washingtonpost.com
Health Care in Japan: Low-Cost, for Now
Aging Population Could Strain System

By Blaine Harden
Washington Post Foreign Service
Monday, September 7, 2009

TOKYO -- Half a world away from the U.S. health-care debate, Japan has a system that costs half as much and often achieves better medical outcomes than its American counterpart. It does so by banning insurance company profits, limiting doctor fees and accepting shortcomings in care that many well-insured Americans would find intolerable.

The Japanese visit a doctor nearly 14 times a year, more than four times as often as Americans. They can choose any primary care physician or specialist they want, and surveys show they are almost always seen on the day they want. All that medical care helps keep the Japanese alive longer than any other people on Earth while fostering one of the world's lowest infant mortality rates.

Health care in Japan -- a hybrid system funded by job-based insurance premiums and taxes -- is universal and mandatory, and consumes about 8 percent of the nation's gross domestic product, half as much as in the United States. Unlike in the U.S. system, no one is denied coverage because of a preexisting condition or goes bankrupt because a family member gets sick.

But many health-care economists say Japan's low-cost system is probably not sustainable without significant change. Japan already has the world's oldest population; by 2050, 40 percent will be 65 or older. The disease mix is becoming more expensive to treat, as rates of cancer, stroke and Alzheimer's disease steadily increase. Demand for medical care will triple in the next 25 years, according to a recent analysis by McKinsey & Co., a consulting firm.

Japan has a stagnant economy, with a shortage of young people that hobbles prospects for growth and strangles the capacity of the debt-strapped government to increase health-care spending. Without reform, costs are projected to double, reaching current U.S. levels in a decade, according to the Organization for Economic Cooperation and Development (OECD).

For generations, Japan has achieved its successes by maintaining a vise-like grip on costs. After hard bargaining with medical providers every two years, the government sets a price for treatment and drugs -- and tolerates no fudging.

As a result, most Japanese doctors make far less money than their U.S. counterparts. Administrative costs are four times lower than they are in the United States, in part because insurance companies do not set rates for treatment or deny claims. By law, they cannot make profits or advertise to attract low-risk, high-profit clients.

To keep costs down, Japan has made tradeoffs in other areas -- sometimes to the detriment of patients. Some are merely irritating, such as routine hour-long waits before doctor appointments. But others involve worrisome questions about quality control and gaps in treatment for urgent care.

Japanese hospitals experience a "crowding out" effect, with space for emergency care and serious medical conditions sometimes overwhelmed by a flood of patients seeking routine treatment, said Naohiro Yashiro, a professor of economics and health-care expert at International Christian University in Tokyo.

"Patients are treated too equally," he said. "Beds are occupied by less-urgent cases, and there are no penalties for those who over-use the system."

The government has largely been unable to reduce the length of hospital stays, which are four times as long in Japan as in the United States. Hospital doctors are often overworked and cannot hone specialized life-saving skills, according to recent reports by McKinsey. Statistics show that the Japanese are much less likely to have heart attacks than people in the United States, but that when they do, their chance of dying is twice as high.

There are shortages of obstetricians, anesthesiologists and emergency room specialists because of relatively low pay, long hours and high stress at many hospitals, doctors and health-care analysts said. Emergency room service is often spotty, as ER beds in many hospitals are limited and diagnostic expertise is sometimes lacking. In a highly publicized but not unprecedented incident, a pregnant woman complaining of a severe headache was refused admission last year to seven Tokyo hospitals. She died of an undiagnosed brain hemorrhage after giving birth.

"We are in a hospital desert at night," said Yashiro, citing insufficient pay incentives for the robust 24-hour staffing common at large U.S. hospitals.

Skilled doctors tend to leave Japanese hospitals for the higher pay and predictable hours of private clinics. There, they become primary-care doctors, making up for low treatment fees with astonishingly high volume, seeing patients in an assembly-line process that leaves little time for questions.

Toshihiko Oba had spent most of his medical career in hospitals. As an ear, nose and throat specialist, he worked 80-hour weeks for 13 years, with an annual salary of $100,000. The average salary for a hospital-based doctor in Japan is about $150,000, according to the Ministry of Health.

"The money was not so good and you have lots of responsibility and pressure," said Oba, 47.

Five years ago, he made a career change common for Japanese doctors at the pinnacle of their careers. He left the hospital and opened a private clinic, and now treats mainly colds and allergies.

In his office in Tokyo's upscale Ginza district, Oba works from 9:30 a.m. to 7 p.m., five days a week. He said he works fast, typically treating 150 patients a day, usually for about three minutes each.

Volume has allowed him to increase his income severalfold, Oba said, although he declined to be specific. Most doctors in Japan who jump from hospitals to private clinics double their income, according to the Ministry of Health. Medical malpractice insurance in Japan is not a major expense for many doctors, in part because there are relatively few lawyers. Oba pays only about $1,000 a year.

One of the great strengths of Japan's health-care system -- the ability to see the doctor of one's choice and be seen quickly -- has become one of the greatest curses for controlling health-care quality and costs, experts here agree.

There is no gatekeeper for medical care or for hospital stays.

"The government has been trying for more than 20 years to put up gates," said Naoki Ikegami, professor of health policy and management at the Keio University School of Medicine in Tokyo. "But we don't train general practitioners to be gatekeepers."

Japan also has about three times as many hospitals per capita as the United States does. The government has tried to limit hospital beds, but with little success because of institutional inertia and a cultural preference for in-patient treatment. New mothers in Japan often stay in a hospital five days after a routine delivery; in the United States, they rarely stay for more than one or two.

Japan's health-care system mixes socialism with individual responsibility and market forces. The government pays one-quarter of the total health-care bill, and employers and workers pay the rest through mandatory insurance.

"More than one-third of the workers' premiums are used to transfer wealth from the young, healthy and rich to the old, unhealthy and poor," Ikegami said.

Workers at major corporations pay about 4 percent of their salary to a company-based insurance provider. These premiums are limited to $6,000 a year, but the average salary worker pays $1,931, the government says. Job-based insurance in the United States costs the typical employee $3,354 a year, according to the U.S.-based National Coalition on Health Care.

In Japan, employers pay premiums that match each employee's contribution. In the United States, where health insurance is far more expensive, employers pay private insurers three or four times the amount contributed by each employee.

The self-employed and the unemployed in Japan must pay about $1,600 a year for insurance coverage. In addition, working-age patients are required to make a 30-percent co-payment for treatment and drugs -- the highest such fee in the world. But those payments tend to be relatively low because of the tight lid on costs. If the co-payment exceeds $863 in any month, it drops to 1 percent of additional medical bills.

Hana Mukai, a fashion merchandiser in Tokyo, said she cannot think of anything wrong with health care in Japan.

She takes her son Yugo, 4, to an ear, nose and throat specialist nearly every week during the cold and flu season. They go about 12 times a year, often when her son has a runny nose. She does not need to make an appointment, but has to wait about 75 minutes to see the doctor.

The doctor checks his ears, irrigates his nose and prescribes medicine. The visit usually lasts a few minutes, and it is free. There is supposed to be a co-payment, but Mukai's local ward government covers all medical costs for children, which is common in much of Japan. Mukai says she never buys over-the-counter drugs for Yugo, because prescribed drugs for children are also free.

As for her own health-care costs, she says they are either invisible or negligible. She has never checked to see how much she pays through payroll deductions for health-care premiums. The co-payment for doctor visits is insignificant, she says, since the total bill for most visits comes to less than $30, including drugs.

"I know my medical fee is going to be cheap, so I have never, ever thought about how much it will cost me to go to the doctor," said Mukai, 39.

The health of Mukai, her husband and her son -- and of nearly everyone in Japan -- also benefits from free annual checkups. Japan requires companies to pay for annual physicals for employees.

Local and national governments also push preventative care. Since Mukai is nearly 40, her local ward government has notified her that she can sign up for a comprehensive, and free, battery of tests. Doctors will examine her eyes and teeth, and they will test for colon, stomach and cervical cancer. She will also receive a free gynecological workup.

For her son, an internal medicine specialist and a dentist visit his public day-care center twice a year to conduct free examinations. Once a year at day care, he is examined at no cost by two other doctors for potential eye, nose and ear problems.

The health-care system, though, does not deserve all the credit for the relatively robust health of the Japanese. Diet and lifestyle are generally healthier than they are in the United States. There is less violent crime, fewer car accidents and much less obesity. Only about 3 percent of Japanese are obese, compared with more than 30 percent of Americans, according to the OECD.

Still, Western food has encroached on the diet and there are increasing numbers of sedentary, overweight Japanese. As part of the preventative focus of health care, the government is pushing back against obesity-related health problems -- known here as "metabolic syndrome" -- in ways that probably would astonish Americans.

There is compulsory obesity screening for 70 percent of the population. If people are found to be too fat around the waist, they are required to receive counseling on exercise and diet.

The law was passed three years ago, so it is too soon to know whether screening and counseling are effective. But health-care experts agree that the government has succeeded in making nearly everyone worry about fat, while thinking more about what they eat and how often they exercise.

It puzzles Mukai that the United States does not imitate the best parts of her country's health-care system, particularly preventive care, universal coverage and free treatment for children.

"If the Japanese can do it, why can't the Americans?" she said.

Special correspondent Akiko Yamamoto contributed to this report.

View all comments that have been posted about this article.

© 2009 The Washington Post Company