Turning Japanese? We Could Do a Lot Worse

Published February 22, 2009 @ 08:35PM PT

For this weekend’s policy corner, I wanted to shake things up a bit in looking at a country who has successfully achieved universal health care. No English-speaking countries. No country that has single-payer. We hear a lot about how Americans’ health care appetite for the latest technology and drugs makes us hard to compare to other nations, so let’s look at a country that has the highest number of CT scans per capita and more MRIs per capita than we do, not to mention a higher percentage of their health care dollars spent on drugs. Yet for all of this, they’ve created a universal health care system that provides health outcomes that are the envy of the world – the highest life expectancy for about a third of what the U.S. spends.

The lucky country is Japan, which the World Health Organization ranks second, behind only France. Where Japanese companies competes with American companies, their universal health care has given them a distinct competitive advantage – nowhere as pronounced as in the auto industry. So it makes sense to look at what they’re doing right and what they’re doing wrong.

Moreover, many of the ideas that form the Obama/Baucus/Kennedy/Edwards/Clinton emerging consensus are remarkably similar to features of the Japanese health care system. An entirely private delivery system of hospitals and clinics, and a mixture of private and public insurance. An individual mandate requiring everyone to have coverage. An employer mandate requiring employers provide insurance, which is how 62.8% of the population gets their coverage – a comparable number to the U.S. Fixing premiums as a percentage of income (a recommendation of The Commonwealth Fund, and the equivalent of income-based subsidies found in the Obama plan). A minimum level of comprehensive benefits that is robust and focused on primary care, prevention and outpatient services. An egalitarian approach to physician compensation. Significantly more stringent regulation of the private insurance industry, enough to completely change their business practices. And, finally, significant government intervention to control costs.

The similarities make it not only worthwhile to look at Japanese health care – it makes it imperative. After the jump are my five best things and five worst things about universal health care in the land of the rising sun.

The Good:

1.) Health outcomes outstanding

Japan has the highest life expectancy in the world – 76 years for men and 82 years for women – despite having one of the highest smoking rates in the Western World (26.3% of the population in Japan compared to 16.9% for the U.S. according to the WHO). Think about that for a second. On the other end, they have one of the lowest, if not the lowest, infant mortality rates in the world.

Whenever I mention this at house parties and discussion groups, people immediately begin guessing at what cultural difference might prompt them to be such a healthy nation. The tobacco use clearly doesn’t help that argument, but there are certainly some diet and lifestyle factors. For one, the obesity rate is 1/10 what it is in the U.S., and even 1/3 of runner-up France. (Yes, I’m sorry to break it to you, but Americans are three times more likely to be obese than the French, the inventors of the croissant, hollandaise sauce and crème brulee. I must speak hard truths here.)

But the biggest cultural difference is that everyone in Japan has access to health care, particularly primary care – and they use it. A lot.

2.) Amazing equity – “single tier”

In designing and maintaining their health care system, Japan has always focused on equality – and it shows. They’ve created what is in many ways the ultimate “single tier” system, with each individual guaranteed robust and comprehensive coverage. Premiums are fixed by law to be about 8% of an employee’s salary, and must be split equally between the employer and employee. If you make the equivalent of $30,000 or $250,000, the rules are the same. The self-employed and people on pensions follow similar rules, but with the government picking up the other half in the place of an employer. Once people get above the age of 70, they’re enter the public Health Services System for the Elderly, where their premiums are paid by taxes that have been collected on all other premiums.

Co-pays are similarly affordable and predictable. For outpatient services, you pay 30% of the cost no matter what plan you’re in. Inpatient services are either 20% or 30%, and primary care, doctor visits, etc. are 10%. Based on this, what do you think people tend to use the most of? That’s right – primary and preventative care, which we know allows us to catch health problems earlier, when they’re easier to prevent and cheaper to treat.

It should surprise no one, then, that Japanese citizens go to the doctor anywhere from twice to three times more frequently than Americans. Going to the doctor makes you healthier – who knew! That’s something else to ponder while realizing that despite their frequency, Japanese per capita health care spending is 1/3 of the U.S.

3.) Use of technology and pharmaceuticals

I wanted to talk about Japan because their use of technology and prescription drugs – two factors that make our health care so unreasonably expensive – matches ours. In 2004, the U.S. had 26.6 MRI machines for every thousand people, but Japan had 40.1. As mentioned, they also have more per capita CT scans than any other country. Their love of toys exceeds ours.

One big cultural difference is that Japanese doctors are often their own pharmacists, dispensing prescriptions directly. But despite the different delivery mechanism, pharmaceutical use is similar to the U.S. – indeed, it’s slightly more frequent. 19% of health care spending in Japan is on pharmaceuticals, compared to 12.4% for the U.S. And yet, Japan in 2006 spent $425 per person on drugs, while the U.S. spent $792.

Here’s the first real secret of how all this is possible. The Japanese Ministry of Health sets rates for everything, not just the government-run plan for the elderly. It has no say in what treatment you get – that’s between you and your doctor. But everyone is on the same page in terms of what it costs.

The country runs on fee-for-service, but prices are uniformly set by the Ministry each year, down to the smallest detail. A story on NPR quoted health economist Professor Ikegami Naoki: “Well, in 2002, the government says that the MRIs, we are paying too much. So in order to be within the total budget, we will cut them by 35 percent.”

One of the real problems in the U.S. is there are huge discrepancies in what treatments cost, even in Medicare. Beta blockers in Denver cost less than beta blockers in Los Angeles. Determining health care value has been based on what the market will bear, which leads to a system that makes some people very rich, but the average person mystified at what the real value of the service is. None of this is in play in Japan. The hospitals are entirely private but not-for-profit, so there’d be no value in testing what the market would bear anyways. The Ministry of Health's uniform fee schedule keeps health care affordable for everyone.

4.) Complete choice for consumers

So if you’re not comparing prices among providers (which, by the way, we don’t do in the U.S. either – patients usually make their decisions based on what’s covered by their insurance, almost never by how much they charge), how do you determine where you go for care?

The short answer is, in a completely open market where you have your choice of any primary care doctor in the country, can go to a specialist without a referral, and can go to any hospital in the country and know that there will be no variance in price, you choose based on the point of comparison left to you: quality.

Imagine that – a free market based on meritocracy (and possibly other factors like geographic proximity, personal recommendations, etc.) Why, that almost sounds like Medicare!

5.) Changes the game for the private insurance industry

If Japan proves anything, it’s that the private insurance industry is not inherently naughty by nature. Rather, it’s our laissez-faire treatment of their business practices that has allowed both amoral and arguably immoral practices to rise in the name of the almighty dollar.

One might even say Japan has a robust private insurance industry, with over 2,000 private insurers who offer a variety of plans. But no one would ever mistake this for the American system. As already mentioned, community rating is the law of the land. Your premium is about 8% of your salary regardless of your health history, your family genetics, your pre-existing conditions, or how much money you have. It is illegal to refuse to sell an insurance policy based on pre-existing conditions, and also illegal to deny a claim so long as the normal procedure is followed. The rates for service are set by the government with no variance. A minimum set of benefits is also required, including ambulatory care, long-term care, dental and prescription drugs.

So, in short, nearly everything that frustrates us about the American insurance industry is illegal.

Here’s another tremendous advantage to the government-set fees: administrative costs. A huge amount of waste and inefficiency is generated by the fact that each insurer in the U.S. has their own payment system, their own requirements for claim, and their own compensation methodologies. But in Japan, everyone pays the same rates, regardless of which company. As such, administrative costs are shockingly low.

And yet private insurance allows employers and, to some extent, individuals to customize their plans to suit their needs. You can get different plans to offer different co-pays, or other variants in elective procedures not covered by the minimum set of benefits.

The Bad:

1.) Hospital and physician compensation

There has to be a loser in the government having such a heavy regulating hands in terms of setting fees. In this case, it’s doctors and hospitals. Japan actually has more hospital beds per capita than nearly every other nation, but the percentage that are vacant at any time are very high, even with the average hospital stay for inpatient services significantly higher than it is in the U.S. They have an equivalent number of doctors, meaning there is a shortage compared to their population. But its effects largely haven’t been felt yet because the very low rates of compensation compel doctors to take as many cases as possible. According to an article in Health Affairs from 1987, the average workload per day for outpatient clinicians at that time was 49 patients, with 17% of doctors seeing more than a hundred.

Suffice to say, there’s no way you can see one hundred patients in a day and not have your quality drop precipitously. As I mentioned, quality is the main factor left to judge providers, which means teaching hospitals – perceived to be the best in terms of quality – are flooded, leading to lines and delays for care.

Government intervention to set uniform rates have been great for the federal budget, great for patients, great for businesses, and great for the elderly. But it continues to cause problems for providers. When you consider that hospitals are required to be not-for-profit to begin with, it’s no surprise that Japan shares another trait with the U.S. – hospital going bankrupt during tough economic times.

2.) Overuse of the most expensive services

Here’s something else that Japan shares with the U.S. – an incentive to prescribe the most expensive services. This, as much as affordability, explains why Japanese health care resembles the U.S. in terms of technology and drugs. Where rates are uniform and low, doctors have an incentive to perform services that have the highest fees. The more expensive, still under patent drugs get a wide circulation. The issue here clearly isn’t that it makes Japanese health care more expensive, but that it influences the care that patients receive. Those new drugs and those MRIs aren’t always necessary. And where they’re not necessary, they may do more harm than good.

3.) The need for more prevention and individual responsibility

When health care is affordable and universal, it gets used. That’s good for your health. But it’s not necessarily good for your sense of individual responsibility – a topic conservatives harp on, but which is still key to a healthy lifestyle. As one recent visitor to Japan remarked, “Dialing 119 (911) to summon an ambulance for the most minor of complaints is almost a sport.” Although Japanese obesity is low compared to Americans, it is on the rise, as are unhealthy lifestyle choices, which will lead to more use of a health care system where doctors and nurses are already overworked. It’s a long-term problem, but a troubling trend.

4.) & 5.) You know what? I can’t think of anything.

I’d love to have two more points for symmetry, but I honestly can’t think of anything. It’s a great freaking system and, coming from an undeniable capitalist powerhouse, has barely a sniff of the usual health care boogeymen.

Certainly, Americans aren’t in much of a position to feel superior on either the question of individual responsibility or the wasteful influence of money in medicine. Government’s heavy-handed intervention in the fee-for-service rates is perhaps a cautionary tale, particularly for visions of single-payer. Clearly, the Ministry of Health’s decisions are somewhat influenced by politics. If Congress was in charge of interest rates, you can bet they’d always be at 1% or below at all times, but that would have dire repercussions for our fiscal policy. Tom Daschle’s Federal Health Board – bring together experts primarily from the health care delivery system, insulated from the political process – is one solution. Doubtlessly there are others. But there’s nothing insurmountable broken in Japanese health care.

Ultimately, universal health care is about creating a system that’s affordable, covers everyone’s basic medical needs, and yields a quality outcome. It’s hard to imagine many countries doing it better than Japan.

(Photo credit: Noriko Puffy on Flickr.)

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Comments (50)

I lived in Japan for two years. One thing that struck me about these people was their caring for all people. They respect and care for their old and sick, not throw them out in the street the way our leaders do. If you want the truth about our health care system compared to the rest of the world see SICO by Micheal Moore. Don't listen to the lies and propaganda put our by the ones that profit from the way it is....

Cherokee Fred Hussein Jesus

Posted by Cherokee Fred Jesus on 02/22/2009 @ 09:09PM PT
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Brilliant post. Thanks for your in-depth explanation of how the Japanese system works.
My favorite parts are fixing premiums at a set percent of your income (and the government picking up the employers' part for the self-employed -- I like that because I'm self-employed and we already pay double taxes elsewhere) as well as making it illegal to screen out or charge anyone more for pre-existing conditions AND illegal to deny care. (Yes!) I'd still rather see single payer because I just think insurance companies can't be trusted and I just don't see what value they bring in exchange to all the layers of complication they add, but if we were offered this system tomorrow, I'd be thrilled.
One thing that wasn't clear to me -- you mentioned that the Japanese pay coinsurance as well for different procedures (10 percent, 20 percent, 30 percent etc.) Is there some kind of cap on this so something really major like an organ transplant wouldn't bankrupt the patient? (I know prices are lower, but I'd still imagine that some serious illnesses could be costly enough that coinsurance fees could wipe someone out financially?)Allie

Posted by Allie Johnson on 02/23/2009 @ 06:42AM PT
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Hi Allie--

Yes, I forgot to mention that out-of-pocket expenditures are capped per month. According to the Japanese Ministry of Foreign Affairs, that cap is set for 63,600 yen, or about $673 per month.

http://www.mofa.go.jp/j_info/japan/socsec/maruo/maruo_5.html

Posted by Timothy Foley on 02/23/2009 @ 08:17AM PT
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Japan is a single payer system, Frontline had a great in depth discussion of many systems. Of all, only the UK was a "government all the way" system. They go into great detail about the good and bad of the Japanese system.

I also did a Blog post about Sicko and Gapminder that bears updating as Gapminder has improved a great deal, but points out many facts about American care vs Civilized care.

Posted by Bob Danforth on 03/02/2009 @ 11:57AM PT
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Just to include the link for Bob's comment, since it doesn't seem to have gone through, the Frontline series is here:

http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/

You can watch it online -- and I recommend that you do!

There's also a great interview with economist Naoki Ikegami here:
http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/interviews/ikegami.html

I will correct to say that Japan has a multi-payer system in which government, individuals, and employers share the cost, but the government's control over the pricing makes it function not dissimilar to a single-payer.

Posted by Timothy Foley on 03/02/2009 @ 12:57PM PT
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Very good
What we need in the U.S. is a combination of the present Japanese universal health-care and one that I have proposed, i.e,

There's only one obvious way to solve this nation's health-care crisis and that is "Disease Prevention" using natural foods. It must be taught in our schools and this will not require substantial investment on the government's part and we would save billions[with a "B"]. The U.S. would soon become the healthiest nation once again and would in a short period balance the budget and produce a surplus. It is the "common sense" solution. It is dollars spent in the most effective way. You don't have to be a math genius to figure this out. Of course, the big corporations now involved in providing the present health care would not make the profits they do now while not helping us "prevent illness", but it is the people we should be serving.

Posted by Lucien Beauley on 03/08/2009 @ 04:03PM PT
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The cap is a critical point. We recently had a hospital bill of around $56,000 for a stay in May and June (fortunately, insurance paid it all, which is why I have my current job). This could mean that our maximum exposure would be $673 x 2, or $673 x n, with n=56,000/673. The devil is in the details. Still plenty of room for health insurance companies to rip you off.

Excellent article, Tim. It would be great if you could do a similar piece on #1, France.

Posted by Kevin Twine on 02/23/2009 @ 08:52AM PT
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Tim this does sound like it is working for the Japanese. I am curious though. The Japanese peoples' work ethic is still intact. What % of people are working, and therefore contributing the supporting the system, versus how many are on some sort of government assistance, and only taking from the system? This could be very important. I wonder If it would work as well if too many people were takers vs. givers, as I am afraid it would be in this country. (I love my country, but lets' face it we're not what We used to be)

Posted by Charlie Reed on 02/23/2009 @ 09:07AM PT
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There is a public assistance program that covers 1% of the population, largely the elderly, the diasbled and a category we don't have "fatherless households."

The reason it's so low is because unemployment insurance is a benefit that's required to be offered to you by your employer, with you and your employer splitting the costs of your premium. Should you lose your job, you draw down benefits from your unemployment insurance until you find a new one. I don't have figures at hand about what the cost of that is and if there are similar regulations on premiums.

Posted by Timothy Foley on 02/23/2009 @ 10:26AM PT
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Charlie,

I think we have second problem with the unemployed in our country. There are many who would love to work, but cannot get a job. Whether it be an old conviction from drugs or other felonies of the past, people are not employed because of "history". Many of them with a history that, actually happened many years past. It has long past since people in this country could "pay their debt to society". Now, they are just throw away people! The government and politicians have allowed themselves to throw away a certain portion of our population, in effect, by keeping them unemployed.

There are several social ills we have that Japan does not. We are not as kind to each other, that is obvious! Maybe it is just greed.

Maybe it starts with greedy bankers and insurance companies. But, you won't find any solo practicing doctors in most of the country now, either! They are all big (business) practices with little practitioner autonomy.

Posted by Michael Langley on 03/01/2009 @ 10:55AM PT
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Thanks Tim, Do you have any idea what percentage of Americans would have to foot the bill for those who would be only taking, but not paying in to the system for whatever reason? (not pointing fingers, been there myself, maybe again, Who knows) As I think about it, this would be an equation needed before implementaton of any social program. From what I have heard the Japanese take particular pride in their work ethic, and Your 1% figure seems to support this.

Posted by Charlie Reed on 02/23/2009 @ 12:12PM PT
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It should be noted that the Japanese are forced into retirement at age 60 (or at least they were when I was there 3 years ago). Their population is roughly 130 million, and is actually in decline, while ours has been growing (due to an influx of migrants who come from cultures who still see a benefit in having large families, and feel 'contraception' is immoral)

So while I feel that pride in a work ethic is important, and the protestant work ethic is no less of a reality (thank you Weber), we ought to consider more factors in the comparison.

A huge factor is obesity which leads to a large number of health problems - type 2 diabetes, heart disease, blod clots, high cholestrol, etc. This statistic in our nation alone will be a massive cost on a single payer system unless people are forced to take preventative measures to reduce their weight now. (Which isn't going to happen because we live in a democracy. We all have the freedom to become as fat as we want.)

Posted by Ryan Sprague on 03/01/2009 @ 10:46AM PT
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Ryan,

Yes, obesity is finally overtaking smoking for the level of health problems involved, but really, can you imagine choosing to be obese? This health issue has nothing to do with "becoming as fat as we want"; it is an issue of societal norms that limit many people who suffer obesity (in ways you may be oblivious to) from reaching their healthy weight.

Severe negative judgements are constantly made of the sufferers of obesity who often also suffer depression. One cannot just quit eating like you can with smoking.
Your accusatory attitude is no help at all if you care for the health of people who have this problem.

Posted by Elise Villemaire on 03/02/2009 @ 01:45AM PT
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Obesity is big business here in the U.S. They want you to be over weight, just look at all the weight loss programs, pills, diets, books, dvd's out there, were flooded with them, it's sensory overload. Our food manufactures use the cheapest ingredient’s they can find, i.e. Trans Fats, & other low cost unhealthy fats, all to maximize profits, our restaurants & grocery stores are full of them, it's hard to find a product, that does not have partially hydrogenated oils, or high fructose corn syrup, or sugar, in their ingredients list. This is also the same Big Business that is trying to stop obesity, they feed on each other, they shove it down your throat with their manipulative marketing to get you to eat, buy, & use their products. The insurance companies, doctors, hospitals, food manufactures, our government, & the pharmaceutical companies all are making too much money to let in a system like Japans, one that’s actually helps the people. It’s all about the Almighty Dollar. It's just like the war on Drugs.... It’s not supposed to be won, just maintained, we give you the drugs, get you hooked, prosecute you for them, & rehab you from them. It's all a scam. The American way has become to have as much money as you can, no matter the cost, or who you may hurt or bring down in the process, it's driven by greed, not love for one another.

Posted by Tony Bursi on 03/02/2009 @ 08:23AM PT
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Tim,
I think this is one of the best summary on Japanese healthcare system written so far and its comparative tone to US system. I have never lived in Japan but am interested in learning about healthcare systems around the world. I think that an almost pure single tier system works quite well in Japan. Following is an excerpt from Wikipedia:
"In the Japanese health care system, healthcare services, including free screening examinations for particular diseases, prenatal care, and infectious disease control, are provided by national and local governments. Payment for personal medical services is offered through a universal health care insurance system that provides relative equality of access, with fees set by a government committee. People without insurance through employers can participate in a national health insurance program administered by local governments. Since 1973, all elderly persons have been covered by government-sponsored insurance. Patients are free to select physicians or facilities of their choice."

I was curious to know how do the local/ regional versus national governments collaborate in Japan for uninsured?
http://www.canadianhealthcareblog.blogspot.com

Posted by Chander Sehgal on 02/24/2009 @ 01:27PM PT
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I think diet and lifestyle are an enormous part of this. Prevention of disease is key. Less disease = less cost treating disease, naturally. And on the topic of diet, the traditional Japanese diet is certainly healthier than the typical meat- and dairy-heavy diet of most Americans.

As for the French, my sister dated a Frenchman who made an interesting point once: he remarked that the French generally don't overeat the way Americans do, that when they feel themselves getting satisfied, they stop (rather than feeling like they must eat everything on the plate or rather than eating until they feel like they'll vomit if they try to fit anymore food in). That's anecdotal, of course, but an interesting idea.

Posted by Stephanie Ernst on 02/26/2009 @ 02:59PM PT
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Hey Tim, Thanks much for the for the blog. I wasn't even aware of the effectiveness of the Japanese system. I agree that utilizing such methods would cure a lot of our ails. I've tended to focus mainly on the Canadian system, but still keep getting hit by the central fact that we don't trust our government enough to run such a system. Then again, as an organization, they have been too corrupt to to act in common good of the people. Primary point must be addressed, before anything can be done with costs we must limit costs to physicians and care staff. Torte reform and malpractice rates must be legislated. Medicine is not an exact science. What is life-threatening to one patient is the cure for another, doctors will goof every now and then. If it is reckless or incompetent, fine penalize them, but within reason. Many doctors pay more than they make in premiums, thus the only winners are insurance companies and lawyers.
I do have an idea though to help pay for those less fortunate, I recognize that smoking is bad for me and will face the consequences, already decided if I get cancer, no treatment, when my time is up it's up. But if they can tax my smokes, then they can tax Big Macs, doritos, coke, and donuts. Those things cause just as much medical harm to people and lead to a decreased quality of life and productivity.

Posted by John Bugner on 03/01/2009 @ 05:35AM PT
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But if they can tax my smokes, then they can tax Big Macs, doritos, coke, and donuts. Those things cause just as much medical harm to people and lead to a decreased quality of life and productivity.

I agree. Food items that have negative nutrional value should be taxed for it. While it may be fun to eat crappy food every once in a while, it should not be the cheapest and most widely available. Then again people could just stop being lazy too. :p

Posted by Ryan Sprague on 03/01/2009 @ 10:52AM PT
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I can't see the U.S. insurance companies agreeing to become heavily regulated non-profit institutions. As long as they exist, they'll find a way to weasel out from under attempts at regulating them. The fairest, simplest and easiest to implement system for the U.S. would be H.R. 676. It's really time the politicians found the backbone to stand up to the insurance industry.

Posted by Carol Tvaroh on 03/01/2009 @ 07:47AM PT
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A good overview of Japan's system, but please pick up on Carol Tvaroh's comment above. To what extent are Japanese insurers for-profit? Are they simply selling "supplemental plans"? The co-pays look pretty high to me.

I question your description of the Japanese system as "single tier" if some people get basic coverage and others get a higher standard of care. Do some, for example, get increased access to high-tech treatment? Might the empty beds indicate that the comparatively high co-pays are keeping people from needed hospital care?

I'm a believer in visualization. Let's take a few sample cases and track them through the Japanese system. (a) an unemployed 20-something injured in a skateboard accident, (b) an low-income employee with a back ailment who works for a small tailor shop (c) a 52-yr-old factory worker with chronic diabetes, (d) a teacher diagnosed with depression, (e) a child from a disadvantaged family in need of a livertransplant and follow-up meds, (f) an elderly low-income retiree in need of a stent to correct an arterial problem, (g) a wealthy CEO diagnosed with a pulmonary disease.

How would those scenarios play out in Japan?
And what are the levels of bureaucracy needed to administer the varying levels of coverage and care?

Yet another question--How have the Japanese addressed the problems evident in the Massachusetts mandate plan?

I love our new President but I'm no fan of his team's public-private health plan proposal(s).

How about Medicare-Plan E, as suggested by Dr. Rob Stone of Bloomington, IN, a member of Physicians for a National Health Program (pnhp.org)

Medicare-E: Expanded and improved Medicare for Everybody!

Contact your Congressperson today. Call the White House.
E-mail Gov. Sibelius, the newly nominated candidate for HHS Secretary. Tell them all to enact HR 676, the single payer plan.

"We the people" can insure ourselves in a publicly funded plan. We can make what is morally right politically feasible. Yes, we can!

Posted by Harriette Seiler on 03/01/2009 @ 09:09AM PT
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Great information especially for those who are not familiar with a health care system financed by the government and delivered publicly and privately - the kind of singly payer system we want here.

A couple of comments as a person who experienced that system...
Nothing is cheap in Japan and of course nothing is free. But healthc are is guaranteed from birth to death. Typically, when you are a child and student, you are under your parents' insurance card (that's national health insurance by the way) then, when you are employed by a decent size of company you get your own coverage paid partially by the employer and goverment and you also pay 20% or so (I think). When you change job, you never loose your coverage. You just have to do the process of changing it.

Cost... a good example of the system is this. If a pregnant woman decides to have her baby in a public hospital where the cost is, lets say, $1000, and it's fully covered. But if she chooses to have a fancy and better service, she may choose to do it at a private facility where she can have a nice private room with French dinner instead of rice and miso-soup dinner. Then, she may pay extra $500 or more. This is how the system usually works. Yes, you have choices and it's fair, I think.

A bad thing I hear is that emergency system there. They don't seem to have a law like our EMTALA that is any patient who presents to ER must be treated. I hear often that sick people there get declined at ER and end up dying while looking for an accepting facility.

The last comment... My father in Japan recently had a gallbladder surgery and stayed in the hospital for 2 weeks because his incision got infected (that long stay itself almost never happens here). While he was there, he made an old American friend who was also staying for something else. And this is what my father told me this American man said, "You know, if I was in America, they would have kicked me out of the hospital by now. Here, the country takes care of you. It's a good country and I'm staying."

Posted by Yuriko Lee on 03/01/2009 @ 10:19AM PT
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Thanks for your insight Yuriko.

Posted by Ryan Sprague on 03/01/2009 @ 10:57AM PT
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Diet is the cause of this, not their health care system. In fact, the Japanese are becoming more like us every day. They have been since the end of WWII. They are copying the US diet and are getting obesity, diabetes, various heart diseases and new cancers for their trouble. They went from a 10% fat diet to a 30% fat diet, and brought in all of our sugars and protien overdoses as well. Don't just compare them to us... compare them to themselves 25 and 50 years ago. This is one reason why health care should be a private expense. Nearly anyone can be healthy and avoid the major Western killer diseases by eating a simple, inexpensive diet of grains, fruits, vegetables and legumes. Why we want society to pay for someone's McDonald's-induced triple bypass surgery is beyond me.

"Better" health care is a pretty vague concept. Only a few kinds of "better" actually have any effect on longevity. A few others have a positive effect on quality of life. A lot of "betters" (in any system/country) are probably actually expensive convenciences or simple social expectations that have no basis beyond expectation itself. Is it so great to be able to go to any doctor without worrying that the prices will be any different? Really? If someone else is picking up the tab, sure. But when you are one of the people paying (and we all are) that hardly inspires confidence that you are getting an efficient product. And forget high-end or high-touch... that would cost more, and costing more is illegal.

The bottom line is, where did you get the right to tell me with whom I can contract to have my body maintained? Do you own my body? Do you own my doctor? Then why do you have any right to interfere with our private transactions, carried out freely between us as individuals, that cause no harm to other people?

Posted by Ethan P on 03/01/2009 @ 10:25AM PT
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Ethan,

They own your doctor, already! Medicare, Medicaid, and private insurance companies have to approve the care you get, in many instances. Pre-approval is just one of the ways they control your health care!

But, the doctors and hospitals play with the billing system to maximize profits, so they are part of the problems, as well.

Even if I was insured, I would not do what too many of the population does that aggravates the problem as well. Running to the doctor for every little sniffle and contagion, does little to help ones health and costs a fortune, in the end! Now, I just live in bad health without medical care. I just wonder what my untreated hypertension is doing to my heart brain and kidneys!

Posted by Michael Langley on 03/01/2009 @ 11:10AM PT
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That's not the "they" I am worried about. If there were actually a free market for health care, I could take or leave a given insurance provider. And I probably wouldn't need one for anything short of catastrophic care.

I care about the government. They are telling my doctor whether or not he's qualified (instead of allowing me to decide), who he must treat if he opens his doors at all, what amount of payment he can accept, and what medicines he is allowed to prescribe.

That means that really, the government is my doc. Even though they never went to med school and they respond mostly to lobbyists and lawsuits.

I completely agree on the overuse of insurance. Even if I accept that the government is going to be offering health care, there is no reason it should be providing anything but catastrophic coverage. Using insurance to pay for office visits and antibiotics is terrible economics for everyone but the insurance companies.

The rule of thumb is: only insure what you can't afford. And if you can't afford visits and simple meds, you certainly can't afford the kind of insurance that covers them! Unless of course it's really other people that are paying for it.

Posted by Ethan P on 03/01/2009 @ 04:44PM PT
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Ethan - It's nice to finally hear some intelligence on this thread! It amazes me how blind most people are these days.

Posted by Lana Little on 03/04/2009 @ 06:41AM PT
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Ethan,I agree with you about diet (I'm a huge fan of Dr. John McDougall, and it seems criminal to me how little attention and credit diet change gets for restoring the health of people who supposedly needed bypass surgery etc.) I also eat that simple diet of grains, beans and vegetables you talk about, and it really staggers the mind how much suffering could be prevented if people stopped living on Big Macs and Twinkies.
However, it's a fact of life that the majority of Americans are not going to eat that way, at least not right now. So, we need to work with what we have. Just saying that someone else should do this or should do that isn't going to be very productive.
Not only are you and I already paying for all those Big Mac induced bypasses via our health insurance premiums (well, I do at least because I know anyone could be in an accident or get food poisoning from tainted spinach or come down with a genetic illness - none of us is immune to illness no matter how healthfully we eat) and through our taxes, which pay for Medicare, Medicaid, SCHIP, the VA, Tricare for military and gold-plated Cadillac lifetime health care for every one-term member of Congress and President, including George Bush. And we're also paying for the mansions of those health insurance CEOs who make 20-some-million-a-year salaries AND the huge overhead and marketing costs of said health insurance companies and their obscene profits. Unless you don't have health insurance or pay taxes, you are paying for all of this.
So, the question becomes, not should my neighbor be eating all those Big Macs, but given the reality of the situation in the U.S., what should we do?
If I am going to pay for everyone's bypass and cholesterol lowering meds then I'd at least like to get the most bang for my buck. (And I also recognize that just because I eat well does not mean I'm somehow immune to getting sick or injured, like a lot of healthy eating exercisers on these threads seem to.) The best way to do that is single payer, I believe, though a Japanese system could work as well but would probably be more costly because of more administrative layers.
Also, a single payer system would allow more emphasis to be put on preventative care and wellness, and the effectiveness of these initiatives measured over time. I'm always puzzled by people who state that the current mess would somehow be solved by LESS government involvement. Okay, so health insurance companies just screw people every chance they get now because there's a little too much government oversight, so of course it logically follows that if there were less oversight, they'd suddenly turn into Boy Scouts??? That's like saying that abusive spouses would suddenly become peaceful and loving if we repealed domestic violence laws - it defies logic. We can see what competition gets us now - it gets us cost cutting, skimping on quality, denials of care to save money, tricky contract language no "consumer" can understand etc.
Allie

Posted by Allie Johnson on 03/04/2009 @ 07:18AM PT
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Allie, thanks for listening. First of all, I do want to agree with you that if we are going to pay we should get the most for our money. I disagree with the new administration about many things but I take comfort in its apparent intelligence. If we're going to have unabashed socialism then let's make it as livable as possible.

Let me respond to the rest of your post from this angle: If the current companies are behaving so badly and providing such a poor product, then why are we buying it? And why isn't anyone stepping in to the market to fill this gaping satisfaction hole?

Without suggesting that these are the only answers to those question, let me list a few and then talk about why those are the answers, and what problems they have introduced:

Why are we buying it?
1. 60% of Americans receive insurance through their employers as a job benefit.
2. There aren't any significantly different options available to us.

Why isn't the market offering a better product?
1. It's not a free market.
2. Consumer interest and power are both significantly dampened.
3. Innovators rarely choose heavily-regulated markets to start businesses in.

60% of Americans receive insurance through their employers as a job benefit. This means that at least 60% of the product in this market is not selected by the end user. Companies have different priorities than individuals, and - whether evil or just hard pressed - it is a huge temptation for companies to go with the lowest bidder. After all, it's a very long chain of effects that would be required to bring noticeable effects back to harm the company. When the consumer isn't the one selecting the product, a major force of the free market gets bypassed. And why is this number at 60%? Because through employers we can buy health insurance pre-tax. As individuals we can't. At any given moment that looks like a 10-30% discount, but what is the real cost of dampening the market effect of consumers? And why is the government giving a tax advantage to businesses that it withholds from individuals? What would the industry be like if the insurance companies had to appeal directly to consumers for 100% of their business, instead of merely having to convince the executives and HR department of companies?

There aren't any significantly different options available to us. This is the rest of the reason for why we are buying these poor products - we don't have other options. The reasons for that are:

It's not a free market. Insurance is heavily regulated in all forms. Maybe not effectively, today, but heavily nonetheless. Laws get built up around current products such that new and innovative products wouldn't even be legal to offer, just by accidental side effect and unthinking assumptions by lobbyists and legislators. Existing players are motivated to develop lobbying arms because the content of regulations affects them so drastically; once they have lobbying power they start using it to force their product on people through legislation and to lock out new competition by crafting an environment in which they have all the advantages. The companies that are willling to play this game survive, and the others get out-manuevered. It stops being about producing a desirable health insurance product and starts being about controlling the market and manipulating the regulators....*because there starts to be more money in those endeavors than in producing a desirable product*. That is the crux of this whole paradigm: that this sort of regulation - as opposed to simply strong anti-fraud enforcement - thoroughly cripples the free market by distorting the rewards for the major actors. It's all downhill from there.

Consumer interest and power are both significantly dampened. Why wouldn't they be? Only 40% of Americans are going to think about shopping for insurance, because for 60% they have only one choice that makes any economic sense, thanks to inequitable tax policies (I expect - without knowing a thing about it - that those policies were pushed for by the industry itself. That's just how these things go.) Of that 40%, about half don't carry any coverage at all. Are the remaining 20% of the market going to drive innovation and responsibility with their buying power? No, that's just too small of a group to get it done. Game over. So what have we got? Our health insurance products are defined by lobbyists and legislators, and selected by corporations. Is is any surprise that we aren't getting what we want?

Innovators rarely choose heavily-regulated markets to start businesses in. Innovators are more product- and consumer-centric than the corporations that follow. It's the vision of something new and better, something market-changing, that drives them. So why choose an industry whose possibilities are constrained by yesterday's legislation, whose major players have evolved to fit the game rather than the market, and whose consumers are not in meaningful control of their own spending?

Posted by Ethan P on 03/04/2009 @ 09:10AM PT
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Ethan,
Economic theory is not my strong suit, so I'm not going to go into a long, speculative reply to your speculation about what might happen if we had zero government regulation of the health insurance industry.
However, I just don't see that we need some fancy array of "products" that do the job of paying for health care. In fact, I think, given that we all have bodies that could become unexpectedly sick or injured at any given time, we all have the exact same needs: to get any expensive health care we suddenly need paid for in full at the time we need it. (Without being jacked around, denied, cut off or forced into bankruptcy and homelessness while we're sick.)

It's kind of like the service of putting out fires. Do we need a thousand different fire companies all competing to get us to buy their "fire insurance," with one differentiating itself by having purple trucks that squirt green Jello at a fire while another might have the fire fighters serve you a latte while they put out your fire? No - we just need to know that, should we ever be unlucky enough to need the service, a fire truck will show up in a reasonable amount of time and put the fire out. That's it. it's something everyone needs (even those of us too smart to ever leave the stove on could have faulty wiring or a neighbor who leaves the stove on) so we've decided to pool our money to provide this service to those who need it for the common good and have the government take care of this service, and overall it works adequately.
On the paying side of health care, we should do the same. None of us could possibly predict exactly what might go wrong with us (car accident? cancer?) so we pool our money for the common good, knowing that all we need is someone to take the money we've all paid in and write a check when someone is unlucky enough to be struck with a serious illness or injury. That's it. Simple.

Posted by Allie Johnson on 03/04/2009 @ 02:22PM PT
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What a productive discussion! Ethan's last post is making a lot of sense for me. One thing you haven't mentioned is freedom of choice in type of health care. I"m looking for the ability to choose the type of health care i want ("complementary" medicine for maintenance/prevention and allopathic MD's for broken bones, joint replacement, etc.), and the practitioner I want. NOt whichever overworked or incompetent doc a HMO forces on me. (And the Japanese system's downside of extremely overworked doc's is a huge one. A nightmare in the making.)
I'm looking to have these choices not only available but affordable to me, reimbursed by insurance, which would have to be priced reasonably enough for employers to provide it. MIght the savings from offering effective low-cost alternative protocols like acupuncture, massage, nutrition, herbs, healthy exercise regimens could be huge enough to offset the inducements by pharmaceutical industry-backed medical lobby to lock out other, often more effective modalities with less of the costly side-effects? Particularly in the wildly lucrative growth industry that is cancer treatment in the US? I'm not sure it's a matter of less regulation or more regulation, but maybe BETTER regulation. Regulation which does not strangle competition at the level of healing OR at the level of coverage, but which sanctions any modalities showing effective, positive health outcomes...

Posted by a j kehoe on 03/04/2009 @ 06:40PM PT
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Another note on the economics of this... is a system where everone gets the same product and it always costs the same amount attractive in any other industry? I know the line, "Healthcare is too important to allow market forces to work." But isn't it both too important and too expensive to NOT allow them to work?

Education is important too - in fact I would argue that it's much more important than good health care - but to take the same approach in education would require making private schooling of any kind illegal. And note what would be cut out - the high end products. The low end solutions are already the public schools themselves.

Would this work for groceries? For automobiles? For houses? Of course not. We don't all want the same products because we do not all have the same values, beliefs, or incomes. It is no different with medical care.

Posted by Ethan P on 03/01/2009 @ 10:35AM PT
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"Another note on the economics of this... is a system where everone gets the same product and it always costs the same amount attractive in any other industry?"

In economics it is called a perfectly competitive market - same product, same cost, no differentiations. Whether or not it is attractive is a moot point because what other industry directly affects the ability of a nation to be healthy, and being healthy helps a nation be productive. Granted a lot of the health related problem in our country are the fault of each person's poor choices in diet, exercise (or lack thereof), and the environment they live in.

Any kind of system that is implemented in America ought to place a high emphasis on preventative care, and on holistic/alternative medicine(which is very good at preventing problems).

I think mandating health classes at every grade level that teach students in great detail how to be healthy should be a big part of any new legislation that changes our healthcare system. Knowing is half the battle (thx G.I. Joe)

Posted by Ryan Sprague on 03/01/2009 @ 11:07AM PT
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Regarding education, the problem is that our government doesn't get health education right. The diet they recommend is far from optimal and does little to prevent the most avoidable and expensive Western diseases.

That is likely to remain true due to ignorance, lobbying, and lethargy.

Posted by Ethan P on 03/01/2009 @ 04:36PM PT
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You can't separate institutions and their success (or lack of success) from the populations that make up the country. This is a monoracial country, with just about everybody marching lockstep culturally speaking. It's obvious that things are going to work better!

Posted by Anna May on 03/01/2009 @ 10:39AM PT
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This is a great point Anna. As my professor of Japanese likes to remind my class, "It is easier to get 100 people to wear the same thing in Japan, than to get 2 people to agree on the same toppings on a pizza in America."

The thought process behind their system is not ours. They consider the greater good of their nation first, not the greater good of any one individual. In this way we have much to learn from them, and they have much to learn from us. I think in the short term we ought to consider what is the greater good for America, while keeping in mind the effects this can have on the people most directly involved. I am more than willing to make some sacrifices in the level of my health care if it means that more lives can be saved, less families experience financial ruin, and our country is better off for it. If only more people felt this way, instead of thinking only of themselves, but then we'd all be Japanese.

Posted by Ryan Sprague on 03/01/2009 @ 11:14AM PT
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Although I agree that you can't separate a system from its cultural context, it's worth noting that the health outcomes for Japan exceed all that of any ethnic category in the U.S., including non-Hispanic whites.

Still, Ryan's point is very well taken. Preventative care and community spirit are cultural values which help make the system work.

Posted by Timothy Foley on 03/01/2009 @ 04:13PM PT
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Your article is too long to read and probably misses the fact that in Japan ambulances with dying patients are regularly turned away. The last news report of this type of immorality was about 2 weeks ago when someone died after being turned away by many hospitals. Great system. I suppose these cases are not in the statistics. Here - read about it yourself: http://www.tokyomango.com/tokyo_mango/2009/02/many-japanese-die-in-ambulances-because-of-strange-policy.html

Posted by Diane Richardson on 03/01/2009 @ 02:46PM PT
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Gosh. Sounds like the U.S. to me:

http://www.newamerica.net/blog/new-health-dialogue/2008/quality-ambulance-diversions-show-need-reform-6737

Yep. Ambulances with dying patients are regularly turned away right here at home.

Posted by Timothy Foley on 03/01/2009 @ 04:10PM PT
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I wonder how the Japanese deal with naturopathic and chiropractic care. My chiropratic doctor has done a lot more good to me than most of the allopathic doctors I have seen. I prefer not to take prescription meds - they ALL have side effects.

Posted by Jackie Branagan on 03/01/2009 @ 04:10PM PT
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Glad to see your post, Jackie B. Everyone else here thinks it is just a matter of more & more fiscal tinkering (rearranging the Titanic's deck chairs) or "losing weight". Well, only for starters, there's lots of people in N. America and Japan too who may be slender but they still have self-induced chronic health problems. I say, if you are going to have single-payer system, make all sorts of licensed health care providers equal in the scheme. Chiros/nature doctors of all kinds/licensed herbalists/homeopaths/massage therapists & so on.

My only complaint about naturopaths is that in recent years they are becoming more & more like allopaths in their methods. I don't mind the hightech diagnostics, but then they just prescribe you a neutriceutical, and away you go! This is not traditional naturopathy. But I digress. Sorry.

Posted by Anna May on 03/01/2009 @ 05:14PM PT
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Great article!

It didn't sound like the Japanese government is doing anything to control the costs of drugs. Is it? Or ot that part of "The Bad"?

Posted by Frances Lunney on 03/01/2009 @ 05:55PM PT
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Thanks Tim. I have been following these pieces closely. I am waiting for your piece on France. WHO's #1

Bob

Posted by Bob Richards on 03/01/2009 @ 11:01PM PT
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I found the information about the Japanese system interesting. There is definitely much to learn from the health care systems outside the US.

For the last five years I've live in South Korea and use the Korean National Health Insurance system. The health insurance in required for all employees and is paid half by the employer and half by the employee (the last time I checked the premium was 4.5% of your salary, but I'm not sure what the percentage is now).

Much like the Japanese system, we can go to any hospital or clinic we want and all most all of the time can be seen for treatment the same day. The co-pays and the prescriptions prices are low.

It just reminds me how badly we need to get off our butts and change the system in the US so that people can get adequate medical treatment.

Posted by David English on 03/02/2009 @ 02:14AM PT
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TOne reason our health costs are so is that the health care industry is betting that American will spend their last dollar on health to delay death. I ran this by a doctor some tears ago and he acknowledged this to be true with disgust for his own profession.With the collapse of the economy and wealth disappeared in the $trillions the health industry will still continue their greed on what's left.

Posted by ken lusk on 03/02/2009 @ 02:22PM PT
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Responding to Anna May ("Japan is a monoracial country"): The Japanese as monoracial are kinder with a greater sense of community because they do not have the same sense of protecting turf against "invaders" that our history of immigration has given us. We really were animals before we became human.

And to Ethan Pooley, who said: "... the Japanese are becoming more like us every day ... copying the US diet and are getting obesity, diabetes, various heart diseases and new cancers for their trouble." The Japanese system will fail eventually, too, because they are following in our culinary footsteps.

What does your body truly need to thrive? The requirements of its cells are not arbitrary. Ill health and early demise are the result of cells not having had basic requirements met over time. Good health starts with diet.

In the last 50 years we have reinvented our relationship with food, created new foods infused with new additives, processed and served in new ways. But our cultural adaptation to these new foods far outstrips our bodies' actual ability to thrive on this fare, and people everywhere are getting fatter and less healthy because we do not recognize how profoundly these changes have affected our health.

No problem, we can simply re-invent our antiquated, formerly not-for-profit health care system into a new one that will deal with this new crisis and then we will be healthy again, right? Unfortunately, both the current health care system and the insurance system it rode in on are more about creating profit than they are about delivering health care.

What if your cells would thrive if you simply drank more water every day? What if you could extend your life simply by learning how to breathe better? The current for-profit health delivery system will never research these or other low-cost remedies. It needs to put you on the highest-priced treatments available and keep you coming back until your money runs out, whether this money comes from your own pocket or the governments.

We can do better. Not today, and not by coddling the current system, but by imagining a completely new system designed to focus on the real-life needs of the human body. We must lift ourselves up to the next level on the evolutionary ladder, to learn how to deal in health until health becomes the new profit.

Posted by Nancy Churchill on 03/02/2009 @ 03:16PM PT
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What a great discussion! fascinating look at Japan's system, and i'm so glad to see the repeated recognition that getting more doctor visits, technology and drugs may not in fact be our panacea...that in addition to creating some kind of parity/accessibility we also need education in the basics of what our bodies need in order to be healthy and the discipline to do that. Also access to naturopaths, chiropractic, and the other modalities that have shown good track records and building/maintaining health. Real freedom of choice. And infinitely lower cost. A good start. I'm really hoping Tim posts a study of France like this one of Japan. Not only would the economics be interesting, but we'd probably notice that lifestyle, diet and type of medicine have a huge impact on their positive outcomes.

Posted by a j kehoe on 03/02/2009 @ 05:49PM PT
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You had me at 8%. That sounded high until I did the math, and realized that I was paying 25% while working at a minimum-wage job.

Thanks for the great explanation, been wanting more details about the Japanese system.

Posted by Lo Carr on 03/04/2009 @ 04:25PM PT
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The U.S. doesn't have a health care industry, we HAVE a HEALTH INSURANCE INDUSTRY. THE INSURANCE INDUSTRY MORPH'S HEALTH CARE AND HEALTH INSURANCE as though they are one and the same and they are not. This is orchestrated by the insurers with an expensive propaganda campaign which has convinced Americans that NO HEALTH CARE is BETTER THAN the dreaded socialized, an imagined fear, medicine. The propaganda campaign is delived through the MSM as well as paid advertising, bribed politicians and the Fascist front think tank organization such as the AEI, Heritage Foundation just to mention a few. Americans are manipulated by imagined fears and the last 8 years has exposed the depth of ignorance in the general population.

Posted by ken lusk on 03/07/2009 @ 07:20AM PT
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This system sounds disasterous to me. With inpatient services that carry 20% or 30% co-pays, I couldn't afford treatment. I wouldn't be going for any primary care either. Why go for cancer screenings if you can't afford to treat any cancer that is found?

I recently gave birth to my first (and only) child. The bill was roughly 20k. In this system you describe, I would then be responsible for 4-6k of that bill. Well, in that scenario, I think you may see more women having unattended home births, which I would expect to lead to increased infant mortality and morbidity; increased maternal mortality and morbidity (and hence more orphans).

I thought the point of reforming our current health care system was to make it MORE affordable and MORE accessible.

Posted by L B on 04/30/2009 @ 04:37PM PT
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You're forgetting that most inpatient services cost a fraction of what they do in the U.S. Your example of childbirth brings an interesting case. First of all, the average hospital stay in Tokyo for childbirth is 400,000 yen, or a little more than $4k -- 1/2 of the average cost in the U.S.. However, childbirth in Japan is heavily subsidised, up to 350,000 yen. Essentially, the patient's "share" of the hospital stay is around $500.

This is not that far from U.S. mothers covered by insurance. The average vaginal delivery is about $7,750 and C-sections are about $11,000 (with, of course, variations by geography). Insurance plans frequently cover a large portion of this, with an average patient "share" around $463.

But there's a big difference -- the entire population has access to health coverage in Japan. In the U.S., 16% and rising do not. This goes a long way to explaining why the U.S. has the highest infant mortality rate of the industrialized nations, and Japan has the lowest.

Posted by Timothy Foley on 05/01/2009 @ 07:18AM PT
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Tim has been an online organizer and blogger on health care policy for the Obama for America campaign (during the primaries) and currently for the Committee of Interns and Residents/SEIU Healthcare, a labor union for intern and resident doctors. Views expressed here are Tim's, and don't represent the positions of CIR or SEIU.