School of Public Health

History of measures to achieve universal coverage of

national health system and role of price control in Japan

Hideki HASHIMOTO, MD DPH

Professor in Health and Social Behavior

University of Tokyo School of Public Health

hidehashimoto-circ@umin.ac.jp

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Tokyo Fiscal Forum 2016

School of Public Health

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Japan’s Life Expectancy exceeded OECD avg. since 1970s

Male

Female

Canada

USA

France

Italy

Netherland

Norway

Sweden

UK

Japan

Main driver = Reduced stroke

mortality brought by • Improved living

standard • Public health

intervention • Widely available

anti-hypertensive medication

School of Public Health

Mandated universal coverage

Community based plans by municipal government insurers, and occupation based plans by NGO insurers (more than 3000 insures), with different premium rates

Standardized benefit package and payment scheme set by the central government

Dominantly private delivery system under tight price control

For details; see Japan Series in the LANCET, 2011 September

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Japan’s healthcare system today

School of Public Health

Reference) OECD Health Data 2010 3

High % of public expenditure for Total Health Expenditure

School of Public Health

Not “big bang” introduction

Formal sector (rich) vs. Community based for informal sector (poor)

Original Source) Ikegami, et al. Lancet 2011, Figure 1,

Trends in health insurance coverage in Japan, 1927-90 modified by Hashimoto 4

History of Japan’s Universal Coverage

0%

20%

40%

60%

80%

100%

'27 '31 '39 '40 '43 '49 '53 '58 '61 '70 '80 '90

Year

Perc

en

t o

f p

op

ula

tio

n

GMHI

SMHI

CHINone

MAA

Community based plan

Plans for small business

Corps for large business

Other

WW II

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Business based plans for formal sector workers since 1927

Mandated

NGO insurers by large business

Government insurer for small business

100% coverage + work compensation

Militarism-based productivism

Community-based plans for informal workers since 1938

Voluntary community based NGO, with varying terms

Anti-poverty and social stabilization (very weak)

Reference) Shinmura T. The Era of Universal Coverage in Japan, 2011 pp42-44 5

Origin of public insurance plans (1922-1945)

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Extension of coverage first (1950-1961)

1958 general election (conservative liberal vs. socialism)

1958 amendment of community based plans (mandated)

Mix of social insurance and tax subsidy to extend coverage of informal sectors (Abandonment of Bismarkian system)

Matured welfarism under economic boom (1961-1973)

Expansion of benefit coverage (50->70%)

Subsidy to catastrophic copayment

Free care for the elderly (reduced copayment since 1983)

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Policies under post-war democratic government

School of Public Health Outpatient utilization (x1000 visits/day)

7 7

1961;

UHC 1982;copayment reintroduced

1973; Free elderly care

Subsidy against catastrophic

copayment

Source) MHLW Patient Survey

School of Public Health

Low financial barrier to healthcare access

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0

2

4

6

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経済的理由で必要な医療サービスを

過去1年間に受けなかったことがあるものの割合（％）

65歳未満 65歳以上

Data source; Study of Health, Age, and Retirement in Europe

Japanese Study of Ageing and Retirement

Those who withdrew healthcare consultation due to financial concerns in the past year (%)

School of Public Health

Japan’s public health plans and financial contributions

NHIA (National

Health Insurance

Association);

medium to small

companies): 1

Employer Employee Self-employed

Premiums Taxes

Government

CHI (Citizens’ Health Insurance)

Municipalities: 1788

CHI Unions: 165

SMHI (Society-Managed

Health Insurance; large

companies): 1497

MAA (Mutual Aid

Associations; public sector):

77

1st Tier 2nd Tier 3rd Tier

10%

40%

50%

Premiums

From 1st to 3rd

tiers

75 and over

LEHI (Late Elder

Health Insurance;

prefectures): 47

4th Tier

Ikegami, et al. Lancet 2011 Fig 3.

Tax and inter-plan transfer to cover poorer plans

Achieving redistribution and contribution equal to ability to pay

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Revival of productivism (late 70s~mid 90s)

Economic stagnation since late 70s with skyrocketing medical expenditure due to generous scheme

Cost control through macro cap and fee schedule control by the government agency

MOF sets growth limit

Negotiation b/w payers and providers on fee schedule amendment

Item by item negotiation, controlling price and expected quantity

Little direct control for delivery process and resources

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Challenges; population ageing and economic stagnation

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Originally started during war-time under strong central government’s coercive power, succeeded to post-war democratic government

Fee-for-service under standardized fee schedule, no extra charge allowed.

Fee schedule equally applied to the whole sector

Negotiation b/w payers and providers under macro cap set by MOF

Avoids low-price low-quality dilemma

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Price control through fee schedule

Hashimoto, Ikegami, et al. 2011 Lancet Fig 1

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Medical exp. growth tightly controlled under

GPD growth rate since 1980

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National Medical expenditure (Trillion JPY)

Medical exp growth rate

Economic growth rate (GDP)

Since 1980, ministry introduced price control through national fee schedule, while keeping fee-for-service scheme

Hashimoto, Ikegami, et al. 2011 Lancet

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Provider side

National fee schedule; item-by-item price list with reimbursement conditions

Price setting under macro cap set by Ministry of Finance

Ban against selection, extra charge, and limited private practice beyond fee schedule (95% of hospital revenue from NHI)

Political negotiation b/w providers and payers under the cap

Fee-for-service based payment provides financial incentive for physicians (dominantly private sector) to do more

Japanese Medical Association stands for office-based private physicians who were major providers for chronic care outpatient services under free-access policy.

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Cost containment while keeping physicians incentives (Ikegami, 2014 World Bank report)

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Extension of coverage first, supported by economic growth and increased tax revenue (1950-1961)

1957 general election between liberal vs. socialism parties

Tax subsidy to extend coverage of poor informal sectors

Matured welfarism era supported by economic boom (1961-1973)

New economy policy (“Retto Kaizo ron”)

Social security as economic policy, redistribution of welfare across the nation

Expansion of benefit coverage for community plans (50->70%)

Subsidy to protect from catastrophic copayment

Free care for the elderly

-> reduced copayment since 1983 to prevent moral hazard

Redistribution from formal to informal sector, from young to old generation, from metropolitan to rural

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Policies under post-war democratic government

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Decreased economic growth & subsequent decrease in tax revenue while continually increasing medical demand due to population ageing

Current re-distributional system through transfer to medical expenditure became a major threat to national economy even under tightest price control

Compensatory increase in copayment rate while increasing income gap under economic stagnation results in declining horizontal equity in healthcare access.

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Challenge since late 90s

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Healthcare system as a political lever for resource redistribution and equity

Achieved high equity in service access and utilization through build-in re-distributional system across plans, especially for older people

Population ageing and economic stagnation threatens horizontal equity and sustainability of current risk redistribution mechanism across people with different socioeconomic risks.

Reframed risk adjustment structure is required to address emerging economic disparity WITHIN age strata, genders, and work sectors.

Recent policy change towards balanced equity for all generations needs to address fairness in welfare, and avoid inter-generational conflicts.

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Japan’s healthcare system and welfare policies