International perspective on mixed health care: Japan

FOCUS REVIEW Japan's health care system should be the envy of the world. Japan consistently places near the top of the World Health Organization's overall health rankings, and does so while spending the smallest proportion of its GDP on health care than any member of the G7 (8% in 2004; Canada spent 9.9%), making it perhaps the world's best health care bargain. This accomplishment can be traced back to the founding of Japan's national universal insurance health care program in 1961, in which all Japanese could receive equal treatment at any health care facility. This system, however, is in danger of crumbling. In Japan, patients must pay approximately 30% of their medical expenses (including medications) out of their pocket. In 2004, however, this still left the proportion of all health care costs borne by governments at an exceptionally high 81.5% (Canada: 69.8%). Particularly expensive are the country's drug costs, which make up 18.9% of all medical expenses (Canada: 17.7%). The universal insurance system does exclude certain medical services such as orthodontia and cosmetic surgery; these uninsured services must be paid for out of pocket and are effectively privatized. Japanese law is very strict about the distinction between the provision of insured and uninsured care and prohibits medical institutions from providing both insured and uninsured services as different components of a single series of medical treatments. Since the late 1990's, however, there has been increasing pressure from the business sector for the government to allow a mixed system in which providers could offer different medical services at the same time, some covered under the public-insurance system and some not. Foreign countries such as the United States have also pressured Japan to introduce market mechanisms and competition to medical care, allowing new insurance plans and medical-service businesses to flourish. In addition, wealthy individuals have expressed a wish to have access to high-level care at the very cutting edge of technology. In 2001, Prime Minister Jun'ichiro Koizumi formed the Council on Fiscal and Economic Policy to bring Japan's public finances to order, aggressively promoting government-budget reform based on neoliberal principles. With the government's new emphasis on small government, free-market ideology, market-based incentives and increased privatization, Japan's social welfare programs faced major changes. Health care was no exception. In 2004, a law was passed allowing private companies to participate in running health care institutions under limited parameters in exceptional cases only. Such involvement was …