part because insurance companies do not set rates for treatment or deny claims.

The Flaws Of The Japanese Health Care System

Like any system, Japanese healthcare is far from perfect.

To run up fees, some doctors order unnecessary tests, and prolonged hospital stays are the norm for even minor procedures. Many doctors bypass the complexities of specialization to focus on primary care work, making up for low treatment fees with high volume, seeing patients in an assembly-line process that leaves little time for questions. It is rare to leave a doctor’s office, no matter what the reason for the visit, without some sort of prescription and a recommendation for a return visit.

Questions also exist over how the system will sustain itself in the face of Japan’s aging population. Some doctors advocate for a freer system that would allow them to practice outside of the regulated one, a sort of parallel system for wealthy patients. Some critics suggest that Japan’s very best bypass medical school or practice for more lucrative research jobs, and that drug companies innovate less because they face a harder time recouping costs.

The criticism all have kernels of truth in them, and represent challenges for Japan going forward. Yet at the same time, as in Canada, the UK and elsewhere in the developed world, Japanese citizens have access to modern medicine when they need it, not simply when they can afford it.

That alone represents a goal America might aspire to.


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