The Healthcare System in Japan and the Quality of the Service - Essay Example

Abstract – The essay explores the healthcare insurance industry and the different concepts in the same. With particular reference to the two different healthcare insurance models, one which Japan has implemented and the other which the US has implemented, the contrast between them is also studied. For this, the general idea behind providing healthcare insurance is understood and a literature review of the same is carried out for a better and deeper analysis. In the literature review, the features of the two healthcare insurance models, the Equality concept implemented in Japan and the Investor model implemented in the US, are studied and compared. Also, the factors leading to the implementation of the different models is studied in this essay. Further, the advantages and disadvantages of each are discussed. Japan’s concept of healthcare for the aged above 65+ is studied with particular interest in the model’s success. It is observed in the conclusion, why the Equality model of Japan has more advantage in financial terms in the present and a disadvantage in future in terms of its decentralised model of implementation which leads to faster and more number of aging population. CONTENTS – 1. Introduction 2. Features of Healthcare 3. Healthcare Industry - Japan 4. Healthcare Industry – US 5. Reasons for Japan’s Healthcare 6. Reasons for US Healthcare 7. Comparing the two 8. Conclusion 1. Introduction The Healthcare industry is the most serious and buzzing business across the world today and many policies are formulated according to the different needs of the individual, groups of people or the population as a whole by the various public-private bodies or the Government of the country or state. It is observed that the crux of this activity is to ensure the general health of the people of the nation, which is seen as the moral responsibility predominantly by the governing body. As it is obvious without people there is no nation and healthy people are a nation’s pride and power just as a healthy child can be a pleasure and boon to the parents and the society. As this comes with a premium, there are differences in how it is perceived in terms of care and the efforts invested to bring about the desired result. And any health care program can be a continuous one with changes being implemented regularly taking the socio-economic and environmental factors into consideration. 2. Features of Healthcare It means that everyone gets a fair chance to life and has access to the facilities as deemed, either by virtue of their capacity to avail these facilities or their need for the same. This very realization has given rise to the concept of insuring the lives of the people in different ways. One approach can be that of the business-like way of insuring the lives which is found to be less inclined towards fairness for all and more towards doing business fairly. This kind of principle or concept of insuring is often called the Investment principle. Further, it emphasizes on the Quality of Service based on the investment by the individual. As quoted in the (White,1995; pp23-27) that “investment principle is about fairness that individuals should get out what they put in and the higher the risk, the higher would be the premium and lower the benefits“. The Investment principle focussed more on private or personalized services. The other fundamental principal of insuring is the Equality principle which has more of an inclination towards giving a fair chance as far as possible to all of the citizens irrespective of their capability to afford the services. The idea of the Equality principle is to enable the access of services by all at affordable costs for a majority of the basic services. This principle enables subsidized services to cater to the service needs of the lesser capable to pay by asking more from the highly capable payers thus balancing the inequality. To quote the Equality principle,” to each according to his needs, from each according to his means” (White, 1995; pp23-27). This principle has more to do with public good. Although it has been observed that there has always been a polarized approach to implementing these concepts in health insurance and a majority of the countries swing between being more investment oriented to being more equality oriented. As is the case with the US and European countries which are more polarized towards the investment principle and have never stopped looking eastward toward countries implementing the equality principle to gain and hence improve their own principle. Likewise, the countries like Japan which have convincingly implemented the equality model of health insurance have ever been looking towards the Western counterparts to draw from the best practices in investment principle of health insurance (Ikegami Campbell, 1996; pp19-32). Irrespective of the principle implemented in healthcare insurance, it has been of paramount importance that certain factors be looked at when formulating it. The most important factor in any healthcare insurance policy being the cost to the stakeholders involved. Of further importance is the coverage of the different facilities or services needed by the majority of the people. Other factors important when considering the formulation of an healthcare insurance are the simplicity with which it can be applied to a range of population or subscribers, and the measurable results of implementing these policies (Ward, Piccolo, 2004). With all the factors being inter-dependent this establishes the need for frequent reviews of these policies. Further, the need for investing in a particular service is always driven by a need for enhancing the standards of living which establishes the relation between taking a particular service and gauging it against the result it yields. And since any policy is formulated after considering the facts related to the determinants of such over a period of time, there are governing bodies which consider the best practices and success of the concepts and then make the policy. These are found to be local authorities, public-private partnership bodies, individual members of the society representing a section or category of the clientele or the government itself. It is also maintained that the policy is well researched and studied and is considered to be of great implementation value to the one it has been directed to benefit. Additionally, the implementation itself is supposed to be relatively simple to reap the benefits over the period of time it is targeted at. All these considerations in making policies for healthcare have resulted in mainly the two concepts, investment and equality concepts based on the conditions for the requirements for the policies and the inclination of the societies and their governing bodies themselves. To understand the influence on the policies it is imperative to understand the socio-cultural, economic and political environment of the place. There are two contrasting principles implemented in Japan and the US. The equality principle is implemented in Japan while the US has embraced the more brazen investment principle. However, it has also been observed that these two countries have never still stopped looking into the other’s principles to gain an advantage particularly so with the US, which has been under criticism for its adoption of the more sophisticated investment principle. It is to be noticed that there is an element of awe as to which concept is in reality more sophisticated or made to look so. However, each of the two different implementations is found to have their own success stories as well as concerns, more so with the American investment principle. Statistics have revealed that there have been more advantages with the equality principle as against the investment concept due to its so called egalitarian nature. The equality principle stresses on being not for profit and that facilities have to be equally provided without discrimination to the extent possible and to all sections of the society with various requirements, with benefits equally shared. In Japan, it is mandatory for all people to be covered under healthcare insurance policy as per the government’s National Health Insurance (NHI) scheme. Under this scheme, healthcare is to be provided with a non-profit motto and the collective services for healthcare are to be provided by every hospital as well as private medical practitioners/ physicians. Further, the operational expenditures are to be kept low so as to enable access to all classes of the population. The providers are paid directly by the insurers thus reducing the time factor considerably. While the private service providers of healthcare account to 80% of the total providers, just 20% of the services are provided by the big hospitals. The private providers are readily available and also cost less with the advantage of providing a totalitarian health scheme. And since the fee is dictated by the Fee Schedule laid down by the government where each service provided is charged the same through out the country, any service can be availed at any place conveniently. An amazing point to note is that the MRI is made very affordable and is available at every clinic and big hospitals. Further, since the collective healthcare scheme is implemented, the private physicians are also at freedom to prescribe which can lead to over-prescription and also pose serious health effects for the patients. Another facility that is provided under the scheme is that the patient is charged based on the income level but has access to all the basic services. Further, it is observed that the healthcare industry enjoys a 7.6% investment spending by the government every year towards the health scheme. This when compared to the developed nations like US an UK is almost half. 3. Healthcare Industry - Japan The Japanese government has introduced special schemes for different categories of citizens based on their age and economic conditions to ensure total coverage of all. In addition, it also has full-fledged programs focussing on medical mass screening at various schools, work, and other public places which is a basic but an important step to ensure the health care of a nation. It is observed that funds for this kind of an all encompassing scheme come from the taxes, the health insurance premiums and co-pay by the individuals and the establishments. While the taxes come from individuals, establishments and government revenue; the premiums are the one’s paid for insurance for three different kinds of insurance. Premium from employees from large companies under the Society-Managed Health Insurance (SMHI), that from employees of small companies under the Government-Managed Health Insurance (GMHI) and that from other non-employed or self-employed citizens under the Citizen’s Health Insurance (CHI) scheme account to the funds towards premium insurance (Doko,1994; pp104-105). Further, the co-payments also called out-of-box payments are paid by the patients and are charged 20%-30% which are borne by the patients and consist of a cap of 14.8%. The National Medical-Care Expenditure system caters to the official spending on these schemes on behalf of the government. The aim of the government to implement such a scheme is to ensure that the costs are uniform and in control, thus providing healthcare to all at affordable costs (Ward, Piccolo, 2004). Different categories that vary systematically, under the egalitarian system, consists of seven different entities that share the costs and are enrolled in - the government/ quasi-public employee that is a pool of young and well paid employees who account to 10% of the population, the employees of large companies who are also young and enrolled at company level societies. These account to 20% of the population, while the employees of small firms who are not so young, are above 40years of age and are paid, enrol at government managed insurance pools which account to 30% of the population. Further, the self-employed and non-employed citizens that include the farmers, small shopkeepers who are older with low incomes form another pool which accounts to 34% of the population and are managed locally. A further classification of the population covered under the NHI is the class of retired but less than 70years old who are covered by the CHI. These are given lower co-pay and a separate finance allowance and constitute about 3% of the population. A sixth category of insurers consists of the elderly above 70years who are members of some other insurance pool accounting to 9% but have their own financing systems. The last and the seventh category consist of the poor accounting to 1% and need public assistance (Reinhardt, 1993; pp172-193). In each of these categories, the need for health insurance is found to be different and hence the burden of paying is also taken care of based on the capacity to pay. This type of classification also enables the healthcare scheme to be implemented by decentralising it. It also ensures that the benefits are not compromised but each bears the burden according to his paying capacity. It is to be noted here that the services provided and the costs according to the fee Schedule are not at all dependent on the quality of the service. The Fee Schedule is revised every two years by the healthcare industry and the health ministry by studying every detail minutely to fix the price for every procedure and every drug to be prescribed. This unbelievably simple yet effective strategy as far as equality principle for healthcare insurance is concerned. However, the implementation loopholes do exist and it is far from being 100% effective. The result of the healthcare insurance scheme is gauged in terms of the cost efficiency, the facilities available, the coverage and the ease or simplicity of implementation of these policies. It is observed that the system is efficient in that it offers uniform and very low cost facilities covering the entire population while being personalized based on their specific healthcare needs and different categories of population sharing the burden of pay as per their income. This effective and simple decentralized implementation of healthcare insurance in Japan has contributed to the low cost spending of GDP but it also has some disadvantages. It is observed that the Japanese healthcare system has been restricted much to the urban areas where there is increased awareness of health and also due to concentration of the physicians and paying population in the cities. Another disadvantage is found to be the freedom enjoyed by the practitioners who resort to malpractices along with the insurers and drug manufacturers by over-prescribing and prescribing low quality drugs. It is observed that the aging population is on the rise and the birth rate is also declining due to over usage of drugs. This is resulting in a declining economic growth as the medical system goes into deficit due to an increase in the aged population which enjoy a different scheme of healthcare. This is further resulting in increasing revenue deficit. Also this is resulting in the young ending up paying more as they are the one’s left with higher incomes. 4. Healthcare Industry – US On the other hand, the Americans have implemented the investment concept of healthcare system and have been spending about 15.2% of their GDP as of 2000 (Rosen, 2008). The American system of healthcare is inclined towards providing individuals the quality of service. It is found that there is less number of physicians in the US and also there is lesser number of beds in American hospitals as compared to hospitals in Japan. The differentiator in cost of service is also studied. It is also observed that American healthcare service costs twice that of Japanese but there is a major advantage in terms of quality. The presence of specialists in the different fields of healthcare also is a factor for the high cost in America. Further, the services are in contrast to the not-for-profit equality concept in that the individuals get just as much as they invest. Which means that the higher the risk and higher the premium and lower the benefit to the patient in terms of cost of the service. Also, the investor model of service which is profit oriented are less regulated and hence do not have the flexibility and simplicity of the equality model system. Since it is profit-based, the investor model of healthcare in the US does not cover the entire population and also becomes inefficient in regularizing to introduce any further changes. Whereas the equality model provides more flexibility and simplicity and has more regularized implementation, and allows easy up gradation every two years. The result of implementing the investor model of healthcare in the US is that the patients end up paying a very high premium, services are not available to all of the citizens and future up gradation and implementation also becomes more and more difficult. 5. Reasons for Japan’s Healthcare Studying the reasons behind the high success rate of the equality model of healthcare system that Japan implements, one finds that the lifestyle, the historical background, the socio-cultural factors along with the systematic factors or the political and administrative factors play a major role. As the equality model of the Japanese is accredited with more success rate than that of the investor model of the US, it can be easily taken to be the best one but it is to be noted that both have their set of failures too. It is only that the equality model has gained more popularity when compared to the less systematic investor model of healthcare system of the US. Observing the different factors like the Japanese lifestyle, the socio-cultural and legal factors that influence the choice of the more socialized system, one can notice that the highly systematic and relatively conservative nature of the Japanese play an important role in the success of implementation. Firstly, Japan’s World War II experience had taught them to be more alert and relatively more conservative than the American society which is more open. Japanese are found to be more liberal to accommodating deviations to the service to be provided and are found to be less critical of the advice from their physicians. They are also considered to be hard working with lesser number of addictions. The major addiction being smoking which is high among the men and a considerable percentage of women are also addicted to it. They are also open to conservative treatments as there is a long tradition of the famous Chinese treatments. The government has also introduced health education early in schools and provides regular mass screening at schools, offices and other community centres. Though the early health education is aggressively implemented and there is an increase in awareness that could probably lead to other negative habits like drug addition, contracting deadly viruses like HIV/AIDs, etc. like other developed countries, Japan due its conservative nature of society has been far from these influences. Hence, the healthcare programs are comparatively simpler and easier to implement. It also makes the services cheap and the rate of visiting the physician nearly three times that of the Americans, the early detection of health problems and the containing becomes easy and less costly. The government‘s policy of Fee Schedule and the cap on co-pay also contribute to the low cost of the service. Moreover, since the operational services are made non-profitable, the availability of the service for all enables high success rates. As the funds are from various sources the burden is also less on the individual patient. Moreover, the average Japanese visits the physicians three times more than the average American which ensures that the Japanese are capable of diagnosing and curing their ailments in the initial stages itself hence saving much costs and time if have are to be treated at a later stage. The dietary habits of the Japanese are also considered to be a major factor in the over all well being of the individual health as well as the health of the nation. But on the other side, their high intake of salt creates problems which otherwise is not found in majority of the European countries and the US. 6. Reasons for US Healthcare On the other hand, the low success rate of the investor model in the US is attributed to the very high spending towards medical insurance as it is a profit oriented service. Also Americans are considered more rights-conscious which can pose serious legal problems and hence the hospitals and the insurance organisations are extra-careful in the dealings. Further it is observed that there is less regularization of the healthcare system in the US as it is a profit oriented service and there is less stake of the government. The nature of the healthcare policy itself does not ensure the service for all and even equally as observed in Japan under the equality model. Also, the average dietary habits of the Americans make them more prone to diseases when compared to the average Japanese individual. 7. Comparing the two The pay for the Japanese physician is no where near to that of the American physician but the Japanese more or less make up good the loss by indulging in malpractices. The average physician’s income in Japan is 40,000 USD as against the American’s average of 54,000USD as per the 1996 OECD study. And according to Naoki Ikegami, “the administrative or total hospital expenditure in percentage in 1991 is found to be 5%-7% for the Japanese and 9%-20% for the Americans. The average visits to the physician per year by the Japanese are 16.0 and that of the Americans is 9.0 (Ibid, 1992). The number of physicians per ten thousand patients is calculated to be 18.4 for the Japanese and 24.3 for the Americans according to a 1994 data by Health Care Providers (Doko, 1994). Rosen compares the Japanese and US healthcare expenditure and other attributes and observes that the number of above 65year olds I Japan is 21.6% and that in US is almost half of it at 12.7% and the life expectancy in Japan is 82.1 years an that of the Americans is 78.1years. Also, the drug consumption per capita is $450.11 and that for the US is $929.91 (Rosen, 2008). From this data, it can be analysed that the Japanese population is aging much faster than the US and this is probably due to the high exposure to the pharmaceutical drugs owing to their increased association with the health schemes and almost over the top usage of MRI scans, overdose of drugs prescribed by the physicians by fault or dubious ways and low mortality. As this is the category of population that requires more healthcare spending, the future looks quite bleak for Japan with its healthcare system and already increasing revenue deficit. Also, most of the burden is falling on the young and working population which is made to bear the burden of the fairness and equality system of healthcare insurance. It is also observed that by the year 2050, one in every three would be an aged person in Japan which is cause for concern (Rosen, 2008). First, because the healthcare spending would increase threefold, second that with the existing healthcare system, the burden on the young working class increases multi-fold, along with the increasing concerns due to the due to the stagnant economic growth since a decade. 8. Conclusion While the US and other countries with the investor model of healthcare system look towards the now successful egalitarian or equality principle in healthcare, the fading equality system of healthcare is looking towards the not so efficient investor model of the US. However, as the healthcare system in Japan is reviewed every two years by the ministry of health and the insurance stakeholders, there is hope of it being revived according to the rapidly changing healthcare needs of the citizens and also the rapidly increasing aged population. Since, till present day the Japanese healthcare enjoys a more efficient system and implementation along with flexibility and wider coverage, it needs to be reviewed with greater insight and arrive at more regularization and strict monitoring of the prescription and dispensing. It can also draw from the investor model of healthcare in that it can take steps to increase the quality of the service and make the practitioners and insurers accountable and also increase the measures for protecting the major economical and social changes that would result due to the future changes in the age group and population. The ’five problems with quality can be addressed by reducing the waiting time, increasing accountability by physicians, increased facilities, improving basic research and good diagnosis’ (Poll, n.d.). Increasing the revenue allocation for the healthcare schemes is also another immediate requirement that Japan has to consider to sustain the efficiency of the healthcare system. A more practical approach with innovative measures apart from the existing two polar models also is the need of the hour. REFERENCES- 1. White .J, 1995, “Low Health Care Spending in Japan – Competing Solutions: American Health Care Proposals and International Experience”, pp1. 2. Ikegami, Campbell, 1996, “Low Health Care Spending in Japan-Containing Health Care Costs in Japan”, pp4. 3. Doko, 1994; “The Egalitarian Health Insurance system- Kosei Tokei Kyokei”, pp89. 4. Rosen, M., 2008, “U.S.-Japan healthcare comparison: Rapidly aging population, skyrocketing costs”, 5. Reinhardt, U. E., 1993, “Low Health Care Spending in Japan-Reorgnaizing the Financial Flows in American Health Care”, pp14. 6. Ward, J., Piccolo, C.M, 2008, “Healthcare in Japan”, MedHunters, Published on 14 Sept 2004, < http://www.medhunters.com/articles/healthcareInJapan.html>. 7. Ibid, 1994, “Health Care Providers”, pp77. 8. Poll, H., “The Quality Problem”, pp 177. Read More