T.R. Reid on Japanese Healthcare

I just finished reading T.R. Reid’s latest book, “The Healing of America” which has a chapter devoted to Japan (where Reid lived for some years in the 1990s).  Japan also features in a documentary he did for PBS titled “Sick Around the World.”

T.R. Reid talking with Dr. Kono Hitoshi

His basic points on Japan can be summarized as follows:

•Everyone is required to have health insurance and pay the premiums.

Since you are covered by whatever insurance company your employer uses (or one based on where you live if you are self-employed, retired, or unemployed), you’re (more or less) automatically enrolled and the premiums are taken right out of your pay.  So really, you can think of it just like a tax.  The standard rate is 7.5% of your income, with your employer required by law to pay at least half.  So the most that you pay is 3.75% (though you may pay even less if you have a good union).

•You pay 30% of all costs, with a monthly cap based on your income.

Insurance basically has to pay every bill submitted to them by a hospital or doctor.  Even in the rare case where they want to dispute paying it though, it is completely between them and the care provider to figure it out; the patient never has to worry about that 70%.  You just pay your 30% on the way out and never worry about it again.  People usually just settle their bill as they leave, like at a restaurant, because:

•Prices are low and standardized.

As Reid says in his book, an American doctor can never tell you how much something is going to cost.  They get paid so many different prices depending on what kind of insurance you have and what that doctor’s arrangement is with the different insurance companies.  The exact opposite is true in Japan, where all prices are set down in a price book that applies to the entirety of the country (this is purposeful in order to effectively pay more to doctors who live in rural areas [where the costs of running a clinic or hospital would be lower] as an incentive to live and work out there in the countryside).  And these prices are very low.  Reid quotes various items like $11 a night for a shared hospital room (including meals), or $10,000 for a complete shoulder replacement, or a mere $5 for a consultation with a family doctor.  And you only have to pay 30% of that (with the monthly cap coming into play for something expensive like that shoulder surgery).

But where does the price book come from?  Like in most countries, your taxes pay the salaries of some number of government bureaucrats.  But unlike a lot of countries, in Japan the bureaucrats really are working for you.  Every two years the Ministry of Health renegotiates the prices with the country’s doctors and hospitals on behalf of the Japanese populace.  But Japanese bureaucrats are good negotiators, so the prices actually go down more often than up.  The results are the current rock-bottom prices you see in Japan.

•There are neither waiting lines nor “gatekeepers.”

Since insurance has to pay every bill, every doctor in the whole country is “in-network.”  Also, you don’t need a referral to see a specialist:  you can just walk into anyone’s office and demand to be treated.  And they treat you.  Most people don’t make appointments; just dropping by when they want to be seen.  Even for more major things you don’t have to wait.  Reid was able to get a consultation for shoulder surgery the same day, and schedule the operation for the following week.

If you’re interested in either health care or how different countries do things, I encourage you to check out Reid’s book.  It was a best seller in America, so there’s a good chance your local library has a copy.  To conclude, I’ll leave you with an excerpt from the book talking about how this system came to be during the mid 1800s after the Meiji Revolution:

“The Meiji reformers set out to turn backward Japan into a modern, industrialized nation.  To do that, they sent teams of bright young men, many of them former samurai, to the United States and Europe to learn how modern nations worked.  These study teams borrowed the best ideas they found in each country and brought them home.  Over three decades, Japan created a military modeled on the German army and a seafaring force copied from the British navy.  They instituted France’s Code Napoléon as a legal system.  They brought in Brits to build railroads and Americans to string telegraph lines.  They built German-style elementary and middle schools, complete with militaristic uniforms, and universities based on Oxford and Cambridge, complete with top hats for the students.  A former samurai, Iwasaki Yataro, hired Dutch naval engineers to build a shipping company; he named his new enterprise after the design on the Iwasaki family crest:  “Thee Diamonds” or “Mitsubishi.”  Impressed by the vast farms of the American Midwest, the reformers started a dairy industry in the vast, empty northern island of Hokkaido.  In terms of social welfare, the world’s leading model of modernization at the time was Bismarck’s Germany.  The Japanese saw and admired the chancellor’s network of health and accident insurance plans designed to unify the country and keep the workforce healthy.  The Japanese brought German doctors and economists to the newly established University of Tokyo to teach the nation how to practice, and manage, Western medicine.”

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