The Japanese Health Care System: An Analysis of the Funding and Reimbursement System

Abstract

The modern Japanese health care system was established during the Meiji period (1868-1912) using the example of Germany. In this paper, the funding and remuneration of health services and products in Japan are described. The focus lies on the mechanisms used to implement health policy goals and to control costs. Selective literature search. All permanent residents in Japan are enrolled in one of more than 3,000 compulsory health funds. Employees and public servants are covered through company or government-related health insurance schemes. Independent workers, the unemployed and the pensioners are usually assigned to health insurance plans managed by local city governments. The elderly over 75 years are insured through special health funds managed at the prefectural level. To correct the fiscal disparities among the health insurance programs, a risk adjustment is realized by compensatory financial transfers between the funds and substantial subsidies from the central and local governments. The statutory benefits package that is identical for all insurance plans is regulated in a single comprehensive schedule. All the covered health services and products are listed with the fees and compensations, and the conditions for the service providers to be remunerated are also stated. This fee and compensation schedule is regularly revised every 2 years under the leadership of the Ministry of Health, Labor and Welfare. The revisions are intended to contain health expenditures and to set incentives for the achievement of health policy goals. The funding of the Japanese health care system and the risk adjustment mechanisms among health funds are well established and show a rather static character. The short- and mid-term development of the system is mainly controlled on the side of the expenditures through the unique and comprehensive fee and compensation schedule. The regular revisions of this schedule permit to react at relatively short notice to evolving situations, and through a policy of small improvements, target an optimization of the system as a whole.