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LEARNING | How does Japan pay for healthcare?

“I saw both sides of Japanese medicine. There was instant access to fine doctors, a considerable range of choice for the patients, and a private insurance system that seemed to cover just about everything. There was also a sense of a medical infrastructure that was overstretched and pinching pennies. In a sense, that makes Japanese medicine the mirror image of America. Our country spends too much on health care and gets too little in return; Japan gets lots of health care but probably spends too little to make its excellent system sustainable.”[2]

Reid, T. R.. UC-The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care (Kindle Locations 1425-1428). Penguin Group US. Kindle Edition.

By Several Sources Noted Below


Japanese Health Care: Low Cost Through Regulated Fees[3]

By Naoki Ikegami

Research Article | Health Affairs | Vol. 10, No. 3


Japans health care system represents an enigma for Americans. The system incorporates features that Americans value highly: employment-based health insurance, free consumer choice of physician, and a delivery system that leaves clinical decision making in the hands of the doctor. But the cost of medical care in Japan is very low, compared with that in the United States, thus raising the question: How does Japan provide ready access to care for all of its citizens at a cost that is the lowest among major industrialized nations? In this essay, Naoki Ikegami describes the basic structure of the Japanese system, how it constrains expenditures, and the major issues it faces. Ikegami is a rare figure in the Japanese system because his interests span clinical medicine and health policy—a combination that is far more commonly found in the United States. Ikegami, who trained as a psychiatrist and started his research activities on the epidemiology of alcoholism, is a professor of health and public service management at Keio University in Tokyo. He also holds an appointment as professor of hospital and medical administration in Keio’s School of Medicine, from which he received his medical degree. Ikegami received a master of arts degree in health services studies with distinction from Leeds University (United Kingdom). During 1990-1991, Ikegami was a visiting professor at the University of Pennsylvania’s schools of medicine and business. Asked what lessons he derived from the experience, Ikegami said it allowed time “to ponder the pros and cons of opening the Pandora’s box of managed care and micro-management in trying to evaluate the quality of care.” While at Penn, Ikegami also strengthened his research interests in the comparative analysis of policy and management in health care. He was the director of a course in comparative health care systems at Penn. Other research pursuits have included the management of long-term care and the evaluation of health care.



 The monthly insurance premium is paid per household and scaled to annual income. … Insurance for individuals is paid for by both employees and employers. This ends up accounting for 95% of the coverage for individuals. Patients in Japan must pay 30% of medical costs.[1]


Tour Preview (LISTEN): The Japanese Health Care System at a High Level

“It’s worth noting that this happens in a largely private-sector system; Japan relies on private doctors and hospitals, with the bills paid by insurance plans. In fact, Japanese doctors are the most capitalist, and most competitive, that I’ve seen anywhere in the world.”


In Japan, services are provided either through regional/national public hospitals or through private hospitals/clinics, and patients have universal access to any facility, though hospitals tend to charge more to those patients without a referral. As above, costs in Japan tends to be quite low compared to those in other developed countries, but utilization rates are much higher. Most one doctor clinics do not require reservations and same day appointments are the rule rather than the exception. Japanese patients favor medical technology such as CT scans and MRIs, and they receive MRIs at a per capita rate 8 times higher than the British and twice as high as Americans.[8] In most cases, CT scans, MRIs and many other tests do not require waiting periods. Japan has about three times as many hospitals per capita as the US[31] and, on average, Japanese people visit the hospital more than four times as often as the average American.[31]
Japanese outcomes for high level medical treatment of physical health is generally competitive with that of the US. A comparison of two reports in the New England Journal of Medicine by MacDonald et al. (2001) [18] and Sakuramoto et al.(2007) [19] suggest that outcomes for gastro-esophageal cancer is better in Japan than the US in both patients treated with surgery alone and surgery followed by chemotherapy. Japan excels in the five-year survival rates of colon cancer, lung cancer, pancreatic cancer and liver cancer based on the comparison of a report by the American Association of Oncology and another report by the Japan Foundation for the Promotion of Cancer research.[20] The same comparison shows that the US excels in the five-year survival of rectal cancer, breast cancer, prostate cancer and malignant lymphoma. Surgical outcomes tend to be better in Japan for most cancers while overall survival tend to be longer in the US due to the more aggressive use of chemotherapy in late stage cancers. A comparison of the data from United States Renal Data System (USRDS) 2009 and Japan Renology Society 2009 shows that the annual mortality of patients undergoing dialysis in Japan is 13% compared to 22.4% in the US. Five-year survival of patients under dialysis is 59.9% in Japan and 38% in the US.[1]

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