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Containing Health Care Costs in Japan

Naoki Ikegami and John Creighton Campbell, Editors

Publication Year: 1996

The Japanese health care system provides universal coverage to a healthy but aging population. Its costs are among the lowest in the world and have remained nearly constant as a share of the economy for more than a decade. Americans concerned about runaway medical spending need to know about the successes that Japan has experienced and the problems the country has encountered in its effort to control costs while maintaining quality of care. Offered here is an analysis of the key issues of cost-containment by specialists followed by reactions from some of America's best-known experts on health care delivery and finance. Topics include the macro-and microeconomics of health care, technology and costs, institutions and costs, attitudinal and behavioral aspects, and the politics of health care. This collection provides an authoritative study of successful cost-containment in the Japanese health care system---a chronicle of success that is neither a statistical illusion nor a result of sociocultural factors. Detailed here is information on the key mechanism of cost constraint: a fee schedule that covers virtually all medical services and rewards inexpensive services while making expensive services unprofitable. This system has resulted in the provision of quality health care to the entire population at roughly half the cost of American health care. Is it a single-payer system? Would the United States have to introduce a dramatically altered health care structure to benefit from the Japanese experience? No. Japan relies mainly on fee-for-service medicine financed by multiple insurers---a system familiar to Americans and one from which many lessons may be learned. Based on conferences held in Washington, D.C., and Izu, Japan, this volume collects original chapters on the overall cost structure, how the negotiated mandatory fee schedule works, specific mechanisms for cost control, the politics of health care financing, and the impact of cost cutting on quality, among other topics. These pathbreaking studies will be a significant resource for policymakers and scholars interested in comparative health care systems as well as those interested in health care reform in the United States.

Published by: University of Michigan Press

Title Page

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pp. v-vii

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pp. 1-6

As the debate over what to do about health care in the United States develops, Americans have looked overseas for examples of what might work better in providing more coverage and somehow constraining costs. Canada is most often invoked, but its single-payer system, though attractive in its simplicity, ...

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Conventions and Usages

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pp. 7

Japanese names are given in the Western order, with family name second. Our rule in translating names of Japanese agencies and programs is to follow the Ministry of Health and Welfare's most common usage. The major exception is Kokumin Kenkō Hoken, the health insurance program for the nonemployed, ...

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1 Overview: Health Care in Japan

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pp. 8-18

By the broad measures ofperfonnance, the Japan's health care system appears to have achieved a paragon of success. Gross health indices are the best in the world, with an infant mortality rate at 0.46% of live births and a life expectancy at birth of 75.9 years for males and 81.8 years for females (Kōsei Tōkei Kyōkai 1991). ...

Section I: The Macroeconomics of Health Care

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pp. 19

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2 Comparison of Health Expenditure Estimates between Japan and the United States

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pp. 19-32

According to the OECD Health Data (1991), the estimated total health expenditure in Japan for the 1990 fiscal year was ¥27.5 trillion. For comparison with U.S. data, this amount can be divided by population (Schieber, Poullier, and Greenwald 1992, 70-71) and then converted into dollars using purchasing power parity (PPP); ...

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3 Factors in Health Care Spending: An Eight-Nation Comparison with DECO Data

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pp. 33-44

One of the difficulties of making international comparisons of health care data is that any observed differences may not be substantial but due to the method of statistical compilation. For example, simply comparing the average length of stay for each country has little meaning because the definition and function ...

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4 Afterword: Costs—The Macro Perspective

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pp. 45-52

In assessing the financial resources spent on health care, three questions should be answered: (1) How much did Japan spend on health care? (2) How does the total expenditure compare with that of the United States? (3) What are the trends in cost inflation and their underlying causes? The common analytical tool ...

Section II: The Microeconomics of Health Care

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pp. 53

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5 The "Natural Increase" and Cost Control

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pp. 53-72

Japan's expenditure on health care as a proportion of national income is quite low, second only to that of the United Kingdom among industrialized nations, and its growth has been quite moderate since the early 1980s (see Katsumata, this volume; and Organization for Economic Cooperation and Development Health Data ...

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6 Comparison of Capital Costs in Health Care between Japan and the United States

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pp. 73-79

Health care costs in the United States that are categorized as "construction" amounted to $10.4 billion in 1990. When the figures for 1980 and 1990 are compared, there has been a 1.8-fold increase in ten years, and the increase in the private sector is greater. Construction costs consist of costs for ...

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7 Comparison of Administrative Costs in Health Care between Japan and the United States

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pp. 80-93

The high administrative costs in the United States have been regarded as the one area where savings can be made without adverse effects on the provision of health care. However, if consumer choice and competition, managed or otherwise, are to be part of the system, then both payers and providers will continue ...

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8 Afterword: Costs—The Micro Perspective

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pp. 94-100

The chapter by Yoshinori Hiroi gives a detailed account of the workings and evolution of the Japanese point-fee system. Hiroi contends that stability in medical expenditure growth is a structural phenomenon determined by government fee-schedule policy. He sees technology as a factor that should reduce costs, ...

Section III: Technology and Costs

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pp. 101

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9 Comparison of Hospital Admission Rates between Japan and the United States

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pp. 101-105

According to the Organization for Economic Cooperation and Development (OECD) statistics, U.S. health care expenditures were 11.2% of GDP in 1987 versus 6.8% in Japan (OECD 1992); the ratio of the United States is 1.65 times that of Japan. However, when statistics on health care services are compared, ...

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10 High-Cost Technology in Health Care: The Adoption and Diffusion of MRI in Japan

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pp. 106-120

New technologies have generally been incorporated into the health care system with enthusiasm by both providers and consumers. This is particularly true in Japan, where the medical care system has quickly embraced sophisticated, high-technology equipment. For example, the total number of installed MRI and CAT units in Japan ...

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11 Comparison of Pharmaceutical Expenditure between Japan and the United States

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pp. 121-131

While health expenditures in Japan are in general far less than in the United States, phannaceuticals are the exception to the rule. According to the Organization for Economic Co-operation and Development (1992) data, in 1989 per capita pharmaceutical goods expenditure in Japan amounted to $200 ...

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12 Sales, R&D, and Profitability in the Japanese Pharmaceutical Industry, 1981-92

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pp. 132-142

Based on guidelines established by the Central Social Insurance Medical Council (often referred to by the abbreviated form of its name, Chūikyō), the MHW detennines the insurance reimbursement price of each prescription drug in Japan. Under Japan's national health insurance system, the reimbursement price ...

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13 Afterword: Quality and Cost in Japanese and U.S. Medical Care

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pp. 143-154

The chapters by Hasegawa, Hisashige, and Ikegami offer important insight into the practice of medicine in Japan and how it differs from medical practice in the United States. Following some preliminary comments, we will tum to the broader question of whether Japan has paid a price in quality for the lower costs ...

Section IV: Institutions and Costs

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pp. 155

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14 Comparison of Long-Term Care for the Elderly between Japan and the United States

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pp. 155-171

From the point view ofthe average American, one of the reasons for Japan's lower health care expenditures would appear to lie in the difference in the provision of LTC for the elderly. It is a commonly held belief in the United States that the elderly in Japan are well taken care of by their children and, ...

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15 The Impact of Financing Reform: Inclusive Per-Diem Reimbursement in Geriatric Care

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pp. 172-174

An inclusive per-diem reimbursement system for geriatric inpatient care was introduced in Japan in April 1990 for the following two purposes: (1) to prevent over-utilization (e.g., drip infusion and laboratory tests) that has been associated with the fee-for-service system; ...

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16 Waiting Lists in Japanese Hospitals

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pp. 176-183

Under the Japanese health care system, patients may visit any health care facility they wish. Most of the hospital visits are made without a referral and virtually all inpatients are admitted from the outpatient department. The copayment rate and the fee schedule are the same no matter where the patient chooses to go. ...

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17 Comparison of Hospital Length of Stay and Charges between Japan and the United States

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pp. 184-192

The average hospital length of stay (ALOS) is by far the longest in Japan of all the other Organization for Economic Cooperation and Development (OECD) countries (Schieber et al. 1992). The difference in ALOS in the United States and Japan has been both substantial and persistent over time as well as across disease categories. ...

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18 Afterword: Implications for U.S. Health Care Policy Reform

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pp. 193-200

Thanks to some gifted and insightful researchers whose work is published in this volume, some things now seem obvious. Japanese health care costs less because: Japanese hospital admissions in general and those for surgery in particular are much lower than ours, and their hospitals are paid less for the surgeries they do perform ...

Section V: Health Behavior and Attitudes

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pp. 201

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19 Paradoxical Comparison of Health Care Needs, Utilization, and Costs between Japan and the United States

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pp. 201-206

A comparison of national health statistics in the United States and Japan indicates a paradoxical contrast: despite lower health care needs (self-reported morbidity) as compared with the United States, Japanese health care utilization is higher, but its health care costs are lower. ...

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20 Keeping Pressures off the Japanese Health Care System: The Contribution of Middle Aged Women

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pp. 207-225

In a recent New York Times article it was asserted that the universal health insurance system in Japan is "the most efficient in the world," producing "one of the healthiest societies on earth" while keeping the financial burden placed on corporations remarkably light (1992). By the usual measures there can be ...

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21 The Three-Minute Cure: Doctors and Elderly Patients in Japan

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pp. 226-233

It is a well-known maxim in Japan that, when you go to the doctor, you wait three hours for a three-minute visit. In most cases, there are no appointments; you go when you feel sick. Entering the waiting room of a large hospital on a typical morning is like going to the airport in the United States the day before Thanksgiving: ...

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22 Over My Dead Body: The Enigma and Economics of Death in Japan

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pp. 234-247

Japan's brain death debate began on 8 August 1968 when an economics student from Komazawa University went for an afternoon swim. Pulled from the sea unconscious, he was rushed to Sapporo University Hospital and declared dead from drowning. The following morning his heart was implanted into an eighteen-year-old ...

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23 Afterword: Social, Cultural, and Behavioral Factors

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pp. 248-254

This section's chapters focus on various aspects of the cultural differences between Japan and the United States that account for the differences in health services organization and utilization, which account in turn for the differences in health care costs between the two nations. ...

Section VI: Politics and Health Care

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pp. 255

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24 The Egalitarian Health Insurance System

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pp. 255-264

Health care in Japan is financed by numerous insurance organizations that are fonnally independent. Government regulations are so pervasive, however, that these organizations really have very little scope for autonomous decisions on important issues.1 That means it is possible to provide health care ...

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25 The Evolution of Fee-Schedule Politics in Japan

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pp. 265-277

The primary mechanism for controlling health care costs in Japan, as in Germany and other countries, is the fee schedule. A single fee schedule essentially applies to all physicians and hospitals in Japan. Balance-billing is prohibited; that is, no more (or less) than the prescribed fees can be charged. ...

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26 The Japan Medical Association and Private Practitioners' Income

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pp. 278-285

Since universal health insurance was instituted in 1961, the point-fee system has been used for remuneration of medical care in Japan. In this system, fees are determined for individual medical procedures, such as examinations, drug dispensing, injections, tests, and surgery. The medical services ...

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27 Afterword: National Health Insurance, Cost Control, and Cross-National Lessons—Japan and the United States

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pp. 286-296

Japan and the United States present an interesting picture of similarities and differences. Japan is outwardly very different from the United States: an island nation, with a significant language disparity and, until recently, strikingly different historical and cultural patterns. For purposes of direct comparisons ...


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pp. 297-300


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pp. 301-311

E-ISBN-13: 9780472024131
E-ISBN-10: 0472024132
Print-ISBN-13: 9780472105380
Print-ISBN-10: 0472105388

Page Count: 376
Publication Year: 1996