From the discussions of how American car companies are put at a disadvantage because they have to pay health insurance costs that firms in other countries avoid, it isn’t surprising that many people have concluded that health care systems in these nations are single payer. In fact, neither Germany nor Japan, two of the countries most commonly cited in this connection are government run or paid. I have already discussed Germany on several occasions, today I want to talk about Japan.
The Japanese health care system is rather complicated, with different, somewhat interlinked, plans for citizens depending on their employer and stage of life. Japan’s Employee Health Insurance Program obligates any business with 700 or more people working for it to offer health coverage to its employees. About 85 percent of companies essentially self-insure. For these companies, around 8.5 percent of payroll goes to health care and employee and employers split the cost more or less in half. Around 26 percent of people in Japan fall under this part of the system.
Companies with fewer than 700 employees participate in a federal, health insurance scheme for small businesses, run by the state. Approximately 30 percent of Japanese are in this group. Small companies pay about 8.2 percent of payroll and the state then puts in additional money.
Those who are self-employed fall under the government’s Citizens Insurance Program. It is managed by municipal rather than national authorities and is paid for by a self-employment tax, taxes on insurance companies and the government plan for small businesses, and, when necessary, direct government contributions. Those who are unemployed retain the coverage they had while working.
Finally, the health coverage for the elderly is called Roken and does not have separate financing of its own but is paid for by money from the other three parts of the system and government money. Private health insurance is possible, but rare.
In addition to taxes and the percentage of their wages they pay out for health care, people in Japan also have significant co-pays, usually around 30 percent, and other out of pocket costs for medical services. There is a ceiling on co-pays, for a middle class family, it is about $677 a month, and a normal family spends around $2,300 in a year on medical care in addition to what they pay through work. Out of pocket costs amount to about 17 percent of annual medical spending.
Japanese hospital and medical facilities are usually privately owned and operated. Small facilities tend to belong to one doctor or family, even those carrying out advanced procedures. Hospitals and doctors in private practice usually get paid a set amount for each treatment or other service and drugs also cost the same throughout the country because the prices are determined by the government.
That doesn’t mean that some people haven’t figured out ways to game this system. In some cases, doctors have bribed government officials in charge of setting fees. Doctors also benefit from ordering unnecessary tests and from seeing as many patients as they can in as little time as feasible. As a result, “two-thirds of patients spend less than 10 minutes with their doctor; 18 percent spend less than 3 minutes.”
The upside of health coverage in Japan is that it includes almost everything, sometimes reimbursement for travel expenses. Patients can go to any doctor or hospital and usually they do not need a referral or approval from a primary care physician to see a specialist. Technology is highly advanced and very accessible. And, because the cost is the same everywhere, medical facilities compete on the basis of quality or having the latest treatments. Some top hospitals do end up with queues, however, and some people pay illegally to jump to the head of the line.
Contrary to the situation elsewhere in the world, many argue that Japan needs to spend more money on health care, which consumed about 8.2 percent of GDP in 2005, less than similar systems in Europe or the US. However, the system is strapped for cash with the costs of care outstripping what is paid in. Further, people in Japan go to the doctor a lot, especially the elderly who pay less out of pocket for their care, whether for minor complaints or just to chat. This is particularly a problem because the elderly account for a staggering 90 percent of the growth in health care costs and are steadily rising in number, producing fear for the future of the system.
