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japanese health care

Friday 28 May, 2010

The Japan America Society of Chicago sponsored this event SOME ADVICE ON HEALTH REFORM FROM THE WORLD’S HEALTHIEST PEOPLE – THE JAPANESE featuring Prof. Greg Kasza of Indiana University.  Greg talked about 3 facets of health care in Japan:

features of the health care system

  • it’s a universal & mandatory public health insurance system out of which you may not opt-out
  • it covers a full range of services;  hospital, surgery, dental, maternity, for an unlimited duration of treatment
  • health care providers can be chosen without restriction, but there you may have to wait for the most popular ones
  • a government commission sets all prices which are revised every 2 years
  • all patients get the same treatment @ the same cost
  • doctors (60% private/40% public) are paid only for services provided
  • health care is financed by social insurance which is paid 50%/50% by employers/employees (up to 8% of income with a cap while the poor pay 0)
  • patients co-pay 30% (of lower level prices) capped at $350/month for low income earners & $1100/month for high earners
  • insurance premiums cover 50% of health care costs, employee copayments cover 15%, & the government covers the remaining 35% of health care costs
  • the system is segmented into 8 sub-segments which cross subsidize 1 another, for example, large enterprises do their own paperwork & subsidize SME’s for whom the government does the paperwork

politics & history of Japan’s health care system

  • the political left has never pushed this health care system-it is not a point of political contention
  • by 1944 80% of the population had health insurance;  by the late 1950’s 100% had coverage

why is Japan’s health care system more economical?

  • Japanese administrative costs are 1/2 of what Americans pay per capita
  • American insurance companies each have their own policies & fee schedules which must be negotiated which creates complex paperwork, while Japan has 1 with no negotiation with simple paperwork
  • Japan’s fixed prices (or lack of price competition) forces competition based strictly on quality & early detection/prevention, which increases the number of doctor visits, but results in healthier people
  • Japan’s administrators adjust the fee schedules to make certain services more profitable, such as MRI’s
  • Japanese earn 4X the average local income while American doctors earn 5.4X their average local income, but American also have to pay malpractice insurance, so that difference is less than it appears
  • the Japanese government is a non-profit health insurance provider
  • 48 children are born to every 1000 US mothers 15-19 years old: the same age Japanese women bear 4 children/1000

Q&A

  • public expenditure on health as % of total spending is higher in a few countries, such as Sweden, but not many
  • encouragement of innovation is difficult to resolve-in some cases the Japanese simply buy new technologies from other countries, i.e. MRI’s.  The US does more cutting edge research, but much of that is on Viagra-like more profitable products & not curing cancer, so more & better research does not necessarily result in healthier people
  • Japanese insurance doesn’t cover some transplants to protect the transplantors-these are OK for the rich in the US, but the poor do not have the same access
  • emerging economies seem to be gravitating more towards a European-like system, for example, Malaysia & Singapore use provident funds
  • differences in culture explain why America can’t replicate Japan’s system.  American insurance companies determine the market in negotiation with doctors.  It’s difficult to compare the 2 systems because they are so different.  US doctors can’t subsidize other segments like the Japanese can.

my take-a government directed health insurance system is essentially a monopoly, which Americans loathe.  Lacking the competitive mechanism to supposedly rein in costs prevents this in the US.  The fact is many state markets are effective monopolies, so we have them, despite railing against them.  At a very basic level, there are huge differences between government bureaucrats from country to country who work in these areas.  They are not respected or paid well comparatively in the US, so the US government doesn’t get the best people.  In many other countries, Japan included, government workers are more respected & better paid relatively, so they get better people to oversee these types of systems, which results in better systems.

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