All residents of Japan are required to carry healthcare insurance by law. If you do not have insurance from an employer while living and working in this country, then you can sign up for a national health insurance program that the local governments administer. Each of the 47 precincts in the country works to distribute the care and services that are necessary to provide world-class services.
Medical fees in the Japanese healthcare system are strictly regulated by the government. This requirement is the only way to ensure that the services remain affordable for the general population. If you do not carry any insurance, then you are responsible for paying 100% of the costs of care. The only exception to this rule is if you are homeless and brought to the hospital by ambulance or receive a government subsidy because of your low income level.
Japan spends about 8.5% of the country’s GDP on healthcare expenses, which is significantly lower than the 18% that the United States spends each year. The tight regulations and fee negotiations help to keep expenses low, which is why the pros and cons of the healthcare system that the Japanese follow are under closer scrutiny today.
List of the Pros of the Japanese Healthcare System
1. The standard of healthcare in Japan is exceptionally high.
People who are born in Japan have the longest life expectancy rate of any other country or culture in the world today. Even though there are fewer doctors per capita in the population because of the educational costs of becoming a doctor in the country, the clinics and hospitals are excellent because of the emphasis on technology and equipment. Even local medical providers have access to state-of-the-art options that allow you to receive some of the best care that is offered anywhere on our planet today.
2. It operates on a non-profit business model.
Hospitals in Japan are required to be operated as a non-profit organization according to national law. Physicians are responsible for the management of them instead of bureaucrats. For-profit entities cannot own a clinic or hospital, even if their primary services fall outside of the medical industry. Any entity providing care in the Japanese healthcare system must be owned and operated by a doctor.
Because of this, an MRI of the neck area for a patient in Japan costs roughly $100, while the same service in the United States would cost more than $1,500. The negotiated rates for care in the country are only changed once every two years.
3. The system functions through a universal system of care.
The healthcare system in Japan is generally viewed as being a universal system of care. Whether you are a citizen of the country, and expat, or a foreigner, you will receive the same level of access to the treatments you need to improve your health. Non-citizens qualify for the system if they stay in the country for more than a year, while students can register for healthcare options through the nation’s National Health Insurance System. Employers can offer an association plan as a benefit as well.
As in the United States, any benefits which are employer-provided will receive an automatic deduction from any earned salary. You would then receive the remainder of your earnings through direct deposit or some other method.
4. You can receive free care for many services.
The Japanese healthcare system provides free screening processes for several diseases, offers control for infectious illnesses, and includes prenatal care without an additional expense. If you receive services that fall outside of this spectrum, then you automatically accept responsibility for 30% of your medical costs. The government will then take care of the remaining amount that comes through the provision of services.
There are levels at 10% and 20% depending on the age of the person and the overall income for the family. Monthly thresholds are set for each family as well, also dependent on age and income, and any medical fees exceeding this amount are either reimbursed by the government or waved.
5. Patients using dialysis in Japan have a significantly longer life expectancy.
A comparison of the data between the Japanese healthcare system and that of the United States shows that patients who are dealing with kidney failure have a significantly higher life expectancy rate after five years than they would receiving comparable treatments in the United States. According to data published by the Japan Renology Society and the U.S. Renal Data System, the 5-year survival rate in Japan is 59%, while it is 38% in the United States.
The reason why there are superior results available in Japan is because the law forces clinics, hospitals, and doctors to provide the same standard of care at all times. It doesn’t matter what the negotiated rate happens to be for the service. You either offer the correct services or you lose the opportunity to do so.
6. Cancers are treated more aggressively in the Japanese healthcare system.
If you receive a diagnosis of certain cancers when living in Japan, then you have a higher survival rate to follow than if you were in the United States are other developed nations in the world today. The Japanese healthcare system excels in the treatment of lung cancer, liver cancer, pancreatic cancer, and colon cancer when compared to the survival rates found in the United States.
The surgical outcomes for cancers in Japan tend to be better as well, along with overall survival, because there tends to be a more aggressive use of chemotherapy in late-stage cancers compared to what American doctors provide their patients.
7. Organ transplants are more effective in Japan than in other countries.
Studies which track the global rate of success for organ transplants show that the work performed in the Japanese healthcare system tends to be more successful and effective than anywhere else in the world by a significant margin. The survival rate for heart transplant recipients in Japan after five years is over 96%, while the global average is under 72%. Although there is a lack of donors in the culture so that about 100 transplants are performed each year, that means only four of them fail to meet the expected average.
8. Service fees are identical everywhere across Japan.
The government of Japan uses a nationally uniform fee schedule for reimbursement when patients seek care from a doctor. That means you know what a service will cost, no matter where you happen to be in the country, so there are no geographic changes that can surprise you. That is very different than what you might experience in the United States, where the cost of care can vary between providers, rural vs. urban care, and several other factors.
9. It reduces the need for emergency room visits.
Before the implementation of the Affordable Care Act in the United States, 46% of the patients that emergency rooms served each year received care there because there was no other place for them to go. Since they did not have any insurance to call upon to visit a primary care physician, they used the ER whenever there was a healthcare need since that was their only option. It is this inequality that is one of the most significant reasons why medical costs continue to rise in the United States.
Because the Japan healthcare system emphasizes local access and mandates insurance coverage for everyone, a greater level of attention is given to preventative care options instead of being reactive.
10. This structure provides high levels of early childhood care.
Even with the lower birth rates that Japan experiences when compared to the rest of the world, this country discovered that future social costs go down when there is early healthcare present for children. There are fewer issues with welfare dependency, crime, and health issues like obesity because there is an emphasis on family health education. The goal is to prevent chronic diseases and treat acute problems aggressively to ensure that a positive outcome can occur for the patient.
This structure allows the government to guide the general population toward a healthier choice as well. Regulations that make unhealthy choices more expensive help to curb behaviors that could lead to future health problems. You will see “sin taxes” in Japan on items like alcohol and cigarettes, which is a trend that some cities in the United States are following as well.
List of the Cons of the Japanese Healthcare System
1. There is no concept of the “family doctor” in the Japanese system.
There are several private hospitals that you can find in Japan which will provide you with excellent care. The public institutions provide the same level of service, as do the clinics which can be publicly or privately owned. All of them must be a non-profit organization and run by doctors, so combining this feature with the fact that there are fewer people practicing medicine means that you don’t receive a family doctor.
If you require care for any reason, then your doctor will need to review your entire medical file as part of the examination process to offer an accurate diagnosis. This process adds a little more time to the treatment plan, which could be frustrating for some individuals.
2. Everyone pays taxes into the healthcare system in Japan.
When you receive healthcare insurance as a benefit through your employer in Japan, then the company will withhold your tax amount to the National Health Insurance System so that your full responsibility for payment is covered. You must pay the additional 30% for chargeable services on top of this premium that comes through taxation.
Your tax rate is based on the amount of income you earn while employed in Japan. If you are unemployed or a self-employed worker, then you must enroll in the health insurance place which is available through the local government office. You would then be responsible for an assigned tax amount based on what you earn.
3. Language barriers exist in the Japanese healthcare system.
The population of non-Japanese citizens is growing rapidly thanks to the expansion of educational and vocational opportunities in the country. If you do not speak Japanese, then trying to access your healthcare services can be challenging, even as the government attempts to place more English-speaking professionals in the hospitals and clinics around the country.
Because of this disadvantage, anyone who does not speak Japanese and needs to see a doctor is encouraged to bring their own interpreter or translator with them to an appointment. You will also need your health insurance card whenever you access services through a clinic or hospital.
4. Japan’s psychiatric hospitals are well behind the times in terms of global standards.
Although the Japanese healthcare system excels in many areas of advanced medicine, their focus on mental health is somewhat lacking compared to the rest of the world. Even with the development of recent reforms, most hospitals in the country continue to use outdated methods of control. While all other developed countries are seeing lower levels of isolation, physical restraint, and compulsory medication, Japan is seeing their rates in these areas climb.
One of the most significant dangers to the use of forced restraints is the development of deep vein thrombosis and other risks of premature death.
5. It forces healthy people to pay for the costs of medical care for others.
Because you are paying taxes into the healthcare system in Japan, you are only receiving a benefit from this effort if you need to visit the doctor for some reason. If you are a generally healthy person and don’t need to see someone very often, then you are essentially subsidizing the cost of those who need more medical services than you do. It is important to remember that the sickest 5% of any population consumes 50% of the total healthcare costs of a country, but the healthiest 50% only consume 3% of those costs.
The United States uses a similar system for Medicaid and Medicare, with payroll taxes going into a large pot that people who are 65 and older or with certain disabilities can access for their care. If you don’t qualify for Medicare or die before you get to use the system, then you experience this same disadvantage as some do in the Japan healthcare system.
6. This system may not encourage good health practices.
You don’t get to be the global leader in life expectancy because you stop taking care of yourself. With women living an average of more than 86 years, Japan is the place to be if you need care. Although this disadvantage does not apply to everyone, it is a general complaint about universal care. When there is no financial incentive to take care of oneself, then they may not be as careful with their health as they could be.
Despite an overall lowering of healthcare costs for the economy with a system like this, the actual per-person expenses can sometimes be more when all funding resources are accounted for in Japan when compared to the United States. The average expenditure per person is roughly $3,000, but the government picks up 70% of the tab for the services which are not classified as being free.
Verdict on the Japan Healthcare Pros and Cons
Although there are some significant successes to consider with the Japanese healthcare system, the kaihoken is in crisis today. Since its establishment in 1961, this country is seeing significant aging in its population, a reduction in their birth rates, and a population by 2050 that will be 40% of what it is today. What has worked well in the past is beginning to fail because the proportion of people over the age of 65 has quadrupled.
What holds the healthcare system in Japan back is its overall inefficiency. Despite its many successes, there are changes that must be made to encourage more doctors to come embrace these challenges. It is essential to remember that out of the 33 countries which are considered “developed” by global standards, 32 of them use either a single-payer, forced insurance, or two-tier approach to coverage.
These Japan healthcare pros and cons show us that the aggressive negotiations for low rates, generic drugs, and long-term price fixing makes it possible to reduce the cost of care quickly. It has worked overseas with much success, but it may not be a system that could work in the United States or in other developed countries.
Blog Post Author Credentials
Louise Gaille is the author of this post. She received her B.A. in Economics from the University of Washington. In addition to being a seasoned writer, Louise has almost a decade of experience in Banking and Finance. If you have any suggestions on how to make this post better, then go here to contact our team.