When compared to the United-States, the United-Kingdoms, or France, the healthcare system in Japan is quite different. In a nutshell, it could be seen as a hybrid relying heavily on responsibility and co-payment. The Legatum Institute’s Prosperity Index ranked the Japanese health care system as the tenth best in the world. But this quality has a price, and with a super-aging population and declining demography, Japanese policymakers have to be creative to maintain its long-term sustainability.
Japan introduced universal health care in 1961 with the implementation of the National Health Insurance (NHI) system. All Japanese citizens and long-term residents must be part of a health insurance scheme according to their employment status and age. Health Policy is multileveled in Japan. It is decided at the national level, reformulated regionally, and implemented at the municipal level. Although more than 3,500 independent insurers exist, they are all integrated into a uniform framework that is mandated by the national government.
The Employee Health Insurance & National Health Insurance
The Japanese health system is based on a fee-for-service reimbursement scheme under a uniform national tariff schedule that is revised periodically. The health insurance scheme is divided into three primary groups depending on the age and employment status of the enrollee:
· the Employees’ Health Insurance scheme (EHI) for full-time employees and their family;
· the National Health Insurance Scheme (NHI) for students, freelancers, self-employed, farmers, and the retired;
· the Long Term Care Insurance (LTCI) for the Elderly over 65.
The insurance scheme includes the statutory benefits package covering hospital care, ambulatory care, approved prescription drugs, and most dental care.
The insured pay their premium. The contribution’s rate is 10% of a salary on average, with a cap of 13%. In principle, the employer pays covers half of the premium. The local governments define the premium. The calculation formula and amount of contribution differ following the local governments from an average of 250,000 yen up to 560,000 yen per year. For the Long-Term Care Insurance Scheme, the elderly contribute to only 10%. Government subsidies finance 50 %, and the working generation contributes to 40 %.
When receiving health services, the insurees are required to pay 30% of the total cost. Elderly over 75 and children under six years only pay 10%, while those aged 70-74 pay 20%.
The balance of the charge is submitted for reimbursement to the Prefectures’ Claims Review and Reimbursement Organizations (CRROs). The claims submitted are checked for the appropriateness of procedures. In the event of inappropriate or unnecessary procedures, CRROs have the authority to reject the request.
Almost all Japanese medical facilities are paid directly by the social health insurance scheme. The basis of compensation is set by the national tariff schedule. This schedule is revised every two years by the Central Social Medical Insurance Council (CSMIC), which is comprised of representatives of the payers, providers, and public health organizations.
Individuals are free to choose the services they wish to access, and most care is reimbursed on a fee for service basis. This freedom has a price for society and taxpayers as some people overuse the system and visit doctors on a daily basis. With few mechanisms to control demand, the primary tool for controlling costs is the provider fee schedule, which is reviewed every two years. Not being able to charge more than the amount defined by the authorities, the only way for physicians to increase their income is to increase the number of patients which could lead to a decrease in the quality of the care.
National health expenditures in Japan are increasing. In 2014, spending totaled US$361.1 billion, equivalent to US$2,842 per person. According to the OECD database, Japanese healthcare expenditures represented 10.9% of the GDP, which was 2% above the median of other OECD countries.
In 2018, The Health and Global Policy Institute conducted a survey that showed that 47% of the 1,000 respondents were very satisfied and overall satisfied with the Japanese medical care and the Healthcare system.
In 2014, the elderly’s healthcare costs skyrocketed up to US$1,085 billion. With a rapidly aging population, this figure increases dramatically and now reached as much as 35.4% of the total national healthcare expenditure. In 2040, the elderly over 65+ will represent more than 30% of the population, which will undoubtedly bring a lot of financial pressure to the system. The financial sustainability of Japan Healthcare is and will be even more at risk in the coming years if the Government does not take dramatic measures to reform it.
The Long-Term Care Insurance System
The Long-Term Care Insurance (LTCI) is separated from the Medical Care Insurance. It is at the core of the Japanese Social welfare system. As of January 2015, LTCI provides benefits to over 5 million persons, about 17% of this age group.
The main goal of Long-Term Care Insurance is to “assured that citizens will receive care and will be supported by society as a whole.” The system is focused on the users and the quality of long-term care services.
In 2017, close to 35 million Japanese were aged 65+ and could pretend to receive LTCI. According to the projections, in 2042, more than 38 million Japanese will be over 65.
The aims of establishing the LTCI system includes shifting the burden of family caregiving to social solidarity, shifting cost-sharing via an insurance premium system, and integrating long-term care and welfare services. Eligibility is assessed using a standardized computerized 74-item questionnaire based on activities of daily living.
People aged over 65 who satisfied the eligibility criteria and those aged 40-64 with age-related diseases are entitled to receive long-term services at home in or facilities, irrespective of income level and availability of family caregiving. Insurance benefits in kind include in-home services (e.g., home visits/day services and short-stay services/care and services at facilities, including long-term care welfare or medical facilities).
Challenges of the Long-Term Care Insurance
Japan introduced the LTCI as a compulsory scheme benefiting all older adults in need. The system has done well to address much unmet need, to provide support on a universal, needs-alone basis and to support informal carers. However, the financial sustainability of the model is questionable under current cost and eligibility arrangements. The number of users, and therefore spending, has increased far beyond expectations.
Although more than 90% of the Japanese population is enrolled in a private health insurance scheme, it is only additional. Most of the private insurances developed historically as an addition to life insurance. They provide lump-sum payment benefits in case of chronic or life-threatening sickness.
The lack of nursing facilities and home care services had been identified as a critical reason for the long lengths of hospital stay. In the 1950s, about eight in 10 Japanese died at home. Today about seven in 10 Japanese dies in clinics and hospitals. According to a health ministry survey, nearly six in 10 Japanese wish to die at home, but many ends up being hospitalized because they wish to avoid being a burden for their family members and feel uneasy about the level of medical treatment that can be provided at home. Reducing “Social Hospitalization” is one of the challenges that the Japanese government is currently trying to tackle in a country with the longest life expectancy.