APO Japan Health System Review (Health in Transition)

Editor's Notes

1. Japan is an archipelago which shares no contiguous land borders with any other nation. The majority of the population resides on four main islands with a predominantly urban (93.5%) population. Japan’s population numbers 126 million (Legido-Quigley & Asgari-Jirhandeh, 2018) though it is ageing rapidly and shrinking due to low birth rates, increased life expectancy and its immigration policy. Japan is the world’s third largest economy by GDP (purchasing power parity (PPP), current international $) at $40686 but recent figures highlight a slowing growth rate at 1.2% in 2015 compared to 4.2% in 2010 (World Bank, 2017). The literacy rate stands at 99% for adults (Knoema, 2018) while it has a Human Development Index ranking of 19 out of 189 countries and territories placing it in the very human development index category (UNDP, 2018). Knoema link: https://knoema.com/atlas/Japan/topics/Education/Literacy/Adult-literacy-rate UNDP link: http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/JPN.pdf
2. Total Health Expenditure (THE) accounted for 10.9% of Japan’s GDP in 2015 according to OECD data. This is above the OECD average of 9%. Japan’s health system is primarily funded through insurance premiums and taxes which make up 87.5% of financial contributions. Co-payments from patients add 11.7% (Ministry of Health, Labour and Welfare, 2014a). The government regulates and controls nearly all aspects of the health system. There are three levels of administration: national, prefectural and municipal where service delivery and implementation are mainly handled by the latter two. The Ministry of Health, Labour and Welfare and the Ministry of Finance have both had strong influences over the health system traditionally. Since 2016, the Shinzo Abe led government has shifted greater levels of responsibility towards the Ministry of Economy, Trade and Industry as well as the cabinet office as Prime Minister Abe believes it is the main industry in Japan (Legido-Quigley and Asgari-Jirhandeh). The health system is characterized by a universal health insurance scheme which is mandatory for all residents of Japan by law including foreign nationals with a residence card. Co-payments must be paid at every visit to clinics and hospitals which covers more than 5000 medical procedures, dental care and drugs. Japan does not maintain a gate-keeping system through general practitioners meaning patients can choose clinics or hospitals for their first point of contact. Historically, Japan has undergone a series of health system reforms to ensure high quality and low cost cover. Universal health insurance was established in 1961. In a bid to ensure robust implementation of this system to meet changing demographics, reforms focusing on the elderly, integration of services, financing and decentralization have occurred. Out of pocket payments are set by a national schedule though caps are placed on monthly and yearly expenditure to decrease high costs. Japan’s geographical position and its proximity to the Pacific Rim makes the country particularly prone to seismic activity, earthquakes, tsunamis and typhoons originating from the Pacific Ocean. The 2011 9.0 magnitude earthquake, coupled with the resulting tsunami and Fukushima Daiichi nuclear power plan accident created unprecedented levels of damage to human life, health care and long term care facilities (Legido-Quigley and Asgari-Jirhandeh).
3. There is no differentiation between primary and secondary health care. Patients are free to choose and there is no gate-keeping or waiting list system through GPs. Patients can seek care from secondary health care facilities at an affordable cost. Cost set the same regardless of speciality, location, public/private under fee schedule. Introduction of referral system for larger size hospitals means utilization has declined shifting to smaller community based clinics. The speciality of ‘general practitioner’ is relatively new in Japan. A clinic physician may have little background in general or family medicine instead having been certified as a specialist in some subspecialty. Differences between primary and secondary care facilities remain vague as smaller community based clinics can often provide hospital level services.
4. There are 47 prefectures in Japan with a total of 1718 municipalities made up of cities, towns and villages. Both the central and local (prefectural and municipal) are responsible for ensuring high quality and efficiently run health care services. The Ministry of Health, Labour and Welfare is the main body which conducts policy formulation, planning and evaluation in health care. While the majority of the planning is headed by the central government, each prefecture is required to create and implement a Medical Care Plan (MCP). Most health care is provided through privately owned facilities although the government retains oversight over provision and financing. Consumer and professional groups, including the Japanese Medical and Nursing Associations, play a significant role in client and patient advocacy. Such professional organizations do engage with MHLW through policy meetings but few have enough clout to influence the policy making process. They have no regulatory authority as they are voluntary.
5. The government regulates and controls nearly all aspects of the health system. The Ministry of Health, Labour and Welfare is the main body which conducts policy formulation, planning and evaluation in health care. The central government sets the national fee schedule for insurance reimbursement, subsidizes and supervises local governments, insurers and health care providers. Finally, it establishes and enforces regulations for insurers and health care providers at prefectural levels. While the majority of the planning is headed by the central government, each prefecture is required to create and implement a Medical Care Plan (MCP). These plans aim to provide seamless health care for locals from acute, long term and in home care. MCPs are reviewed every five years and are often developed in consultation with local stakeholders. Municipalities provide health promotion activities as outlined by their respective prefectural MCP framework.
6. Japan’s health care system has previously been described as having high quality health care provision at a relatively low cost. Advanced technologies, increased medicine prices and an ageing society has pushed health expenditure to third highest among OECD countries (Legido-Quigley and Asgari-Jirhandeh). In 2017, approximately one third of the national budget was allocated to social security (health care, pension, long term care and welfare) (Ministry of Finance, 2017). The health system’s financing is tax and insurance premium based. The majority of the funding is from public sources. According to the National Health Care Expenditure, insurance premiums contribute 48.7% of financial contributions, taxes contribute 38.8% and co-payments 11.7% (Ministry of Health, Labour and Welfare, 2014a). The social insurance system is divided into two main types – Employee’s Health Insurance and National Health Insurance. The former covers employed workers and dependents while the latter covers self-employed and unemployed people. These form the social health insurance scheme and it is mandatory for all residents including foreigners with residence cards. Voluntary health insurance is available but does not mean the individual can forgo social health insurance. Health insurance is provided by around 3000 organizations creating complex cross-subsidy mechanisms and varying premium rates. A nationally uniform fee schedule has kept out of pocket payments low as a percentage of total health expenditure.
7. Health insurance coverage is universal in Japan. Scope of coverage and reimbursement billing conditions are reviewed every two years. Japan has two major types of insurance schemes in Japan: Employee’s Health Insurance (EHI) and National Health Insurance (NHI). EHI covers public servants or those in companies. It is divided into four major categories: Japan Health Insurance Association (small and medium size companies), Society-Managed Health Insurance (large companies), Mutual Aids Societies (public servants) and Seamen’s Insurance (Seamen). NHI covers the self-employed and unemployed. It is insured by municipal governments and NHI societies. EHI covers 58.7% of the population while NHI covers 28.3% (MHLW, 2016). The late-stage medical care system for the elderly (75 or above) which began in 2008 was introduced due to the large increase in unemployed persons (mainly retirees) affecting the NHI financial stability. 10% is deducted from pensions, 50% from government subsidies and 40% from working class contributions.
8. Japanese hospitals and clinics are predominantly privately owned. 6849/8442 hospitals in 2016 were privately owned with 84.0% of them being owned by non-profit medical corporations. 2.8% were solely owned by private individuals and 10.1% owned by others including non-profit public corporations, non-profit school corporations and private medical schools (Ministry of Health, Labour and Welfare, 2017r). Although privately owned, they are all non-profit. A further 19% were established by national agencies, public organizations (such as prefectural municipal governments) and social insurance groups. The number of hospitals has declined by more than 1500 from 10096 in 1990 reflecting mergers and acquisitions. Most larger size public hospitals with acute and tertiary care focuses are in a state of financial crisis due to the current fee schedule set by MHLW though subsidized by the government. Most small, private clinics and hospitals for non-acute care are well financed. Hospitals have the highest concentration of inpatient beds with 1561005 (93.8%) of the total 1664525 beds in all facilities (2016). The majority of beds are for general use followed by psychiatric disorders and long-term care. Inpatient care in Japan is characterized by longer hospital stays then in other OECD countries (OECD, 2018b). The average length of stay in Japan was 16.5 days compared to 6.8 in OECD nations. The rise in welfare homes providing care for the elderly and a fee schedule revision to incentivize reduction of chronic care beds in hospitals has likely contributed to greater long-term care bed use with utilization of general use beds declining.
9. The ageing population has placed a great amount of focus on elderly care. Nurses are expected to be at the centre of The Integrated Community Care System, the central tenet of Japanese long term care strategy, to oversee and provide seamless care to the elderly and those in need of support. The number of nurses per 1000 population has risen from 2.12 in 1980 to 9.06 in 2016 marking the consistent rise in the elderly population. However, a nursing shortage remains with the government expecting 30000-130000 more nurses required by 2025. In line with this, care worker demand has risen rapidly. However, wages were set too low discouraging many care workers from choosing aged care. Only 58.4% of certified care workers were working in aged care in 2012 (Kubo M, 2014). A 15% turnover rate per annum also means many care workers tend to have low skills. (Hotta S, 2007). A government led ‘8020’ campaign advocating for those aged 80 and older to maintain at least 20 natural teeth to decrease incidence of periodontal disease and cavities. Professional mobility of physicians is limited in Japan and few with a local medical license go abroad to practice. Likewise, it is uncommon for nurses to go abroad for practice. Formal agreements are in place for foreign physicians, nurses and care workers to practice in Japan based on certain conditions being met including examinations. MHLW has stated that this scheme is not designed to address nursing and care worker shortages but to reinforce economic cooperation (MHLW, 2017a). A lack of uniform standards for doctors is being reviewed in achieving specialist status. Currently it is organized by non-nationally qualified academic societies with general practice being proposed for certification (MHLW, 2013a). Several levels of credentialing for nurses exist. A formal training system was established in 2015 to promote task shifting from physicians to nurses and other health workers.
10. Japan has had a long history of health insurance reforms. In 1922, the Employee’s Health Insurance (EHI) System was introduced for employed workers in order to stop them from being attracted to socialism and maintain their health. By 1938, the Community Health Insurance (CHI) system, later renamed ‘National Health Insurance’ or ‘NHI’ was created for self-employed workers in 1938 as very few of them had access. Both insurances were voluntary at the time. Following the Second World War, there was a push for universal insurance. With the expansion of the EHI and mandatory enrolment within the NHI, a universal health insurance system was achieved in 1961 (Ikegami N et al., 2011). This expansion was aided by almost 15 years of economic growth at a rate of 10% allowing the government to reduce the OOP payment rate from 50% to 30%, introduce a cap on such payments monthly and annually, and facilitate free medical services for the elderly. This latter provision was revoked in 1982 due to a slowing economy yet the foundation for the system remained. Facing serious economic stagnation, the Ministry of Health and Welfare shifted its policy focus to cost-containment through price and volume control (Hashimoto H et al., 2011).
11. Due to changing demographics, a number of health system reforms have been introduced in recent years. An ageing society, decreasing fertility rates, slowing economic growth and want for more expansive technologies has placed a strain on the national health system. These changes have been built on the universal insurance system already in place. In 2000, the Long-term care insurance system was developed for those aged 65 and above who require long-term care or social services. With the increased ageing population, a majority of the elderly wish to stay at home but many are currently living alone. The Integrated Community Care system (2006) aims to provide necessary support and integrates prevention, medical services and long-term care while also providing living arrangements and social care. The Comprehensive Reform of Social Security and tax (2010) aimed to improved fiscal sustainability within the social security system to support priority areas include child-raising, employment of young people, medical and long-term care services reform, pension, poverty, income inequality and low-income earners. The Regional Healthcare Vision (2014) was introduced by the Ministry of Health, Labour and Welfare so each prefectural government can create a regional plan estimating supply and demand for healthcare. Region-specific health care systems are to be developed by 2025 based on this.
12. Before 2008, the Elderly Health System (EHS) provided a financial redistribution mechanism for those aged 65 and above. Many retirees joined municipal NHIs creating a larger financial burden. The NHI was subsidized through the EHS with subsidies up to 41% of benefit disbursement. Insurers with below average enrolment of the elderly above 70 years would have funds levied to those with above average enrolment. Eligibility age was raised to 70 in 2002 and incrementally by one year until it reached 75 after that. Increases in health care costs due to ageing led to health insurance and distribution of premiums for those aged 65-74 and 75 and above being separated. Those over 75 are now insured by an independent health care system called the late-stage medical care system. By law, the late-stage elderly contribute 10% of premiums through their pensions with 50% from government subsidies and 40% from the working population contributions. One quarter of the subsidy from the central government is distributed to 47 prefectures to balance financial disparities. Overall government subsidies add up to 47% of total benefit for the late-stage medical care for the elderly. Those aged 75 and above with a high income pay a 30% OOP rate on top of their 10% pension contribution. An increasing elderly population, decreasing working population and expected increases in health care costs for the elderly have pushed the government to rework working population contributions from per-capita to income-based contributions.
13. Japan has the highest life expectancy in the world. Men are expected to live for 79.9 years and women are expected to live for 86.3 years (Legido-Quigley & Asgari-Jirhandeh, 2018). The control and eradication of common infectious diseases is one of the health system’s key successes. Japan has passed through the epidemiological transition from communicable to non-communicable and chronic diseases. There has been a substantial decrease of transport accident death having dropped out of the top 20 causes of death from 1990 (ranked 12th) to 2015. Japan has enjoyed very low mortality rates for mothers and their children from the 1970s. Infant mortality reached a record low of .02 deaths per 1000 live births in 2015. Maternal mortality has reduced from 14.0/100000 live births in 1990 to 5.0 in 2015 (World Bank, 2018).
14. The Japanese Government has had a continuing philosophy to ensure equity in health care over many decades. Since achieving UHC in 1961, Japan has expanded in breadth and depth the financial and health protection afforded to its citizens. The social health insurance system covers more than 5000 procedures and allows access to good quality health care regardless of income, place of residence and type of hospitals. Two key reforms introduced to shift the burden of care giving from individuals to society as a whole are the Long-Term Care Insurance and the Integrated Community Care System. The former seeks to assess care-level needs and provide care accordingly. The latter, being the central core policy of health and long-term care in Japan, aims to ensure long term support of the elderly to allow them to live with dignity with sufficient social support. The Comprehensive Reform of Social Security and Tax aims to improve fiscal sustainability of the social security system. Its priority areas include youth employment, medical and long term care services reform, pension reform, poverty and income inequality and low income earners. The focus of health care equity has already been identified by the government as its main industry (Legido-Quigley and Asgari-Jirhandeh, 2018) and has proved to have strong political backing despite several economic challenges including the 1973 oil and 1990s economic crisis.
15. OOP expenses are an important marker to measure the extent of risk pooling and preventing catastrophic levels of spending by patients which could potentially lead to impoverishment. Japan’s OOP payment levels add up to 11.7% of health spending. In comparison to other OECD countries, Japan’s household consumption on OOPs stands at 2.2% which is lower than the OECD average of 2.8%. Utilization of all health products and services requires a co-payment which is set by a national schedule fee with limited exceptions. For those under the age of 70 the OOP rate is 30%. For those aged 70-74 and children up to 6 years old it is 20% and 10% above 75. OOP payments are capped monthly and annually to decrease overall costs especially for those with chronic illnesses. Payments for services are required to be paid upfront which can deter poorer patients. Although often covered by health insurance, the difference between actual expenditure and cap payment is reimbursed a few months late.
16. Based on a “Declaration to be the World’s Most Advanced IT Nation” by the Cabinet in 2013, the MHLW has encouraged sharing of information among medical and long-term care institutions (Cabinet Office, Government of Japan, 2013a). Most health-related statistics are collected, compiled and analysed by the MHLW. For emergencies, MHLW selects infectious diseases of severe and/or huge burden on the public obliging health care facilities to report occurrence of infection based on five categories. MHLW has drawn up two documents to encourage information technology use in health care. These are the Grand design for informatization of the health care field (2001) and the Grand design for information utilization in medical care, health care, long-term care, and welfare sectors (2007) (Ministry of Health, Labour and Welfare, 2001). The Cabinet also launched the ‘Japan Revitalization Strategy’ in 2013. All insurers were required to analyse reimbursement data to create ‘data health plans’ to promote evidence based health promotion activities for clients. Although electronic health records encompassing medical history, illnesses, patient details have been opposed due to high costs and privacy concerns, 27.3% of hospitals had electronic health records to streamline and effectively facilitate medical services.
17. There has been a steady increase in the health care workforce across roles including physicians, dentists, pharmacists, public health nurses and nurses from 1980 to 2014 (Ministry of Health, Labour and Welfare, 2014c, 2016n) Japan has a relatively low supply of doctors at 2.35/1000 population compared to the OECD average of 3.02/1000 (OECD, 2016). Japan has more nurses than the OECD average at 9.06/1000 population compared to 8.03/1000 population in OECD nations (OECD, 2016).
18. Under Prime Minister Abe’s leadership, the Ministry of Finance, Foreign Affairs and MHLW have aligned successfully around health security with an aim to consolidate Japan’s commitment under a unified government. The Ministry of Health, Welfare and Labour collaborates across government departments and with international partners to deliver positive global health outcomes. Ministries such as Finance, MEXT (Education, Culture, Sports, Science and Technology), MAFF (Agriculture, Forestry and Fisheries) as Justice collaborate on issues including financing, alcohol and food, education of medical professionals, climate change, emergency planning and NGO and civil society engagement. Pandemics have been recognised not only as a health sector issue but an issue of national security, diplomacy, trade and economy requiring several departments to be involved. As president of the G7 Summit in 2016, Japan placed health security at the top of the agenda raising awareness and strengthening responses to public health emergencies by focusing on attaining universal health coverage and health emergency preparedness. Japan also cooperates with low and middle income countries and international NGOs to develop health care related projects and has been doing so for more than six decades to contribute to universal health care development.
19. Japan faces a demographic crisis with a shrinking population, low birth rates (Tamiya N et al., 2011) and increasing incidence of non-communicable and degenerative diseases. The 127 million population is ageing rapidly and shrinking due to lower fertility rates below replacement levels. Currently, the total fertility rate sits at 1.44 per woman while the population has shrunk by approximately 1 million between 2010 and 2016 (Statistics Bureau Ministry of Internal Affairs and Communication, 2017). The proportion of older people in the population (aged 65 years or older) rose from 17.4% in 2000 to 26.7% in 2015. It is expected that the proportion of older people will reach 39.4% in 2055 (Cabinet Office, Government of Japan, 2016). Health expenditure for those aged 65 years and above made up 60.4% of total health expenditure in 2014 (Ministry of Health, Labour and Welfare, 2014a). As the majority of costs are covered by the working population through the payment of taxes and medical insurance premiums, this is expected to increase even further. The proportion of older people in the population (aged 65 years or older) rose from 17.4% in 2000 to 26.7% in 2015. It is expected that the proportion of older people will reach 39.4% in 2055 (Cabinet Office, Government of Japan, 2016)
20. Japanese hospitals are generally well equipped with high-technology devices (Matsumoto M et al., 2004). There are no restrictions on hospitals prohibiting purchase of medical equipment or to open any speciality department without central government authorization. There is no official regulation on capital investment. Clinics fulfil a general diagnostic function and are usually well-equipped with technologies including x-rays creating even more convenient services. CT and MRI scanners in Japan far outweigh their OECD counterparts. There are .101 CT scanners per 1000 population and 0.047 MRI scanners per 1000 population compared to 0.0024 and 0.0014 respectively in OECD countries. Two out of every three hospitals, including psychiatric hospitals, have whole-body CT scanners (Ministry of Health, Labour and Welfare, 2017r). Patient access improves but can drive up cost escalation, be inefficient and incur over-utilization. Under the national health insurance system, all prices of health care, medical devices and pharmaceuticals are determined by the MHLW and, in principle, revised every two years.
21. Japan has tight control over health-care cost but a laissez-faire approach to service delivery creating a mismatch between need and supply of health-care resources and reduction in accountability for care quality. Empirical evidence is scarce regarding the quality of primary health care services in Japan. Tanaka et al. (2016) reported poor quality practices to control and screen for diabetes compared to European nations and the USA. Low rates of compliance to guidelines, limited opportunities for general practice training and division between preventive and curative services (Hashimoto et al., 2011). Poor performance in acute care services in hospitals was also shown for acute myocardial infarction (OECD Health Statistics, 2015). Evaluation is also limited for outpatient and chronic care inpatient services. Prefectures and major city governments are authorized to regulate the health workforce and facilities in their constituency. The government has moved to directly regulate health care service in local regions through legislation strengthening local regulatory power, enhancing coordination of providers, increased reporting.
22. Japan’s health insurance system does not have a single pool, but rather insurers are divided into approximately 3000 organizations. The NHI targets the unemployed and elderly population which is growing. This presents greater health expenditure costs with decreasing funding levels despite heavy government subsidies in place. In 2011, it was estimated that there were about 1.6 million people who were not covered by national health insurance (Ikegami N et al., 2011). This was largely due to an increase in the proportion of those with irregular employment at lower wages (from 18% in 1988 to 34% in 2010) and is now of great political concern (Ikegami N et al., 2011). There was a rapid increase in the proportion of the population covered by the NHI in recent decades due to an increase in the number of unemployed persons (mainly attributed to the elderly after retirement). Reforms that are being proposed and implemented to do so are met with the challenge of financing. Raising the consumption tax is the only source of funding expected to support reforms though political and economic concerns have hampered progress.
23. Japan accounts for 7.6% of total global pharmaceutical trade which accounted for $1072 billion USD in 2015 (Japan Pharmaceutical Manufacturers Association, 2017a). Drugs accounted for total health expenditure in 2013. Total drug expenditure has been increasing yearly and has kept pace with the rate in health expenditure increases (Ministry of Health, Labour and Welfare, 2016c). The drug reimbursement price set by the government is reviewed every year and often determined according to market prices. Tightened regulation and low interest of physicians into clinical research has discouraged doctors from conducting clinical trials. Large pharmaceutical companies prefer to conduct trials outside of Japan and import this data to be approved later meaning new drugs often remain unavailable to Japanese patients (Pharmaceuticals and Medical Devices Agency, 2017). This may not always be appropriate as different ethnic groups may react differently to each drug. There is an urgent need to research complementary and alternative medicine (CAM). A recent survey in the USA shows that use of such medicines led to comparatively worse results (Johnson SB et al., 2018). A 2005 survey shows that 44.6% of patients with cancer and 25.5% of those with benign tumours used some form of CAM.
24. Chart: Japan Vision: Health care 2035: Pie chart: 2035 Visions; 5 point cycle: 5 essential infrastructures In response to the rising concerns of impeding on health system sustainability, Japan requires a paradigm shift to a new system as proposed in Japan Vision: Health Care 2035. The goal is to build a sustainable health care system delivering better health outcomes through responsive and equitable care to each member of society. The report points to the need to move from inputs to outcomes, quantity to quality and efficiency, cure to care and specialization to integrated approaches across all sectors. It promotes three visions: lean health care (implementation of value-based health care), life design (empowerment of society while supporting personal choice) and global health leadership (leadership and contributions to global health). Targeting all people of all lifestyles, it will build on innovation, information, sustainable funding, health care professionals and a world class MHLW as its foundation.