Health Care Reform in Asia:

Key issues in Japanese Healthcare

Professor Masako Ii
Hitotsubashi University
masako@econ.hit-u.ac.jp

3 December 2012

KDI School of Public Policy and Management,

The World Bank,
1 Tokyo Development Learning Center
 The Economics of Public Health Care Reform in
Advanced and Emerging Economies, IMF (2012)

The use of market mechanisms in Germany

and Japan is an important factor explaining the
low excess cost growth observed in these
countries both of which score relatively high
in the indices for choice of insurer, choice of
provider, and private provision.
 Health Care Systems: Efficiency and Institutions
OECD Economic Department (2010)

Although estimates of health care spending

efficiency should not be taken at face value,
Australia, Korea, Japan and Switzerland
perform best in transforming money into
health outcomes.
The Economist, September 10, 2011
Japans health-care system is the envy of the
world. It is also in crisis
According to Table 2
Total health care expenditure/GDP is low in
Japan.

Is Japans total health care expenditure lower

than other OECD countries?

5
 Outline of My Presentation
1. Overview the history and characteristics of
Japanese healthcare system including health
insurance.
2. What is the weakest point of Japanese
healthcare system ?
3. Primary care system is a key aspect to learn by
comparison with other countries' cases
4. What can developing counties learn from
Japan's healthcare system history ?
 Health Care System in Japan
1. Good access to health care
Universal health insurance system since 1961
- Can visit any medical institutions regardless of type of
health insurance, residence, and referrals
- No gate-keeper system
- Long waiting time
2. Closed-system operation of hospitals
Unified payment to hospitals and physicians
3. Fee-for-service under a national uniform price schedule
Official prices for medical treatment
- Control of healthcare expenditures by the government
4. Dominance of (non-profit) private hospitals
7
8
 The payments doctors receive for medical
services are the same nationwide, with rates
set by the central government.

There are few incentives for quality

improvement and little competition among
providers on quality

9
The characteristics of Japanese health care system

1. Lack of clear definition of hospital

2. Large number of the hospital beds
3. Low physician and nurse/bed ratio
4. Long average length of stay in hospital
5. Frequent medical usage among the elderly
6. Frequent usage of CT and MRI

10
 Lack of clear definition of hospital

Japanese Hospitals

Social hospitalization
is prevalent.

Hospitals are used

mainly for nursing care
rather than
medical services.

11
 Lack of clear definition of hospital

From the point of view of other countries,

Japanese Hospitals

Japanese hospitals
seem to be a
combination of
hospital & nursing
home.

12
 Lack of clear definition of hospital

From the point of view of Japan,

U.S. Hospitals

In countries like the

U.S., hospitals seem
to be a combination
of ICU & very active
acute care unit.

13
The characteristics of Japanese health care system

1. Lack of clear definition of a hospital

2. Large number of the hospital beds
3. Low physician and nurse/bed ratio
4. Long average length of stay in hospital
5. Frequent medical usage among the elderly
6. Frequent use of CT and MRI

14
 Frequent medical usage among the elderly

Outpatient Visits per 100,000 population

No. of persons (per 100,000 population)

70 and over (partially listed)

65 and over

Whole
35-64

0-14
15-34

Source: Cabinet Office, Structural Reform Evaluation Report 5

15
The characteristics of Japanese health care system

1. Lack of clear definition of a hospital

2. Large number of the hospital beds
3. Low physician and nurse/bed ratio
4. Long average length of stay in hospital
5. Frequent medical usage among the elderly
6. Frequent use of CT and MRI

16
 Japanese elderly use a significant
portion of healthcare expenditure

People aged 65 or over, occupy 22% of the

total population uses 54.6% of the total
expenditure.

Per capita health expenditures among the

elderly are almost 4 times as much as the
amount spent for the 0-64 age group.

17
General Account Tax Revenues and
Government Expenditure

18
Japanese Government Expenditure
92.4 trillion (2011)
Interests
Payments
9958.8
11%
Social Security
Redemption of
28707.9
the National Debt
31%
11590.3
13%

Others
10110.6
11%

Local Allocation
Tax Grants
National Defense 15784.5
4775.2 17%
Education
5%
Public Works & Science Billion yen, % (2011)
4974 5510
6% 6%
19
Japanese Government Expenditure
92.4 trillion (2011)
Interests
Payments
9958.8
11% Social
Redemption of
the National Debt Security
11590.3
13% 31%
Others
10110.6
11%

Local Allocation
Tax Grants
National Defense 15784.5
4775.2 17%
Education
5%
Public Works & Science Billion yen, % (2011)
4974 5510
6% 6%
20
Japanese Government Expenditure
92.4 trillion (2011)
Interests
Payments
9958.8
11%

Redemption of Social Security

the National Debt 28707.9
11590.3 31%
13%

Others
10110.6
11% Local
Allocation
National Defense
Tax Grants
4775.2
5% Education 17%
Public Works & Science Billion yen, % (2011)
4974 5510
6% 6% 21
 National Medical Expenditure
34.1 trillion (2007)

It counts only medical services covered by the

public health insurance.

The following items are not included

- natural birth, non-insured dentistry
- health checkups, vaccinations,
- over- the-counter medicines
- subsidies to medical institutions or investment
- operation of medical insurances
22
 One of the problems in the Japanese medical
and long-term care statistics is absence of
clear systematic concept such as SNA.
It is necessary to re-organize relevant statistics
by positioning OECDs SHA (System of Health
Accounts) as a backbone statistics on medical
expenses
41.9 trillion (2007)

23
 National Accounts: health sector
(2007)
1. Fixed capital formation
for the health sector: Not available
2. General Government Final Consumption
Expenditure (Health): 35.3 trillion yen
3. Households Final Consumption
Expenditure (Health): 11.9 trillion yen

Total: 47.2 trillion

24
What is the weakest point of
Japanese healthcare system?

25
Inefficient primary care system!

26
What is Primary Care?

27
28
29
 Diabetes Dementia

Backache Hearing
loss

Hypertension Cataract
 Primary Health Care
Declaration of Alma-Ata
International Conference on Primary Health Care
Alma-Ata, USSR, 6-12 September 1978

Primary health care is essential health care based on practical,

scientifically sound and socially acceptable methods and technology
made universally accessible to individuals and families in the
community through their full participation and at a cost that the
community and country can afford to maintain at every stage of their
development in the spirit of self-reliance and self-determination. It
forms an integral part both of the country's health system, of which it
is the central function and main focus, and of the overall social and
economic development of the community. It is the first level of contact
of individuals, the family and community with the national health
system bringing health care as close as possible to where people live
and work, and constitutes the first element of a continuing health care
process.
 Hospital-centrism: health systems built around
hospitals and specialists
For most of the 20th century, hospitals, with
their technology and sub-specialists have
gained a pivotal role in most health systems
throughout the world.
Today, the disproportionate focus on hospitals
and sub-specialization has become a major
source of inefficiency and inequality.
Primary Health Care: Now More Than Ever, WHO (2008)

32
 Since the 1980s, many OECD countries have
tried to decrease reliance on hospitals,
specialists and technologies, and keep costs
under control.
Such countries as the UK, Netherlands,
Canada, Australia, NZ, and Scandinavian
countries such as Sweden and Demark have a
strong system to train family doctors/GPs,
specialist in primary care, as key players to
provide continuous, comprehensive, person-
centered care in the community.
33
Table 1 shows that Japan does not
have a system of family doctor

34
 Without family doctors

- Common to visit general hospitals or

university medical centers for minor illnesses
such as tension-type headache or flu.

- Particularly among the elderly.

35
Japanese healthcare system needs
in this aging era

A good collaboration between specialists in the

hospitals and community based primary care
physicians.

36
 Major lessons

After the disaster, many patients with primary care

problems rushed into secondary/tertiary care
hospitals, the function of the hospitals were
affected so much.
Even in the acute disaster period, a good
collaboration between specialists in the hospitals
and primary care physicians was in need.
Efficient primary care system is important for the
any country in any development stages.

37