Japan | Commonwealth Fund

how does universal health coverage work?

japan’s compulsory health insurance (shis) system covers 98.3 percent of the population, while the separate public welfare program for impoverished people covers the remaining 1.7 percent.1 .2 citizens and resident non-citizens must enroll in a shis plan; undocumented immigrants and visitors are not covered.

the shis consists of two types of mandatory insurance:

Reading: Who manages health insurance and care in japan

1. employment-based plans, which cover about 59 percent of the population
2. residency-based insurance plans, including citizen health insurance plans for unemployed people under 74 (27% of the population) and senior health insurance plans, which automatically cover all adults over 75 years (12.7% of the population). the population).

Each of Japan’s 47 prefectures or regions has its own residence-based insurance plan, and there are more than 1,400 employment-based plans.3

Role of Government: National and local governments are required by law to ensure a system that provides quality health care in an efficient manner. the national government regulates almost all aspects of the shis. The national government establishes the shi fee schedule and provides subsidies to local governments (municipalities and prefectures), insurers, and providers. it also establishes and enforces detailed regulations for insurers and providers.

Japan’s prefectures implement national regulations, administer regional residence-based insurance (for example, by establishing contributions and common funds), and develop regional health care delivery networks with their own budgets and funds allocated by the government. National government. the more than 1,700 municipalities are responsible for organizing health promotion activities for their residents and assisting prefectures with the implementation of residence-based health insurance plans for citizens, for example by collecting contributions and registering beneficiaries. 4

Government agencies involved in health care include the following:

• the ministry of health, labor and welfare, which drafts policy documents and develops detailed regulations and rules once general policies are authorized
• the social security council, which is in charge of developing national strategies on quality, safety, and cost control, and sets the guidelines for determining provider rates
• the central medical council of social security, which defines the benefit package and the fee schedule
• the pharmaceutical and medical device agency, which reviews the quality, efficacy, and safety of pharmaceuticals and medical devices
• the medical council of the central social security, which establishes the list of covered pharmaceutical products and their prices.5



Role of public health insurance: In 2015, estimated total spending on health amounted to approximately 11% of GDP, of which 84% was publicly financed, mainly through shis. 6 provided by taxes (42%), mandatory individual contributions (42%), and out-of-pocket costs (14%).7

In employment-based plans, employers and employees share mandatory contributions. Contribution rates are around 10 percent of both monthly wages and bonuses and are determined by an employee’s earnings. contribution rates are capped. In Tokyo, the maximum monthly salary contribution in 2018 was JPY 137,000 (USD 1,370) and the maximum contribution drawn from bonuses was JPY 5,730,000 (USD 57,300).8,9,10 These contributions are tax deductible and vary by country. type of insurance funds and prefectures. For residence-based insurance plans, the national government funds a proportion of people’s mandatory contributions, as do prefectures and municipalities. The Japan Health Insurance Association, which insures employers and employees of small and medium-sized businesses, and the Health Insurance Associations, which insure large companies, also contribute to health insurance plans for the elderly. finally, there are complex cross-subsidies between and within different ship plans.11

The public welfare program, apart from the shis, is paid for through national and local budgets.

Role of Private Health Insurance: Although the majority (over 70%) of the population has some form of secondary voluntary private health insurance,12 private plans play only a complementary or complementary role. Historically, private insurance developed as a supplement to life insurance. provides additional income in case of illness, usually as a lump sum or in daily payments over a defined period, to sick or hospitalized policyholders.

The number of supplementary health insurance policies in force has gradually increased, from 23.8 million in 2010 to 36.8 million in 2017.13 Private health care provision has been limited to services such as orthodontia. Both for-profit and non-profit organizations operate private health insurance.

Part of a person’s life insurance premium and contributions to health and long-term care insurance may be deducted from taxable income.14 Employers may have group contracts with insurance companies, which reduces costs for employees.



Covered Services: All of their plans provide the same benefit package, which is determined by the national government:

• hospital visits
• primary and specialized care
• mental health care
• approved prescription drugs
• home care services provided by medical institutions
• hospice care
• physical therapy
• most dental care.

the shis does not cover corrective lenses unless prescribed by doctors for children up to 9 years old. Optometric services provided by non-physician personnel are also not covered.

Although maternity care is generally not covered, the shis provides medical institutions with a one-time payment for delivery services. In addition, local governments subsidize medical check-ups for pregnant women.

Home care services provided by non-medical institutions are covered by long-term care insurance (ltci) (see “long-term care and social support” below).

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

select preventive services, including some screenings and health education, are covered by their plans, while cancer screenings are provided by municipalities.

Cost sharing and out-of-pocket expenses: In 2015, out-of-pocket payments represented 14% of current health expenses. there are no deductibles, but your members pay coinsurance and copays.

its members have to pay a 30 percent coinsurance for all health services and pharmaceutical products; younger children and adults age 70 and older with lower incomes are exempt from coinsurance.

Small copays are charged for primary care and specialty visits (see chart). residents also pay user fees for preventive services, such as cancer screenings, provided by municipalities.

Providers are prohibited from balance billing or charging fees above the national fee schedule, except for some services specified by the Ministry of Health, Labor and Welfare, including experimental treatments, large multi-specialty hospital outpatient services, after hours and hospital stays of 180 days or more.

safety nets: in the shis, the catastrophic coverage stipulates a monthly disbursement threshold, which varies according to the affiliate’s age and income. For example, the monthly maximum for people under 70 with modest incomes is JPY 80,100 (USD 801); above this threshold, a 1 percent coinsurance rate applies. low-income people pay no more than jpy 35,400 (usd 354) per month.

Subsidies (mainly restricted to low-income households) further reduce the cost-sharing burden for people with disabilities, mental illnesses, and specific chronic conditions.

In addition, there is an annual out-of-pocket cap for health and long-term care at home, which ranges from JPY 340,000 (USD 3,400) to JPY 2.12 million (USD 21,200) per member, depending on the income and age. above this limit, all payments can be fully refunded.

Individuals can deduct annual expenses on health services and goods between 100,000 jpy (1,000 usd) and 2 million jpy (20,000 usd) from the taxable income. additionally, expenses for copays, balance billing, and over-the-counter drugs are allowable as tax deductions.

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Other safety nets for your affiliates include the following:

• members of employment-based plans who are on parental leave are exempt from paying mandatory monthly salary contributions.
• Enrollees in health insurance plans for citizens who have relatively lower incomes (such as the unemployed, self-employed, and retirees) and those with moderate incomes who face abrupt and unexpected income reductions are eligible for reduced mandatory contributions.
• Reduced coinsurance rates apply to patients with one of 306 designated long-term conditions if they use designated health care providers. reduced rates vary based on income.
• Approved providers may reduce coinsurance for low-income individuals through the free or lower health care program.

Low-income people on the public welfare program do not incur any user charges.15



How is the delivery system organized and how are suppliers paid?

Medical education and workforce: The number of people who enroll in medical school and the number of basic medical residency positions are regulated nationally. the number of residency positions in each region is also regulated.

About two-thirds of medical students study in public medical schools, while the remaining third are enrolled in private schools. The total cost of tuition for a six-year public medical education program is around JPY 3.5 million (USD 35,000). the total private school tuition is 20 to 45 million jpy (200,000 to 450,000 usd).16

Since the mid-1950s, the government has been working to increase access to health care in remote areas. Recent measures include grants to local governments in those areas to establish and maintain health facilities and to develop student loan forgiveness programs for medical professionals working in their jurisprudence. most of these measures are implemented by prefectures.17

Primary Care: Historically, there has been no institutional or financial distinction between primary care and specialized care in Japan. the idea of ​​”general practice” has been developed recently.

Primary care is provided primarily in clinics, with some provided in hospital outpatient departments. most clinics (83% in 2015) are privately owned and run by physicians or medical corporations (health care management entities generally controlled by physicians). a smaller proportion is owned by local governments, public agencies, and non-profit organizations.

Primary care practices typically include teams with a physician and some employed nurses. in 2014, the average clinic had 6.8 full-time equivalent workers, including 1.3 doctors, 2.0 nurses, and 1.8 clerks. 18 nurses and other staff are usually salaried employees. In some settings, nurses serve as case managers and coordinate care for complex patients, but roles vary by setting.

Clinics can dispense medications, which doctors can provide directly to patients. the use of pharmaceuticals, however, has been increasing; 73% of prescriptions were filled at pharmacies in 2017.19

Patients are not required to register at a clinic and there is no strict control. however, the government encourages patients to choose their preferred doctors, and there are also disincentives for patients to self-refer, including additional charges for initial consultations at large hospitals.

Payments for primary care are based on a complex national fee-for-service program, which includes financial incentives for coordinating the care of chronically ill patients (known as continuing care fees) and for team home and ambulatory care. the schedule, set by the government, includes both primary and specialized services, which have common prices for defined services, such as consultations, exams, laboratory tests, imaging tests and management of defined chronic diseases. In some cases, providers can choose to be paid per case or monthly. combined payments are not used. Providers are generally prohibited from balance billing, but may charge for some services (see “Cost Sharing and Out-of-Pocket Costs” above).

Outpatient specialist care: Most outpatient specialist care is provided in hospital outpatient departments, but some is also available in clinics, where patients can visit without a referral.

fees are determined by the same schedule that applies to primary care (see above).

In hospitals, specialists are often salaried, with additional pay for additional assignments, such as night shift assignments. those who work in public hospitals can work in other health institutions and privately with the approval of their employers; however, even in such cases, they generally provide services covered by the shis.

The employment status of clinic specialists is similar to that of primary care physicians. Physicians working in medium and large hospitals, in both inpatient and outpatient settings, earned an average of 1,514,000 jpy ($15,140) per month in 2017.20

administrative mechanisms for direct payments from patients to providers: clinics and hospitals submit insurance claims, mostly online, to funding agencies (intermediaries) in the shis, which pay a significant portion of fees directly to providers, patients pay cost share at point of service.

After-hours care: After-hours care is provided by hospital outpatient departments, where on-call physicians are available, and some medical clinics and outpatient clinics. business hours owned by local governments and staffed by doctors and nurses.

The national government provides subsidies to local governments for these clinics. hospitals and clinics are paid additional fees for after-hours care, including fees for telephone consultations.

Patients can go to most hospitals and clinics for care after hours. patient information from after-hours clinics is provided to family physicians, if necessary. such information is often given to patients to show to family physicians.

A national pediatric medical advice line is available after hours. in some regions and metropolitan areas, fire and emergency departments organize emergency telephone consultations with nurses and trained staff, supported by doctors.21

Hospitals: As of 2016, 15% of hospitals are owned by national or local governments or closely related agencies. the rest are private and not-for-profit, some of which receive subsidies because they have been designated public interest medical institutions.22,23 The private sector has not been allowed to run hospitals, except in the case of hospitals established by companies with profit for their own employees.

Acute care hospitals, both public and private, choose whether to be paid strictly on a traditional fee-for-service basis or on a diagnostic and procedure (dpc) combined payment approach, which is a similar case mix classification to diagnostic-related groups.24 the dpc payment consists of a per diem payment for basic hospital services and less expensive treatments and a fee-for-service payment for specific expensive services, such as surgical procedures or radiation therapy.25 most hospitals in critical care choose the dpc approach. episode-based payments involving inpatient and outpatient care are not used.

Mental Health Care: Mental health care is provided in outpatient, inpatient, and home care settings, and patients are charged the standard 30 percent coinsurance, reduced to 10 percent percent for people with chronic mental conditions. Covered services include psychological tests and therapies, pharmaceuticals, and rehabilitation activities. There are specialized mental health clinics and hospitals, but primary care also provides services for depression, dementia, and other common conditions.

Most psychiatric beds are in private hospitals owned by medical corporations.

long-term care and social supports: the compulsory national long-term care insurance (ltci), administered by municipalities under the direction of the national government, covers people over 65 years of age and to people ages 40 to 64 who have selected disabilities. ltci covers:

• home care
• respite care
• Long-term care facility services
• equipment for the disabled
• assistive devices
• house modification.

Care at the end of life is covered by the shis and the ltci. the shis covers hospice care (both at home and in facilities), hospice care in hospitals, and home health services for patients at the end of life. the shis or the ltci cover nursing home services, depending on the needs of the patients. home help services are covered by ltci.

Taxes provide about half of ltci’s funding, with national taxes providing a quarter of this funding, and taxes in prefectures and municipalities providing another quarter.

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The remainder of ltci’s funding comes from mandatory individual contributions established by the municipalities; these are based on income (including pensions) as well as estimated long-term care expenses in the resident’s home jurisdiction. citizens age 40 and older pay income-related taxes in addition to their contributions. employers and employees split their contributions equally.

A 20 percent coinsurance rate applies to all covered ltci services, up to a maximum limit related to income. for low-income individuals age 65 and older, the coinsurance rate is reduced to 10 percent. there is an additional copay for bed and board in institutional care, but it is waived or reduced for low-income individuals. all costs for beneficiaries of the public welfare program are paid from local and national tax revenues.26

Most ltci home care providers are private. in 2016, 66% of home help providers, 47% of home nursing providers, and 47% of senior day care providers were for-profit, while most of the rest were not. for-profit.27 Meanwhile, most ltci nursing homes, almost entirely covered, are run by non-profit welfare corporations.

Family care leave benefits (part of employment insurance) are paid for up to 93 days when employees take leave to care for family members with long-term care needs. a portion of long-term care expenses may be deducted from taxable income.

what are the main strategies to guarantee the quality of care?

By law, prefectures are responsible for creating “visions” of health care, which include detailed service plans to treat cancer, stroke, acute myocardial infarction, diabetes mellitus, and psychiatric illnesses. These delivery visions also include plans to develop pediatric care, home care, emergency care, prenatal care, rural care, and disaster medicine. Structural, process, and outcome indicators are identified, as well as strategies for effective, high-quality delivery. Prefectures promote collaboration between providers to achieve these plans, with or without subsidies as economic incentives.

The prefectures are in charge of the annual inspection of the hospitals. penalties include reduced reimbursement rates if staffing per bed falls below a certain ratio. hospital accreditation is voluntary. As of 2016, 26 percent of hospitals were accredited by the Japanese Council for Quality Health Care, a nonprofit organization.28 The names of hospitals that fail the accreditation process are not disclosed.

public information on the performance of hospitals and nursing homes is not mandatory, but the ministry of health, labor and welfare organizes and financially promotes a voluntary benchmarking project in which hospitals report quality indicators on their sites Web. National and local government facilitate mandatory third-party assessments of social care institutions, including nursing homes and group homes for people with dementia, to improve care.

To practice, physicians must obtain a license by passing a national exam. although physicians are not subject to revalidation, specialist societies have introduced revalidation for qualified specialists. Some physician fees are paid on the condition that physicians have completed continuing medical education credits. public reporting of physician performance is voluntary.

Each prefecture has a medical safety support center to handle complaints and promote safety. Since 2004, advanced treatment hospitals have been required to report adverse events to the Japanese Council for Quality Medical Care. the council works to improve quality throughout the health system and develops clinical guidelines, although it has no regulatory power to penalize poorly performing providers.

the japan board of medical specialties, a physician-led not-for-profit body, established a new framework for the standards and requirements of medical specialty certification; it was implemented in 2018.

The government promotes the development of disease registries and medical devices, primarily for research and development.

Inpatient and outpatient experience surveys are conducted and publicly reported every three years. non-profit organizations work for public participation and patient advocacy, and each prefecture establishes a health care council to discuss the local health care plan. under health care law, these councils must have members who represent patients.

what is being done to reduce disparities?

reducing health disparities between population groups has been a goal of japan’s national health promotion strategy since 2012. the strategy sets two goals: reducing disparities in healthy life expectancy between prefectures and an increase in the number of local governments organizing activities to reduce health disparities.29

Health disparities between regions are regularly reported by the national government; Researchers have occasionally measured and reported disparities across socioeconomic groups and in access to health care.

what is being done to promote integration of the delivery system and coordination of care?

The national government prioritizes care coordination and develops financial incentives to encourage providers to coordinate care in all care settings, particularly in cancer, stroke, cardiac care and palliative care. For example, hospitals that admit stroke victims or patients with hip fractures may receive additional fees if they use post-discharge protocols and contract with clinicians to provide effective follow-up care after discharge. clinic doctors also receive additional fees.

The government also awards grants to leading providers in the community to facilitate care coordination. large, highly specialized hospitals with 500 beds or more are required to promote coordination of care among community providers; in the meantime, they are required to charge additional fees for patients who do not have outpatient referrals.

There are more than 4,000 community wraparound centers that coordinate services, particularly for those with long-term conditions. Currently, there are no common funds between shis and ltci.

Large city and regional governments should establish councils to promote integration of care and support for patients with 306 designated long-term conditions.

In addition, the national government has been promoting the idea of ​​selecting preferred physicians. The Continuing Care Fee Schedule pays physicians monthly payments for providing continuing care (including referrals to other providers, if necessary) to chronically ill outpatients. the 2018 revision of the shis fee schedule ensures that physicians in this program receive a generous additional initial fee for their first consultation with a new patient.31

What is the status of the electronic medical record?

electronic health record networks have been developed only as experiments in select areas. interoperability between providers has not been generally established. the government has been addressing technical and legal issues before establishing a national health care information network so that health records can be shared continuously by patients, doctors and researchers by 2020.32 unique patient identifiers for health care should be developed and link them to the social network. security system and tax number, which contains unique identifiers for taxes.

how are costs contained?

30 percent coinsurance on shis doesn’t seem to work well to contain costs. on the contrary, price regulation for all services and prescription drugs appears to be a critical cost-containment mechanism. The tariff program is reviewed every two years by the national government, after formal and informal negotiations with interested parties. The review involves three levels of decision making:

• the general rate of increase or decrease in the prices of all benefits covered by shih
• revised drug and device prices
• prices for individual services.33

for medical, dental and pharmacy services, the social security central medical council reviews providers’ service fees item by item to meet the general spending targets set by the cabinet. highly profitable categories typically experience larger reductions.

Pharmaceutical and medical device price revisions are determined based on market research of actual current prices (which are often lower than listed prices). Drug prices may be revised lower for new drugs that sell in higher volume than expected and for brand-name drugs when generic equivalents hit the market. generic drug prices have gradually decreased. Medical device prices in the US, UK, Germany, France, and Australia are also considered in the review.

fee schedule includes financial incentives to improve clinical decision making. For example, if a doctor regularly prescribes more than six medications for a patient, the doctor receives a reduced fee for writing the prescription. Insurers’ peer review committees monitor claims and may deny payment for services deemed inappropriate.

Prefectures regulate the number of hospital beds according to national guidelines. the number of medical students is also regulated (see “medical education and the workforce” above).

the national cost containment plan for health care, presented in 2008 and reviewed every five years, aims to control costs by promoting healthy habits, reducing hospital stays through coordination of care and the development of home care, and the promotion of the efficient use of pharmaceutical products. . Prefectures also set health spending targets with planned policy measures, according to national guidelines.

What important innovations and reforms have been recently introduced?

The Social Security Council established the following four objectives for the 2018 tariff review:

• develop efficient and comprehensive care in the community
• develop safe, reliable, high-quality care and create services tailored to emerging needs
• reduce the workload of health workers
• making the health system more efficient and sustainable.34

To further these policy goals, the government modified numerous incentives in the rate schedule. in addition to ongoing care fees (see “what is being done to promote delivery system integration and care coordination?” above), hospital payments are now more differentiated, according to density of hospital personnel, than those of the previous program.

the author wishes to acknowledge david squires as a contributing author on previous versions of this profile.

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