-
Japan’s Healthcare System and Its Outlook (updated: 2014
April)
www.japanmacroadvisors.com [email protected]
-
Executive Summary
2
A participation to public insurance system is mandatory to all
residents in Japan. The prices of medical treatment and subscribed
pills are regulated under the fee-for-service system. Patients
directly pay 10-30% of the services they receive while insurers pay
the reminder. The quality of the healthcare in Japan is considered
to be high. Japan boost one of the longest life expectancy and one
of the lowest infant mortality. At the same time, the system has
been cost effective. Despite the recent rise, the per capita
healthcare expenditure is below OECD average. However, its medical
expenditure is growing fast in recent years. The total cost of
public healthcare has risen from 4.9% of GDP in 1984 to 9.9% of GDP
in 2011. A government study estimates that the cost will further
rise by 3% to GDP by 2025, mostly due to the demographic change.
While reforms are underway to restrain the rise, a rise of 2% to
GDP seems inevitable, in our view.
-
3
Overview
Outlook
Reform Measures under discussion
-
Healthcare system in Japan
4
The healthcare system in Japan is characterized by two
principles: 100% public insurance coverage • All residents and
below must join one of the two public insurance systems regardless
of
whether or not they have private health insurance.
Fee-for-Service. • In principle, all medical treatments and
pills are covered under the public insurance system.
Patients pay portion of treatments and medicines (10-30%
depending on age), and the rest is paid directly to medical service
providers by the insurers. There is a cap on patient’s burden in
all insurance systems – patients can seek reimbursement for payment
above the cap.
• Fees are regulated. The government has a control over what is
deemed as medical treatment and their fees .
-
Japanese Public Insurance System
5
There are three category in the public insurance system: The
elderly over the age of 75 is covered under a universal insurance.
For working age and below, they need to subscribe to either
National Insurance, if they are self employed, or Employee’s Health
Insurance, if they are employed.
The Latter-Stage Elderly Insurance System (14.7 million people
under coverage)
National Health Insurance
(38.3 million people)
Employee Health Insurance*
(73.7 million people)
Source: Ministry of Health, Labour and Welfare. The number of
insured is as of March 31, 2012. * For simplicity, includes mutual
associations for public officials and teachers.
75
20
Age
-
Japanese Public Insurance System
6
There are two public insurance systems for the working age:
National Health Insurance and Employee’s Health Insurance.
Employee’s Health Insurance
• Employers deduct insurance premium from salaries of their
employees, match them, and
pay the whole premium to insurers.
• Corporations and industry associations build health insurance
insures.
National Health Insurance
• Self-employed, non-salary workers, non-workers are covered by
the National Insurance.
-
Separate System for the Elder
7
In 2008, “Medical Care System for the Latter-Stage Elderly” was
established for medical needs for those Age 75+. • Those age 75 and
above will pay 10% of fees for medical services, while their
premium is
automatically deducted from the pension money they receive from
the government.
• Additional premium paid by those between Age 65 to 74 will be
set aside by insurers for the Age 75 and above. EHI and NHI also
pay some money annually to Age 75+.
• In principle, summarizing, 50% is be funded by the national
government, 10% by the elderly, and 40% by the working age
population.
A measure to levy additional insurance premium for high income
earning elderly is under consideration. • This change for the
elderly could raise 230 billion yen for the public insurance
system.
-
8
Infant Mortality Rate (deaths per 1000 live births)
Quality of Japan’s healthcare is Japan’s Infant mortality rate
is one of the lowest in the world, 2.3 per 1000 live births.
Infant Mortality Rate
0.0
10.0
20.0
30.0
40.0
50.0
Ind
ia
Sou
th A
fric
a
Ind
on
esia
Bra
zil
Mex
ico
Ch
ina
Ru
ssia
n F
ed.
Turk
ey
Ch
ile
Un
ited
Sta
tes
Ne
w Z
eal
and
Can
ada
Hu
nga
ry
Slo
vak
Rep
.
Po
lan
d
Un
ited
Kin
gdo
m
OEC
D (
34
)
Au
stra
lia
Swit
zerl
and
Den
mar
k
Ge
rman
y
Au
stri
a
Ne
the
rlan
ds
Irel
and
Isra
el
Fran
ce
Luxe
mb
ou
rg ¹
Gre
ece
Ital
y
Bel
giu
m
Spai
n
Po
rtu
gal
Ko
rea
Slo
ven
ia
Cze
ch R
ep.
Esto
nia
Fin
lan
d
No
rway
Jap
an
Swed
en
Icel
and
¹
Source: OECD “Health at Glance 2013.”
-
9
Life Expectancy (Total population at birth)
Japan’s life expectancy is one of the longest in the world. It
rose to 83 years approx. in 2011 from 72 years in 1970.
Life Expectancy at Birth
0
15
30
45
60
75
90
Swit
zerl
and
Jap
an
Ital
y
Spai
n
Icel
and
Fran
ce
Au
stra
lia
Swed
en
Isra
el
No
rway
Ne
the
rlan
ds
Ne
w Z
eal
and
Luxe
mb
ou
rg
Au
stri
a
Un
ited
Kin
gdo
m
Ko
rea
Can
ada
Ge
rman
y
Gre
ece
Po
rtu
gal
Fin
lan
d
Irel
and
Bel
giu
m
Slo
ven
ia
OEC
D (
34
)
Den
mar
k
Un
ited
Sta
tes
Ch
ile
Cze
ch R
ep.
Po
lan
d
Esto
nia
Slo
vak
Rep
.
Hu
nga
ry
Turk
ey
Mex
ico
Ch
ina
Bra
zil
Ind
on
esia
Ru
ssia
n F
ed.
Ind
ia
Sou
th A
fric
a
2011 1970
Source: OECD “Health at Glance 2013.”
-
Health Expenditure
10
Japan’s health care system seem cost-effective. Its healthcare
expenditure per capita is USD 3,213 (purchase power parity),
slightly below the OECD average of USD 3,322.
Health Expenditure Per Capita, 2011 (or nearest year)
Source: OECD “Health at Glance 2013.”
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
US
No
rway
Swit
zerl
and
Net
her
lan
d
Au
stri
a
Can
ada
Ger
man
y
De
nm
ark
Luxe
mb
ou
rg
Fran
ce
Be
lgiu
m
Swed
en
Au
stra
lia
Ire
lan
d
UK
Fin
lan
d
Ice
lan
d
Jap
an
New
Zea
lan
d
Spai
n
Ital
y
Po
rtu
gal
Slo
ven
ia
Gre
ece
Isra
el
Ko
rea
Cze
ch R
ep
Slo
vak
Rep
Hu
nga
ry
Ch
ile
Po
lan
d
Ru
ssia
Esto
nia
Bra
zil
Me
xico
S. A
fric
a
Turk
ey
Ch
ina
Ind
ia
Ind
on
esi
a
-
Health Expenditure
11
In terms of % GDP, Japan is on a par with the OECD average.
(health and long term care combined)
Health Expenditure as % GDP, 2011 (or nearest year)
Source: OECD “Health at Glance 2013.”
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Un
ite
d S
tate
s
Net
her
lan
ds
Fran
ce
De
nm
ark
Swed
en
Can
ada
Swit
zerl
and
Be
lgiu
m
Ger
man
y
Au
stri
a
New
Zea
lan
d
No
rway
Jap
an
Fin
lan
d
Ice
lan
d
Po
rtu
gal
Spai
n
Slo
ven
ia
Un
ite
d K
ingd
om
Gre
ece
Isra
el
Hu
nga
ry
Ko
rea
Luxe
mb
ou
rg
Cze
ch R
epu
blic
Po
lan
d
Esto
nia
Long-term care
Health
-
12
Current Status
Outlook
Measures
-
Medical Expenditure Growth
13
The per capita medical expenditure is increasing as the society
ages. Despite the narrower coverage after 2007, the medical
expenditure for the elderly continues to raise as a portion of the
total expenditure.
Source: (left) Ministry of Health, Labour and Welfare. National
Institute of Population and Social Security Research. (right)
Ministry of Health, Labour and Welfare. “Annual Health, Labour and
Welfare Report 2012-2013”
Health Expenditure Per Capita and % Age 65+ Population
-
50.00
100.00
150.00
200.00
250.00
300.00
350.00
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
19
54
19
57
19
60
19
63
19
66
19
69
19
72
19
75
19
78
19
81
19
84
19
87
19
90
19
93
19
96
19
99
20
02
20
05
20
08
20
11
Population % 65+
Per Capita
Health Expenditure Used by the Elderly (%)
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
2010
2003-2007 Coverage Change: Age 70+ ⇒ Age 75+
-
Healthcare Expenditure
14
Currently, the government pays approximately 40% of the medical
expenditure. Their burden is expected to continue increasing as the
total expenditure grows.
Government, 38.4%
Employers, 20.2%
Employees, 28.4%
Patients, 12.3%
Others , 0.7%
Source: Ministry of Health, Labour and Welfare. *Data is for
FY2011. ** From [White Paper 2013]
Medical Expenditure by Payers* Payment by the National
Government**
-
2,000
4,000
6,000
8,000
10,000
12,000
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
(JPY bn)
-
Healthcare Expenditure Forecast
15
Japan’s healthcare expenditure (medical and long term care
combined) has been increasing.
Healthcare Expenditure : Historical and Forecast (Medical and
Nursing Expenditure Combined)
Source: Ministry of Health, Labour and Welfare. The figure
includes nursing expenditure after 2000. Forecast is from the
Comprehensive Reform of Social Security and Tax. Forecasts made in
March 2012, included in the final report.
(JPY trn)
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
15
20
20
20
25
Forecast
-
Healthcare Expenditure Forecast
16
The healthcare expenditure (medical plus nursing) is expected to
increase both in nominal numbers and as a percentage of GDP. 40% of
the increase (in amount) is from nursing.
Source: The Comprehensive Reform of Social Security and Tax.
Forecasts made in March 2012, included in the final report.
Healthcare Expenditure: Historical and Forecast (Medical and
Nursing Expenditure Combined)
(JPY trn)
2011 2012 2015 2020 2025
GDP 484.0 479.6 509.8 558.0 610.6
Medical Expenditure 39.0 35.1 39.5 46.9 54.0
Elderly Nursing Expenditure 9.0 8.4 10.5 14.9 19.8
Total as % GDP 9.9% 9.1% 9.8% 11.1% 12.1%
-
Healthcare Expenditure Forecast
17
Even if only the cost-cutting measures are taken, the total
expenditure is expected to increase by 1.5% of GDP.
Source: The Comprehensive Reform of Social Security and Tax.
Forecasts made in March 2012, included in the final report.
Healthcare Expenditure: Historical and Forecast (Medical and
Nursing Expenditure Combined)
2015 2025
As Is Reformed As Is Reformed
Health Expenditure 39.1 39.5 53.3 54.0
Elderly Nursing Expenditure 9.9 10.5 16.4 19.8
Impact of Reform 0.2% 0.7%
0.5% 2.1%
Improving in-hospital care 1.5 6.5
Transferring in-hospital patients to out-hospital 0.3 1.1
Improving nursing care 0.9 5.3
-0.3% -1.4%
Shortening in-hospital stay 1.1- 5.9-
Decreasing hospital visits 0.3- 1.5-
Increasing home-care 0.2- 0.8-
Prevention 0.1- 0.6-
1.0 4.10
Impact as
% of GDP
Impact as
% of GDP
(JPY trn)
-
Medical Expenditure Growth
18
The speed of Japan’s health expenditure increase outpaces other
countries.
Annual Average Growth Rate of Per Capita Health Expenditure
2000-2011
Source: OECD “Health at Glance 2013.”
-14.0%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
Gre
ece
Ire
lan
d
Ice
lan
d
Esto
nia
Po
rtu
gal
UK
De
nm
ark
Slo
ven
ia
Cxe
ch R
ep
Spai
n
Ital
y
Au
stra
lia
Au
stri
a
No
rway
Be
lgiu
m
Me
xico
Fran
ce
Can
ada
New
Zea
lan
d
Net
her
lan
ds
Po
lan
d
US
Swit
zerl
and
Fin
lan
d
Swed
en
Ger
man
y
Hu
nga
ry
Slo
vak
Rep
Isra
el
Jap
an
Ch
ile ¹
Ko
rea
-
19
Current Status
Outlook
Measures
-
Deterrence of Unnecessary Access
20
On average, a Japanese visits doctors 13 times per year.
Introduction of general practitioners (GPs) as gatekeeper may be
able to reduce the burden of doctors, and hence decrease the total
number of visits.
Number of Annual Doctor Consultation Per Capita 2011
Source: OECD “Health at Glance 2013.”
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Ko
rea
Jap
an
Hu
nga
ry
Cze
ch R
epu
blic
Slo
vak
Rep
ub
lic
Ger
man
y
Ru
ssia
n F
ed
.
Turk
ey
Be
lgiu
m
Can
ada
Spai
n
Au
stri
a
Fran
ce
Po
lan
d
Au
stra
lia
Luxe
mb
ou
rg
Net
her
lan
ds
Slo
ven
ia
Esto
nia
Isra
el
Ice
lan
d
No
rway
Un
ite
d K
ingd
om
De
nm
ark
Fin
lan
d
Po
rtu
gal
Un
ite
d S
tate
s
Swit
zerl
and
Ire
lan
d
New
Zea
lan
d
Ch
ile
Swed
en
Me
xico
Bra
zil
Sou
th A
fric
a
-
Deterrence of Unnecessary Access
21
Approximately 70% is spent on services at hospitals and
clinic.
In Patient , 37.3%
Out Parient , 34.8%
Dental, 6.9%
Medicine, 17.2%
Hospital Living Cost,
2.1%
Nurse Visits, 0.2%
Aftercare, 1.5%
Source: Ministry of Health, Labour and Welfare. Data is for
FY2011.
Health Expenditure by Usage
-
Deterrence of Unnecessary Access
22
Japanese in-patients tend to stay in hospitals for a longer
period of time than those in other OECD countries. If then can stay
at home under care of local community and practitioners, the
expenditure may decrease.
Average Length of Stay in Hospital 2011
Source: OECD “Health at Glance 2013.”
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
Jap
an¹
Ko
rea
Ru
ssia
n F
ed
.
Fin
lan
d
Ch
ina
Hu
nga
ry
Cze
ch R
epu
blic
Ger
man
y
Swit
zerl
and
Fran
ce
Po
rtu
gal
Luxe
mb
ou
rg
New
Zea
lan
d
Be
lgiu
m
Ital
y
Slo
vak
Rep
ub
lic
Au
stri
a
Can
ada¹
Esto
nia
Spai
n
Po
lan
d
Slo
ven
ia
Un
ite
d K
ingd
om
No
rway
Gre
ece
Ire
lan
d
Ice
lan
d
Un
ite
d S
tate
s
Ch
ile
Isra
el
Au
stra
lia
Net
her
lan
ds¹
Sou
th A
fric
a
Swed
en
De
nm
ark
Ind
on
esi
a
Me
xico
Turk
ey
-
Separate System for the Elder
23
In 2008, “Medical Care System for the Latter-Stage Elderly” was
established for medical needs for those Age 75+. • Those age 75 and
above will pay 10% of fees for medical services, while their
premium is
automatically deducted from the pension money they receive from
the government.
• Additional premium paid by those between Age 65 to 74 will be
set aside by insurers for the Age 75 and above. EHI and NHI also
pay some money annually to Age 75+.
• In principle, summarizing, 50% is be funded by the national
government, 10% by the elderly, and 40% by the working age
population.
A measure to levy additional insurance premium for high income
earning elderly is under consideration. • This change for the
elderly could raise 230 billion yen for the public insurance
system.
-
Generics and Prevention
24
More use of generics will help Japan contain medical costs.
Generics use in Japan is about half of the OECD average in value
and volume. Prevention is also likely to help minimize the number
of patients with adult diseases that require frequent and
continuous services.
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
By Value By Volume
OECD19 Average
Japan
Share of Generics in Total Pharmaceutical Market 2011
Source: OECD “Health at Glance 2013.”
-
Mixed Treatment
25
Patients may become allowed to be treated under the insurance
and out of their own pocket simultaneously. This will increase the
welfare of patients by choice, while this may potentially save the
government some money. • The original plan was to allow mixed
treatment so that patients of difficult disease will have
more options. However, recently, the ministry is showing
unwillingness to allow it.
• As a compromise, it is likely that a new rule will be set up
regarding the mixed treatment. • Written proposal describing
different treatment options for patients must be
submitted by doctors to patients. • Medical moral hazard (i.e.
doctors suggesting unnecessary treatments) must be
avoided.
-
IMPORTANT DISCLAIMER
IMPORTANT DISCLAIMER: The information herein is not intended to
be an offer to buy or sell, or a solicitation of
an offer to buy or sell, any securities and including any
expression of opinion, has been obtained from or is based
upon sources believed to be reliable but is not guaranteed as to
accuracy or completeness although Japan Macro
Advisors (“JMA”) believe it to be clear, fair and not
misleading. Each author of this report is not permitted to
trade
in or hold any of the investments or related investments which
are the subject of this document. The views of JMA
reflected in this document may change without notice. To the
maximum extent possible at law, JMA does not
accept any liability whatsoever arising from the use of the
material or information contained herein. This research
document is not intended for use by or targeted at retail
customers. Should a retail customer obtain a copy of this
report they should not base their investment decisions solely on
the basis of this document but must seek
independent financial advice.
26
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