Health Insurance System

Japan’s constitution expressly declares that citizens have a right to health and that it is the state’s responsibility to ensure this right can be realized.[i] The government’s commitment to health for all led to universal health care coverage in 1961.1

Characteristics of the Japanese health insurance system include:2

  • Mandatory coverage for anyone who permanently resides in Japan for three months or more. This includes both Japanese citizens and non-Japanese citizens.
  • Enrollees have no choice of health insurance programs. Plans are designated according to the enrollee’s employment status, age, and residence. If the enrollee is not head of household and not eligible through his or her own employer, then the plan is dependent on the head of household’s employment status, age, and residence.
  • There are no restrictions on access. Regardless of the plan, enrollees can receive care from any medical provider as frequently as they would like.
  • Benefit packages are essentially the same. Although some packages offer preventive or health promotion add-ons, these benefits do not serve to affect enrollment since enrollees cannot choose between plans. Benefits include hospital care, outpatient care, mental health care, prescription drugs, home health care, and dental care.
  • Copayments are the same across all plans. Cost-sharing varies according to age. Children under 3 have a 20% copayment and persons over 70 with low incomes have a 10% copayment.3
  • The premium rate varies between plans.
  • An out-of-pocket threshold protects enrollees from catastrophic costs. For people of working age, the average limit on out-of-pocket payments is 90,000 yen per month (approx. $724 at 1 dollar equal to 124 yen). The threshold and post-threshold co-payment varies dependent on age and income. The mechanism ensures financial risk protection within the health care system.
  • Central administrative offices have been established in each prefecture to serve as the intermediary between providers and insurance companies. They evaluate and process claims from providers, then send bills to insurance programs.
  • Japan’s health insurance schemes cross-subsidize each other in order to financially stabilize the plans due to the variation in enrollee income level across schemes.

There are over 3000 health insurance funds divided between three insurance schemes: employer based health insurance, residence-based National Health Insurance (NHI), and health insurance for persons over 75. Each scheme contributes to a common fund that is used to support the other schemes.4

Employer based health insurance is further divided into three groups. The first group covers employees of large companies through over 1400 plans. If a plan faces financial hardship, it is eligible for a government subsidy. The second group covers public sector employees and is not eligible for any government subsidization. The third group covers employees of small to medium-sized companies and contains only one plan, the National Health Insurance Association. Subsidies from taxes and contributions from large employers are combined with employer and enrollee contributions within this plan.

NHI covers the self-employed, unemployed, and retired persons under 75. These plans are currently administered through municipalities, but administration will be transferred to prefectural offices in 2018. Enrollees contribute to these plans through premiums, but nearly half of benefit expenditures are covered by tax subsidies. Due to the significant increase in retired persons under 75, the rise in part-time workers not covered by employer-based insurance, and the decline in the number of farm, forestry, and fishery workers, this scheme is the most fiscally unstable of the three as the number of enrollees who may not or cannot pay has increased.

Health insurance for persons 75 and older was instituted in 2008 and requires that all people in this age group, even the employed and dependent, enroll. This scheme is administered at the prefectural and municipal levels. This scheme effectively moved the oldest of the older population from NHI to an independent system to increase transparency and accountability surrounding healthcare costs and payments for the growing older population. Enrollees pay a premium, which is deducted from their pensions, that is set based on healthcare expenditures by the prefecture for this population segment during the previous two years. In addition to premium contributions, which cover about 10% of total costs, this scheme is supported by government subsidies and by subsidies received from the two schemes listed above.

[i] Article 25 of the Constitution declares that “all people shall have the right to maintain a certain standard of healthy and cultured life” and that “the state shall try to promote and improve the conditions of social welfare, social security, and public health” for this purpose.

Free Access and Freedom of Practice

Patients are essentially free to receive care from the facility of their choosing. For example, a woman who works at a firm in Tokyo can visit a specialist at the university hospital near her office, then in the same week be seen by a physician at a clinic near her home in Kanagawa Prefecture. According to guidelines, a referral letter is required to be seen at a large hospital; however, as is often the case, patients pay a fee of a few thousand yen to be able to be seen without a referral.
Physicians, as well, have the freedom to open medical practices. Furthermore, a physician who has a license to practice medicine can open a specialty medical practice in any medical specialty regardless of whether or not the physician holds a license in that area of medicine. For example, it is possible that a surgeon can practice as an orthopedic surgeon and an internist. It is, therefore, not uncommon to see signs outside of clinics that list several different medical specialties.

References

1 Ikegami N. Universal Health Coverage for Inclusive and Sustainable Development. Washington, D.C.: World Bank Group, 2014

2 Tatara K, Okamoto E, Allin S. Health systems in transition. Copenhagen: World Health Organization, European Observatory on Health Systems and Policies, 2009.

3 Thomson, S., Osborn, R., Squires, D., & Jun, M. (2013). International Profiles of Health Care Systems, 2013.Commonwealth Fund Pub. No. 1717, p.75–83

4 Ministry of Health, Labour and Welfare. Health and Medical Services. http://www.mhlw.go.jp/english/policy/health-medical/health-insurance/index.html (accessed on 15 April 2015)