Elsevier

The Lancet

Volume 378, Issue 9796, 17–23 September 2011, Pages 1106-1115
The Lancet

Series
Japanese universal health coverage: evolution, achievements, and challenges

https://doi.org/10.1016/S0140-6736(11)60828-3Get rights and content

Summary

Japan shows the advantages and limitations of pursuing universal health coverage by establishment of employee-based and community-based social health insurance. On the positive side, almost everyone came to be insured in 1961; the enforcement of the same fee schedule for all plans and almost all providers has maintained equity and contained costs; and the co-payment rate has become the same for all, except for elderly people and children. This equity has been achieved by provision of subsidies from general revenues to plans that enrol people with low incomes, and enforcement of cross-subsidisation among the plans to finance the costs of health care for elderly people. On the negative side, the fragmentation of enrolment into 3500 plans has led to a more than a three-times difference in the proportion of income paid as premiums, and the emerging issue of the uninsured population. We advocate consolidation of all plans within prefectures to maintain universal and equitable coverage in view of the ageing society and changes in employment patterns. Countries planning to achieve universal coverage by social health insurance based on employment and residential status should be aware of the limitations of such plans.

Introduction

Social health insurance, as a mechanism for progress towards universal health coverage, has both advantages and disadvantages. The advantage compared with private insurance is that, being based on solidarity, premiums are levied according to the ability to pay, and not on the risk of illness.1 By comparison with a tax-based system, the advantage is that the benefit package is defined as an entitlement and is financed by contributions that are earmarked for health care.2 The weakness of social health insurance in which plans are organised according to employment and residential status is that solidarity is limited to people enrolled in the same plan. Consequently, plans that have enrollees with high average income and low risk will oppose any national equalisation because this process would lead to increased contribution rates.

Despite this obstacle, Japan managed to extend social health insurance to the entire population in 1961, and has since made benefits more equitable. These developments have been made in conjunction with regulatory measures for containment of costs through a fee schedule that sets the price and conditions across the board for all such plans. The tightening of these measures has contained costs compared with other countries: Japan is ranked 20th among Organisation for Economic Co-operation and Development (OECD) nations in the proportion of gross domestic product (GDP) spent on health.3 This success in containment of costs has been a key factor for improvement of the equity of the system among plans and beneficiaries. Details of the cost-containment mechanism and quality control are explained in the third paper in this Series.4

But Japan is faced with a difficulty inherent in social health insurance; with an ageing society, the premiums paid by people who are working have become insufficient to cover the costs of health care for everyone.5 In Japan, this difficulty has been exacerbated by the huge fiscal deficit amounting to twice the GDP6—which has restricted the capacity to increase funding from taxes—the continued existence of 3500 social health insurance plans, and changes in employment patterns. This report is divided into three parts: the first on historical development; the second on present status and issues in equity; the third on challenges and our plan for reform.

Key messages

  • Japan achieved universal health coverage in 1961, almost 40 years after social health insurance was first legislated in 1922. Coverage was expanded by establishment of employee-based and community-based plans, of which there are now about 3500. Dependants are covered by the plan of the head of the household.

  • The services covered and the fees set for physicians and hospitals have been uniform across the nation since 1959, when community-based plans adopted the fee schedule of employee-based plans. Regulation of price has been the key mechanism for maintenance of equity and containment of costs.

  • Although almost everyone became insured in 1961, the co-payment rate differed greatly: individuals with employee-based plans paid only a token amount for the first physician visit, but all others had to pay 50% of the fee schedule price. Since then, the rate has gradually decreased for those on community-based plans, and has gradually increased for employees. Nowadays everyone, except for elderly people and children, pays 30%. However, when the monthly co-payment exceeds a threshold amount, the co-payment is decreased to 1%.

  • The greatest inequity is in the proportion of income levied as premiums. Although plans insuring people with low incomes are mitigated by subsidies from general revenues, and cross-subsidisation is enforced among plans to pay for the health-care costs of elderly people, there exists more than a three-times difference in the proportion of income paid as premiums across different plans.

  • The sustainability of social health insurance is threatened by the increasing disparity in income and age composition among the plans, as a result of the ageing of society and changes in employment patterns. We advocate consolidation of all plans within prefectures to meet this challenge.

  • Countries seeking to achieve universal health coverage through social health insurance based on employment and residential status should be aware of the limitations of this approach and address its weaknesses before opposition to structural reform becomes entrenched.

Section snippets

Historical development

Although some public-sector employees began to have their health care covered as part of comprehensive benefits in Mutual Aid Associations from 1905, the road to universal coverage formally started with the enactment of the Health Insurance Act in 1922. Japan's insurance system followed the German social health insurance model in that the insurance plans (referred to as societies in Japan) were jointly managed by employers and employees.7 The motives were also the same: improvement of

Changes in rates of use

How have the rates of use of outpatient and inpatient services changed over time with the expansion of coverage and adjustments in co-payment rates? As figure 2 shows, the use of outpatient services increased in all age groups from 1950 till the mid 1960s, as the population covered expanded and average incomes increased.15 From the mid-1960s, the trend began to differ according to age groups. Although it started to plateau for young people and middle-aged adults, it continued to increase for

Complex financing

Subsidies from general revenues and transfers between the plans to equalise the health-care costs of elderly people have allowed the same services to be covered by all social health insurance plans, despite substantial differences in income and age structure. Figure 3 shows this mechanism, which groups the plans into four tiers according to the average income of their enrollees.19, 20 The first three tiers each cover about 30% of the population, and the fourth covers the remaining 10%. The

Extent of equity

The mechanisms discussed here have contributed to making the household's total financial contribution to health care—ie, direct and indirect taxes appropriated to health care, social health insurance premiums, and out-of-pocket expenditures—almost proportional to its income as measured by the Kakwani index,21 and to be much the same as for schemes in South Korea and somewhat more equitable than those in Germany.22, 23 The percentage of households in which out-of-pocket health-care expenditure

Sustainability of the social health insurance system

Opinion polls show that the government's policies to ensure access to health care based on need, rather than on ability to pay, have wide popular support.31 However, the social health insurance system that has been the basis for achieving this principle is threatened by three factors: the ageing society, changes in employment patterns, and the emerging issue of the uninsured.

First, ageing has led to transfer payments that now amount to nearly half of total expenditure in society-managed health

Consolidation of social health insurance plans

From our analysis, we believe that the way forward would be to consolidate social health insurance plans. Consolidation would equalise premium contribution rates across plans, increase total funding by raising the contribution rates of plans currently set at a low level, and improve administrative efficiency by expanding risk pools. Three options exist for consolidation.

The first is to allow everyone to choose the plan that they prefer, after adjustment of the basic premium rate for income,

Global lessons

Japan's major accomplishment with social health insurance, from a global perspective, has been its successful pursuit of the normative goals of expansion of coverage and containment of costs while improving equity in the health system over time. Japan offers several lessons for other countries.

The first is that attainment of universal coverage on the one hand and achievement of equity in benefit packages and rates of co-payments and contributions on the other, are different goals and need

Search strategy and selection criteria

The first section about historical development is based on a synthesis of domestic and international published work on social health insurance systems, and draws on previous studies made by the lead author. The only available nationally representative surveys are those that have been done by the national government. From the patient survey, we examined the effect of universal coverage on service use by age groups because the changes in co-payment rates would have the greatest effect on elderly

Acknowledgments

We thank John Creighton Campbell and Keizo Takemi for their valuable comments, Megumi Kasajima for technical assistance in the statistical analysis, Andrew Stickley for his technical edits, and Tomoko Suzuki and Tadashi Yamamoto for their administrative support. This work is in part funded by the Bill & Melinda Gates Foundation and the China Medical Board, and in part by a research grant from the Ministry of Health, Labour and Welfare (H22-seisaku-shitei-033). The views and opinions expressed

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