Road to UHC and Beyond: Japan’s 50-year Experience

10th Anniversary ConferenceTowards Universal Health Coverage: Increasing Enrolment Whilst Ensuring Sustainability

Tomoko Ono OECD Health DivisionAccra, 5th November, 2013

1920s: Introduction of Health Insurance Scheme1961: Achievement of Universal Health Coverage

2011:50th Year Anniversary of Achieving UHC

Tokyo Station Tokyo Tower Sky Tree

UHC helped Japan to achieve good health results with relatively low health expenditures

Outline of Presentation

• Health system of Japan at a glance

• Financing: Multiple insurances schemes

• Payment: FFS with unified fee-schedule

• Current challenges

Health System of Japan at a Glance

6

Recap historical development

1922: Health

insurance law

1956:30% not

covered

1945: End of WWII

1938: National

Insurance law

1958:National

insurance law

(mandate)

Universal Health Coverage

Population coverage: •100% achieved in 1961

Cost coverage: •82% by government or social security in 2011

Service coverage: •Outpatient, Inpatient, Dental, Pharmaceuticals

Source: WHO, World Health Report 2013

Key Feature of Health Systems

• Financing: • Multiple health insurance schemes, contribution + general

tax + co-payment (with ceiling and exemption for low-income group)

• Payment: • Managed FFS system through unified fee-schedule for all

providers/insurance schemes in Japan• Service delivery:

• Predominantly private providers (although public providers exists)

• Roles of hospitals/clinics and GPs/specialists functions are not well defined in practice

• Access: • Free choice of provider by patients (no gate keeping)

Health Insurance Schemes

4 Different Insurance Schemes

• Over 3,000 insurance plans in Japan, grouped into

• Citizens’ Health Insurance (CHI): farmers, self-employed, unemployed and elderly (later separated)

• National Health Insurance Associations (NHIA): mainly small and medium enterprise employees and their dependent

• Society Managed Health Insurance (SMHI): mainly employees of large firms and their dependent

• Mutual Aid Association (MAA): mainly public sector employees and their dependent

• Limited role for private insurance

Achieving Universal Coverage

Source: Takagi 1994, World Bank 2013 (forthcoming)

UHC in

1961

UHC: Citizen’s Health Insurance’s Role• Historical Development of CHI

• Build upon the existing community-based health insurance scheme: voluntary participation and expanded through government subsidies

• Participation was mandated in 1961 for all residents, management moved to municipalities

• Current financial sources: contribution from beneficiary, cross-subsidy from other schemes, subsidies from national and local government and copayment

Revenues for Social Health Insurance

CHI NHIA SMHI MAA

Individual

Elderly

EmployeeGovernment

cross-subsidies

Individual

Individual

Individual

Individual

Financial Sources for Health Services

UHC

Managed FFS System with Unified Fee-Schedule

Single Payment System: Fee-Schedule• Fee-schedule

• Sets prices for each services, pharmaceuticals and devices for virtually all providers

• Defines the benefits and conditions for reimbursement• Auditing for these conditions• For most providers, these are the only sources of

revenue

• Fee schedule revisions (every 2 years)• Managed by national government• Institutionalized process of negotiating benefits and

resource allocation among key stake holders• Continuous process of adaptation and adjustment

Biennial Fee-Schedule Revisions

Ministry of FinanceMinistry of

Health, Labour and Welfare

Macro: Global Revision Rate

Medical services PharmaceuticalsMedical devises

Central Social Insurance Medical Council

Micro: Fee negotiation for item-by-item

Government

Pharmaceuticals Pricing Mechanisms

• In 1982, 39% of national medical expenditure was spent on pharmaceuticals.

• It went down to 27% in 1988 and 21% in 1998, then went up again to 25% in 2009

• We set a price in fee schedule, but providers purchase products for which bigger discounts can be negotiated and earned.

• Government conduct survey of pharmaceutical prices of each products and set new fee schedule price at a certain percentile.

Cost Containment Mechanism

• Cost containment tools• Price control via negotiation, by monitoring volume• New technology - setting the initial price low,

restriction to patients with specific conditions

• Other restrictions• Balanced-billing (charging more than the fees set

in the fee schedule): banned• Extra-billing (billing services and pharmaceuticals

not listed in the fee schedule with those listed): only allowed for amenity and a few new technologies still being evaluated

Current Challenges

Slow economic growth and increasing social security expenditure

-6

-4

-2

0

2

4

6

8

10

12

14

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

average 4.5% in 1970-90

average 0.9% in 1990-2011

average 9.6% in 1955-70%

10

12

14

16

18

20

22

-4

-2

0

2

4

6

8

1990 1995 2000 2005 2010

Real GDP growth (left)

Social security expenditures / GDP (right)

% %

Real GDP Growth RateReal GDP Growth Rate and Social

Security Expenditures

Source: Cabinet Office of Japan

Ageing Population and Inequality between Insurance Schemes

Age structure of CHI beneficiary, 1975, 2001 and 2007

Take Home Message

UHC in Japan was achieved through...

• Long-term political commitment for UHC, supported by political groups with different ideologies

• Democratic movements and commitment to social solidarity in post-war Japan provided impetus to expand coverage

• Incremental expansion of health insurance coverage

• Harmonization of benefits and established redistribution schemes

Cost Containment despite FFS system

• Institutionalized fee-schedule revision process• Global revision rate• Item-by-item fee negotiation: mitigate

increase in expenditure, maintain appropriate solvency for providers, and reflect government priority

• Stringent and disciplined payment system • Unified fee-schedule for all health services and

conditions of its use• Ban on balanced-billing and restriction on

extra-billing

Acknowledgement:Ghana Health Insurance AuthorityProf. Naoki Ikegami, Keio University School of MedicineJapan-World Bank Partnership Program on UHC

Kagoshima, JapanNiigata, JapanKyoto, Japan

Acknowledgement for picture

• Slide 2

• Tokyo Station http://www.oldphotosjapan.com/ja/photos/78/tokyo-eki

• Tokyo Tower http://showa.mainichi.jp/photo/2008/12/post-1b55-23.html

• Sky Tree

• Slide

• Niigata, http://uonuma.biz/blog/9927

• Kyoto, http://futuretihing.net/futurething/wp-content/uploads/2013/08/63bf16f29e082d9d510aac6e4fd47ea6.jpg

Total Health Expenditure (% of GDP)

Source: OECD, Health at a Glance 2011

Total Expenditure on Health in 2011 by type of financing

Real GDP and GDP per Capita(in 1990 Geary-Khamis Dollar)

Billions of $

Attainment of Universal Health Coverage (1961) ($420B, $4291per

capita)

$ per capita

Source: Angus Maddison (2001) “ The World Economy – A Millennial Perspective”

Real GDP (left)

GDP per capita (right)

1985198019751970196519601955

30

Japan attained UHC while still a middle income country, and at the start of its rapid economic growth period

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