Japan's health care system: Containing costs and attempting reform - Japan cut medical spending in 2002 for the first time in its history, adding fuel to proposals for more radical reforms

Health Affairs

Volumn 23, Issue 3, 2004, Pages 26-36

  Ikegami, Naoki ^a   Campbell, John Creighton ^b  

^a KEIO UNIVERSITY   (Japan)

^b UNIVERSITY OF MICHIGAN   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

COST CONTROL; EVIDENCE BASED MEDICINE; FINANCIAL MANAGEMENT; HEALTH CARE COST; HEALTH CARE DELIVERY; HEALTH CARE ORGANIZATION; HEALTH CARE POLICY; HEALTH CARE SYSTEM; JAPAN; LONG TERM CARE; MARKETING; MEDICAL FEE; PATIENT CARE; PRIVATE HEALTH INSURANCE; PROSPECTIVE PAYMENT; PROSPECTIVE PRICING; PUBLIC HEALTH INSURANCE; REIMBURSEMENT; REVIEW; SUSTAINABLE DEVELOPMENT; UNIVERSITY HOSPITAL;

COST CONTROL; DELIVERY OF HEALTH CARE; HEALTH CARE REFORM; HEALTH EXPENDITURES; HUMANS; JAPAN;

EID: 2442591770     PISSN: 02782715     EISSN: None     Source Type: Journal    
DOI: 10.1377/hlthaff.23.3.26     Document Type: Review

References (29)

1. Shakai Hoken Jyunpou 2180 (11 August 2003): 10-13.
2. J.C. Campbell and N. Ikegami, The Art of Balance in Health Policy - Maintaning Japan's Low-Cost, Egalitarian System (Cambridge: Cambridge University Press, 1998); and N. Ikegami and J.C. Campbell, "Health Care Reform in Japan: The Virtues of Muddling Through," Health Affairs 18, no. 3 (1999): 56-75.
3. J.C. Campbell and N. Ikegami, The Art of Balance in Health Policy - Maintaning Japan's Low-Cost, Egalitarian System (Cambridge: Cambridge University Press, 1998); and N. Ikegami and J.C. Campbell, "Health Care Reform in Japan: The Virtues of Muddling Through," Health Affairs 18, no. 3 (1999): 56-75.
4. The NMW is equivalent to about four-fifths of the OECD's calculation of nominal total health expenditures (THE) during this period because several THE items - in particular, capital investment by the public sector, over-the-counter drugs, health screening, private room charges, and some smaller categories - are not included in NME.
5. Starting in FY 2000, about 6 percent of NME was transferred to the public long-term care insurance implemented in that year. The estimated amounts of these transfers have been added back into NME for the years 2000-2002 for comparability.
6. These draconian measures were introduced because of their wide dissemination: Japan has the highest per capita number of CT and MRI in the world, according to the Organization for Economic Cooperation and Development. OECD, OECD Health Data 2003 (Paris: OECD, 2003). This occurred despite the low fees because providers choose models that are much less expensive than those in the United States and because manufacturers have continuously reduced prices. These inexpensive models have become major export products.
7. R. Abelson, "Generous Medicare Payments Spur Specialty Hospital Boom," New York Times, 26 October 2003.
8. U.E. Reinhardt, "Does the Aging of the Population Really Drive the Demand for Health Care?" Health Affairs 22, no. 6 (2003): 27-39; and D.M. Cutler and L. Sheiner, "Demographics and Medical Care Spending: Standard and Non-Standard Effects," NBER Working Paper no. 6866 (Cambridge, Mass.: National Bureau of Economic Research, 1999).
9. U.E. Reinhardt, "Does the Aging of the Population Really Drive the Demand for Health Care?" Health Affairs 22, no. 6 (2003): 27-39; and D.M. Cutler and L. Sheiner, "Demographics and Medical Care Spending: Standard and Non-Standard Effects," NBER Working Paper no. 6866 (Cambridge, Mass.: National Bureau of Economic Research, 1999).
10. The Japanese data show that the magnitude of the difference in per capita spending among age groups has actually increased despite increases in longevity, possibly because a sizable amount of long-term care is covered by health insurance and because the proportion spent the year before death is less in Japan. See T Fukawa, "Aging and Health Expenditure of the Elderly" (in Japanese), Byouinkanri 35, no. 2 (1998): 25-34.
11. Since billing is made on a calendar-month basis, changes in the number of patient visits and hospital admissions are recorded as changes in the number of claims filed per enrollee during the fiscal year.
12. Iryou Hoken Seido Kenkyukai, Illustrated White Paper on Health Insurance (Medemiru Iryouhoken Hakusho) (Tokyo: Gyousei, 2003), 82-83.
13. These declines spilled over to expenditures for dependents, despite the fact that their copayment rates remained the same, at 20 percent for inpatient and 30 percent for outpatient care. Note, incidentally, that because copays are included in NME, the spending reductions were due solely to decreased volume; savings for public health insurance were made higher by the increase in out-of-pocket spending.
14. The resulting inequity for elders has been mitigated by lowering the income level of eligibility for a lower deductible: Those eligible increased from 1 percent to 15 percent.
15. "When surveyed, 81 percent of health care economists stated that technological change in medicine was the primary reason for the rise in health expenditures, and some believe the purchase and use of medical technology could account for almost half of the increases in health care spending." A. Mehrotra, R.A. Dudley, and H.S. Luft, "What's Behind the Health Expenditure Trends?" Annual Review of Public Health 24 (2003): 385-412.
16. G.F. Anderson et al., "It's the Prices, Stupid: Why the United States Is So Different from Other Countries," Health Affairs 22, no. 3 (2003): 89-105.
17. Ministry of Health, Labor, and Welfare, 1999 Medical Facilities Survey (Iryou Shisetsu Chousa) (Tokyo: MHLW, 2001).
18. For details on LTC insurance, see J.C. Campbell and N. Ikegami, "Long-Term Care Insurance Comes to Japan," Health Affairs 19, no. 3 (2000): 26-39; and J.C. Campbell and N. Ikegami, "Japan's Radical Reform of Long-Term Care," Social Policy and Administration 37, no. 1 (2003): 21-34.
19. For details on LTC insurance, see J.C. Campbell and N. Ikegami, "Long-Term Care Insurance Comes to Japan," Health Affairs 19, no. 3 (2000): 26-39; and J.C. Campbell and N. Ikegami, "Japan's Radical Reform of Long-Term Care," Social Policy and Administration 37, no. 1 (2003): 21-34.
20. Actually, there are two such schemes, one for retirees up to a certain age and a much larger one for people after that age. The age divide was originally seventy, but to decrease the spending amount borne by the government, the cutoff age is being progressively increased a year at a time beginning in October 2003, until it reaches age seventy-five. The level of subsidy to the two schemes from the plans for large companies increased from 16 percent of their total expenditures in 1984 to 38 percent in 1999.
21. The portion of households failing to pay premiums has risen from 14 percent in 1992 to 19 percent in 2003. "Failure to Pay CHI Premiums Cannot Wait" (in Japanese), Asahi Newspaper - Morning Edition, 5 November 2003).
22. Cross-subsidization according to income and age of the enrolled is similar to the German reform in 1993 (Gesundheitsstrukturggesetz, or GSG), but the idea of merging schemes on a prefectural basis is unique to Japan.
23. The JMA's opposition to balance billing is not only on ideological grounds. Private practitioners, its main constituents, have little to gain.
24. For example, the ratio of extra-charge private rooms has been restricted to 10 percent of the total number of beds in public-sector hospitals for equity reasons.
25. Data for 1965 are from MHLW, Medical Facilities Survey (Iryou Shisetsu Chousa) (Tokyo: Kousei Toukei Kyoukai, 1967); data for 2003 are from Report of the Regulation Reform Council (in Japanese), www8.cao.go.jp/kisei/siryo/030711/ 3.pdf (20 December 2003).
26. Data for 1965 are from MHLW, Medical Facilities Survey (Iryou Shisetsu Chousa) (Tokyo: Kousei Toukei Kyoukai, 1967); data for 2003 are from Report of the Regulation Reform Council (in Japanese), www8.cao.go.jp/kisei/siryo/030711/ 3.pdf (20 December 2003).
27. M. Tamura, "Why Does the General Public Oppose the Introduction of Inequality in Health Care? Results from Surveys" (in Japanese), Shakai Hoken Jyunpou 2192 (11 December 2003): 6-11.
28. Only 40 percent of hospitals write discharge summaries, 15 percent have full-time medical record staff, and 10 percent use ICD codes. MHLW, 1999 Medical Facilities Survey.
29. T. Hasegawa, "Comparison of Hospital Admission Rates between Japan and the United States," in Containing Health Care Costs in Japan, ed. N. Ikegami and J.C. Campbell (Ann Arbor: University of Michigan Press, 1996), 101-105.