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The Japanese Health Care System

Susan Goya - 2/22/2013

Before I went to Japan, I had worked as a Medicare claims examiner, and as an insurance biller for both a large hospital and a private physician. For most of that time in Japan, my family was qualified to use the Japanese single-payer health care system that was similar, though somewhat different from the Korean fashion of medical service. To afford a doctor, one did not need to visit a licensed money-lender. I have experience as both an uninsured (full pay patient) and an insured user of Japanese health care. Since returning from Japan, I have worked the front office for both a private physician's office and a small group practice.

And here I was in a Japanese hospital. Could it be? Was I really listening to the pleasant song of birds? I looked around the hospital and saw finches in cages affixed to the walls every twenty feet or so. Well, that's different. So began my first visit to a Japanese hospital. Over the years I would visit general practitioners, optometrists, dentists, obstetricians and pharmacists in public, private and church-run facilities.

I Feel Like Rip Van Winkle
When I returned to America I realized health care had changed while I was gone, lo, those twenty years. For example, doctors no longer collect and process their own lab samples. They send patients to a third party for x-rays and labs. Patients sometimes receive bills from providers they never heard of, providers whose relationship is with the doctor, not the patient. The patient may not get to choose who provides the auxiliary services. A big example is X-rays. A woman may go to the hospital for a mammogram. It used to be that once she paid for the mammogram, she was done. But now she will get another bill from a provider she never met and with whom she has signed no service contract. The bill will be from a radiologist contracted by the hospital to “read” the mammogram. The radiologist and the hospital sign the contract, but the patient pays the bill.

Another good example is an office biopsy. The doctor will take the tissue sample and package it. A courier from the pathologist will pick up the package. In a couple days the doctor will get a pathology report from the pathologist. It used to be the doctor would pay the pathologist himself and include the cost in the biopsy bill the patient receives. Today the patient will pay two bills: one to the doctor for taking the tissue sample and another to the pathologist for the report. Funny thing though, the two bills add up to more than the single biopsy bill back in the day. Furthermore, doctors freely share insurance and other private information with all these sub-contractors, not only for the purpose of billing the insurance, but also for the purpose of possible collections action.

This separate billing by subcontractors has contributed to steeply rising costs if only to cover for all the additional infrastructure to produce and process so many more bills. Every doctor's office or hospital used to have an in-house insurance biller. Today the biller, even billers for large hospitals, may be located hundreds of miles away. There are so many more bureaucratic layers today. Consumers must pay for each and every layer, including a substantial profit margin for the insurance companies.

Japan: Still One-Stop Health Care
All Japanese doctors work out of a hospital even if the hospital has only one doctor. Some hospitals are very small, sometimes with as few as only four beds. I saw no dedicated out-patient facilities. Hospitals are generally full-service. Some wore Korean clothing, owing to a significant Korean population in Japan.

It is possible the doctor send out some work but the patient would never know. The patient pays just one bill.

Some hospitals are specialized. For example, an expectant mother goes to a maternity hospital for all prenatal checkups and the delivery. A patient with heart disease goes to a cardiac hospital. Many hospitals are full service. Wait times are no more or less than in America.

Japanese National Health Insurance is comprehensive and easy. Normally employers withhold the premium at a rate of about 4 percent in addition to income tax withholding. Self-employed people pay their premiums directly. The insurance covers 70 percent of the bill; the patient pays 30 percent out of pocket. Patients pay 30 percent of a far smaller total bill than they would in America. In the case of childbirth, the local city hall reimburses families that 30 percent. In fact, National Public Radio wondered if health care in Japan was too cheap.

Although most health care facilities are privately owned, there are some public facilities. Doctors usually do not work for the government. They are sole proprietors or work for larger hospitals. Patients may go to any doctor or specialist they choose anywhere in the country. A patient's own residence is of no consequence. There is no such thing as a preferred provider network. There is therefore far more consumer choice in Japan than in America.

Of course, because health insurance premiums are withheld from income, Japanese people pay higher taxes than what they would pay without health insurance premiums. Even so, most Japanese people do not consider taxes to be burdensome. In fact, most people pay income tax of no more than 20 percent (about 15 percent for the sum of national, prefectural, and municipal taxes) plus about 4 percent for health insurance). 19 or 20 percent compares favorably to American taxes.

We can expect that an American single-payer system would increase American taxes, but that increase would be more than offset by the elimination of punitive health insurance premiums. Furthermore, medical bills would decrease because there would be considerably less infrastructure to support. A single-payer system is simply much leaner than what we have right now. More than 30-40 percent of medical costs and premiums go to cover an insurance company's overhead plus profit. Clearly health care consumers would realize substantial savings with a single-payer system.

Single-Payer vs. Universal
The public debate has been confused by the conflation of the terms “single-payer” and “universal.” These terms are by no means synonymous. A single-payer system may be universal, or it may not. There is no reason that a single-payer system must mandate participation; either the patient participates or the patient self-pays. In Japan, people can self-pay, participate in the single-payer system or purchase private health insurance, as they choose.

Of course a single-payer system would eliminate for-profit health insurance companies. Whether health insurance should ever be a for-profit business is a matter of debate. The profit motive creates an inherent conflict of interest; the higher the premiums and the less the company pays out, the greater the profits. It is in the company's interest to collect premiums but deny benefits. In America, even patients who carefully read their policies and diligently follow all the rules may find their benefits denied. For example, if an in-network doctor takes a tissue sample and sends it to an out-of-network pathology lab without bothering to check with the patient's insurance company, the insurance company will pay benefits at a much lower rate, or possibly deny payment altogether. The patient, cut out of the loop, rarely has any recourse. Private insurance companies are fond of the current system because the patient must pay for decisions made by health care providers and insurance companies.

Horror Stories
The media often tells horror stories about health care, but horror stories do not make an argument. For every story offered to “prove” that single-payer in some country is bad, there is another story showing that single-payer in the same country is wonderful. The media prefers to concentrate mostly on Canada. One source even defines single- payer a “Canadian-style system.”

It would take little effort to collect a group of similar pro and con stories about the current American health care system. A cherry-picked set of horror stories evokes an emotional response, but such an important public policy needs to be debated with all the facts available, and decisions made on a rational, not emotional basis.

Although America must fully debate the merits of single-payer insurance, the real issue is not whether America should adopt a single-payer system or not. The real issue is whether the single-payer system should mandate universal participation or not. Those favoring a universal mandate argue that a very large pool assuming the risk means for cheaper premiums for each participant. Unless all must pay, only the sick will choose to participate forcing the few healthy participants to subsidize the sick with prohibitively expensive premiums.

However, group insurance is all about healthy patients subsidizing sick patients, especially if the group is tiny. If the employee group is a sick group, premiums will be much higher than if the group is healthy. Sometimes individual health care premiums can be less expensive than group premiums. Premiums will be fairer and very much cheaper when the participating population base is very large.

Opponents of single-payer like to stigmatize it as “socialized” medicine. The purpose and effect of hurling the word “socialized” is to shut down debate with a spurious emotional link to socialism. We must resist the temptation to react emotionally and we must evaluate single-payer systems on their own merits. Japan is one example of a successful national health care system.

Definitions:

Socialism:
1: any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods
2 a: a system of society or group living in which there is no private property b: a system or condition of society in which the means of production are owned and controlled by the state
3: a stage of society in Marxist theory transitional between capitalism and communism and distinguished by unequal distribution of goods and pay according to work done. http://www.merriam-webster.com/dictionary/socialism

Socialized Medicine
Medical and hospital services for the members of a class or population administered by an organized group (as a state agency) and paid for from funds obtained usually by assessments, philanthropy, or taxation. http://www.merriam-webster.com/dictionary/socialized+medicine

Universal health care:
Health care coverage which is extended to all citizens, and sometimes permanent residents, of a governmental region. Universal health care programs vary widely in their structure and funding mechanisms, particularly the degree to which they are publicly funded. Typically, most health care costs are met by the population via compulsory health insurance or taxation, or a combination of both.

Universal health care systems require government involvement, typically in the forms of enacting legislation, mandates and regulation. In some cases, government involvement also includes directly managing the health care system, but many countries use mixed public-private systems to deliver universal health care. http://en.wikipedia.org/wiki/Universal_health_care

Susan Goya is a consultant, researcher and freelance writer. She has a Master's Degree from University of South California.

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