Containing Health Care Costs in Japan

25 The Evolution of Fee-Schedule Politics in Japan

CHAPTER 25 The Evolution of Fee-Schedule Politics in Japan Mikitaka Masuyama and John Creighton Campbell SUM MA RY Detennination of the fee schedule is a political negotiation between payers and providers. The Ministry of Health and Welfare (MHW) Health Insurance Bureau (HIB) plays three roles: as a major payer, as the process manager, and as a policy maker with its own goals. Periods ofrelative equilibrium have been punctuated by intense struggles in the past, but for more than a decade the system has been quite stable and oriented toward cost control. The long battle between the government and the Japan Medical Association (JMA) has been routinized to mutual benefit. Introduction 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. Nearly all medical goods and services are covered. J Having a mandatory fee schedule does not automatically hold costs down, and indeed in the 1970s health care spending in Japan grew rapidly, at about the same pace as in the United States. However, when the government made its mind up to hold down spending in the early 1980s, it was the fee schedule that provided the means. Devising and maintaining a fee schedule are challenging tasks for government . The "correct" fees for each of thousands of items must be calculated, and then must be adjusted periodically to reflect economic and technological changes and, perhaps, new policies. It is a daunting intellectual enterprise. And given that powerful actors somehow have to be brought to agreement, it can be an even more difficult political enterprise. The Politics of Health Care Provision The evolution ofJapan's health care system can be seen as a long struggle among powerful institutions with conflicting interests. A complete tabulation of all the 265 CHAPTER 25 The Evolution of Fee-Schedule Politics in Japan Mikitaka Masuyama and John Creighton Campbell SUM MAR y Detennination of the fee schedule is a political negotiation between payers and providers. The Ministry of Health and Welfare (MHW) Health Insurance Bureau (HIB) plays three roles: as a major payer, as the process manager, and as a policy maker with its own goals. Periods ofrelative equilibrium have been punctuated by intense struggles in the past, but for more than a decade the system has been quite stable and oriented toward cost control. The long battle between the government and the Japan Medical Association (JMA) has been routinized to mutual benefit. Introduction 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. Nearly all medical goods and services are covered. I Having a mandatory fee schedule does not automatically hold costs down, and indeed in the 1970s health care spending in Japan grew rapidly, at about the same pace as in the United States. However, when the government made its mind up to hold down spending in the early I980s, it was the fee schedule that provided the means. Devising and maintaining a fee schedule are challenging tasks for government . The "correct" fees for each of thousands of items must be calculated, and then must be adjusted periodically to reflect economic and technological changes and, perhaps, new policies. It is a daunting intellectual enterprise. And given that powerful actors somehow have to be brought to agreement, it can be an even more difficult political enterprise. The Politics of Health Care Provision The evolution of Japan's health care system can be seen as a long struggle among powerful institutions with conflicting interests. A complete tabulation of all the 265 266 VI: Politics and Health Care battles would probably show that anyone ofthese institutions had fought with any other at some time over some issue. Without too much simplification, however, we can see the principle conflict as between two coalitions, payers and providers, over the fundamental issues of money and control. The Payers' Side It is of course the Japanese people who pay for health care, as consumers, taxpayers , employees, and employers. Because Japan's health finance system is pluralistic, the people have a variety of representatives. Labor unions and Nikkeiren , the Federation of Employer...