3.3 Private Health Insurance

Roles played by private health insurance under universal health coverage

Private health insurance mainly plays roles complementary to the public health insurance system such as guaranteeing services that are not covered by public benefits, guaranteeing additional expenses incurred during periods of illness, and guaranteeing income security during leaves of absence.[24],[25]

In addition, when taxpayers pay life insurance premiums, long-term care insurance premiums, or individual annuity insurance premiums, they can receive certain income-based deductions. These are called life insurance deductions, and they reduce the burdens of income tax and residence tax.

Background of rapid growth in the private health insurance sector

Insurance policies such as those for healthcare and cancer are classified as third-sector insurance policies (For additional information, please refer to the Glossary). Entry into the third-sector insurance industry was first permitted only to foreign life insurance companies in the early 1970s, but after drastic industry reforms in 1995 and the full liberalization of the third-sector insurance market in 2001, domestic companies were also allowed to sell insurance.[26] The number of in-force health insurance contracts in the third-sector has been consistently on the rise,[27] and such contracts have become the main life insurance product. In recent years, new product types such as special medical insurance (medical insurance with relaxed underwriting regulations) for “people with chronic illnesses and pre-existing conditions” have been developed for people who previously had difficulty joining private health insurance plans. Against this backdrop, the number of in-force contracts in the private health insurance sector has been increasing annually. In 2016, the number of medical insurance contracts that specifically covered services such as hospitalization and surgical security in their main life insurance sections had grown to 35.29 million.[28]

Future expectations for the role of private health insurance

The current public health insurance system in Japan offers a wide range of benefits and is a Free Access system. The fact that private health insurance plays a limited role compared with other countries can also be explained by factors such as the High-cost Medical Expense Benefit System and the ban on mixed medical treatments. The need for private health insurance is gradually changing due to epidemiologic shifts, increasing demand for treatments of cancer, which is now the leading cause of death in Japan, and the expansion of advanced medical care services. As a result, the role of private health insurance is expected to transition in the future alongside reforms to the public health insurance system.[29],[30] Japan’s declining birth rate, aging population, and technological innovations are also expected to raise national medical care expenditures, so revisions of public health insurance may result in reduced ranges of coverage. The private insurance plans currently offered in the market primarily cover limited services for fixed fees; however, it is predicted that in the future, these private plans will expand to cover medical services no longer covered publicly.


[24] Tajika Eiji, Kikuchi Jun (2012)“The Role of Government and Private Insurance in Medical Security: A Theoretical Framework and Case Studies by Country”http://www.mof.go.jp/pri/publication/financial_review/fr_list6/r111/r111_02.pdf (accessed 21 November 2017)

[25] Nakahama Takashi (2006) “The Role of Private Medical Insurance—Through Comparison Between Japan and the United States”

https://www.jstage.jst.go.jp/article/jsis/2007/596/2007_596_596_69/_pdf (accessed 21 November 2017)

[26] Serizawa Nobuko (2010) “Third-sector insurance market” http://dspace.lib.niigata-u.ac.jp/dspace/bitstream/10191/16657/1/90_249-271.pdf (accessed 21 November 2017)

[27] The Life Insurance Association of Japan “2017 Life Insurance Trends” http://www.seiho.or.jp/data/statistics/trend/pdf/all.pdf (accessed 21 November 2017)

[28] The Life Insurance Association of Japan “2017 Life Insurance Trends” http://www.seiho.or.jp/data/statistics/trend/pdf/all.pdf (accessed 21 November 2017)

[29] Nakahama Takashi (2006) “The role of private health insurance -through comparison between Japan and the US- “

https://www.jstage.jst.go.jp/article/jsis/2007/596/2007_596_596_69/_pdf (accessed 21 November 2017)

[30] Kawaguchi Hiroyuki, “International Comparison of Public Medical Security System and Private Medical Insurance – Role Sharing of Public and Private Funding and Its Function –” Retrieved from http://www.seijo.ac.jp/pdf/faeco/kenkyu/196/196-kawaguchi.pdf (accessed 21 November 2017)