How does Japan's healthcare system work?

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Japan's Statutory Health Insurance System (SHIS) has universal health coverage and is among the most effective health models in the world. Created in 1961, the current system is the result of some changes made over time, since the medicine practiced at the beginning of the 20th century was based on Chinese medical practice.

One of the reasons why Japan ranks at the top of the ranking of the most efficient healthcare systems in the world is that it has low infant mortality rates, as well as an increase in life expectancy at birth. During World War II, Japanese life expectancy was 50 years for men and 54 years for women. However, with the strengthening of community health institutions, there has been a reduction in the mortality rate from infective diseases, which has made it possible that since the 1980s, female life expectancy in Japan is the highest in the world.

To encourage and help improve quality of life, Japan has primary and secondary preventive actions, in addition to the use of advanced technologies (the country is among the most developed in the world, technologically speaking). Some of the initiatives proposed by the country are: campaigns to reduce salt intake, against smoking, cardiovascular risks, and suicide prevention.

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In Japan, the public health system is based on primary care, so family doctors are responsible for most of the care, while other specialties serve a smaller number of patients. Japan's Statutory Health Insurance System (SHIS) covers 98.3% of the population, while the Public Social Assistance Program for low-income people covers the remaining 1.7%. Resident citizens and non-citizens are required to enroll in a SHIS plan; undocumented migrants and visitors are not covered.

Primary care is mainly provided in clinics, with some services provided in outpatient departments of hospitals. Most clinics are private and run by physicians or medical corporations (health management entities generally controlled by physicians). A small part is owned by local governments, public bodies, and non-profit organizations.

Primary care practices often include teams with a doctor and a few contract nurses. Nurses and other staff are generally salaried employees. In some places, nurses act as case managers and coordinate care for complex patients, but roles vary by environment.

Doctors can provide medication directly to patients, so clinics, as well as pharmacies, can dispense medication. Patients are not required to register at a specific clinic as in other models in other countries, and there is no strict control. However, the government encourages patients to choose their favorite doctors.

Professional commission

In hospitals, specialists are usually salaried, receiving additional payments for extra tasks such as night help. Those who work in public hospitals can work in other health institutions (including private ones), with the approval of their employers; however, even in these cases, they often provide services covered by SHIS.

The employment status of specialists in clinics is similar to that of primary care physicians. A survey conducted in 2017 revealed that physicians working in medium and large hospitals, both in-patient and out-patient, earned an average of JPY 1,514,000 (USD 15,140) per month.

For healthcare professionals to receive the transfer for their care, clinics and hospitals send insurance claims, mainly online, to funding agencies (intermediaries) in the SHIS, which pay most of the fees directly to providers.

Universal Health Coverage in Japan: How Does It Work?

Japan's Statutory Health Insurance System provides universal coverage and is funded primarily by taxes and individual contributions. Benefits include hospitals, primary, specialist, and mental health care, as well as prescription drugs. Citizens pay 30% coinsurance for most services and some copayments.

Low-income, young children and older adults have lower co-insurance rates, and there is a maximum annual household outlay for health care and long-term services based on age and income. Also, there is a limit on extra monthly costs; the national government defines the fee schedule.

Japan's prefectures develop regional distribution systems. Most residents have private health insurance, but it is mostly used as a supplement to life insurance, providing additional income in case of illness.

SHIS consists of two types of mandatory insurance:

  • Employment-based plans, which cover about 59% of the population;
  • Insurance plans based on where you live, which include citizen health insurance plans for non-employed individuals 74 years of age or younger (27% of the population) and health insurance plans for seniors, which automatically cover all adults aged 75 years. or more (12.7% of the population).

National and local governments are required by law to ensure a system that efficiently delivers good quality medical care. The national government regulates almost every aspect of SHIS. The national government defines the SHIS rate table and provides subsidies to local governments (municipalities and municipalities), insurance companies, and providers. It also establishes and enforces detailed regulations for insurers and providers.

The financing of health expenses comes from taxes (42%), mandatory individual contributions (42%), and direct charges (14%). In employment-based plans, employees and employers split mandatory contributions. There is a limit on the contribution rate, and it is around 10% of the monthly salary and bonus, determined by the employee's income. Employers can have collective contracts with insurers, reducing costs for employees.

For home-based insurance plans, the national government finances a portion of the mandatory contributions of individuals, as well as municipalities and municipalities. The Japan Health Insurance Association ensures employees from small and medium-sized businesses, and health insurance associations that insure large companies, also contribute to health insurance plans for seniors.

Although more than 70% of the population has some form of secondary and voluntary private health insurance, private plans perform only a supplementary or complementary function. Historically, private insurance developed as a complement to life insurance. It provides additional income in case of illness, usually as a lump sum or in daily payments over a defined period, for sick or hospitalized policyholders.

All SHIS plans provide the same benefits package, which is determined by the national government. The services covered by the plans are:

  • hospital visits;
  • primary and specialized care;
  • mental health care;
  • approved drugs;
  • home care services provided by medical institutions;
  • palliative care;
  • physiotherapy;
  • most dental care.

Durable medical equipment prescribed by doctors (such as oxygen therapy equipment) is also covered by SHIS plans. People with disabilities who need other equipment, such as hearing aids or wheelchairs, receive government grants to help cover the costs.

Optometry services provided by non-physicians are not covered under SHIS. In the case of corrective lenses, for example, there is coverage unless they are prescribed by doctors for children up to 9 years of age.

Although maternity care is generally not covered, SHIS provides medical institutions with a one-time payment for delivery services, and, local governments subsidize medical tests for pregnant women.

Souces: CREMESP - The Commonwealth Fund