A Comparison of the American and the Japanese Health Care Systems

Both the United States and Japan are part of the Organization for Economic Cooperation and Development (OECD, an organization composed of industrialized countries) and as such both countries are under the pressure to live up to a certain median when it comes to the quality of health care. Apart from the median created by OECD countries, the US and Japan are also equally pressured by such organizations as the World Health Organization (WHO) that sets up checklists for good health care systems. In a report last 2000 on the health care systems of 191 countries, WHO set some goals for a health care system.

These goals are the following: good health, responsiveness, and fairness in financing (WHO in Bureau of Labor Education of the University of Maine 2001, 1). By “good health” WHO refers to the good health status of the entire population although out the human being’s life cycle. “Responsiveness,” on the other hand, refers to “the extent to which caregivers are responsive to the client/patient expectations with regard to non-health areas such as being treated with dignity and respect” (Bureau of Labor and Education o the University of Maine 2001, 6).

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Fairness in financing generally refers to the progressiveness of the health care system wherein those who have less are also to spend less on medical care. These goals shall be utilized to evaluate and compare the Japanese and the American health care systems. But before an effective evaluation and comparison could be done, it will be important to individually describe the health care systems of these two countries. As such, this paper shall consist o the following parts: a description of the American health care system; a description of the Japanese health care system; an evaluation and the comparison of the two health care systems.
The American Health Care System A. The Framework of the American Health Care System The American Health Care System could best be illustrated using figure 1. In figure 1, it could be noted that there are two insurance systems in America, public and private. Public insurance system refers to Medicare, Medicaid, the State Children’s Health Insurance Program (S-CHIP), and the Veteran’s Administration (VA). Private insurance system, on the other hand, refers to either employer-sponsored insurance or private non-group insurance. We shall discuss each of these types.
Medicare is a federal program that insures seniors aged 65 and above as well as some disabled individuals (Chua 2006, 2). This is a single-payer, government-administered program that covers hospital services, physician services, as well as prescription drug services (Chua 2006, 2). Medicare is financed three ways: federal income taxes, payroll tax (paid both by employers and employees), and individual enrollee premiums (Chua 2006, 2). There are individual enrollee premiums because even if Medicare provides the above-mentioned services, there are still important services that are not covered without the premium coverage.
These premium services include nursing facilities; preventive care coverage; and coverage for dental, hearing, or vision care. This means that the elderly who are covered by Medicare would many times still need to avail of premium services and as such, they contribute a total of 22% of their income for the cost of health care (Chua 2006, 2). Medicaid is a state-administered health insurance program that provides coverage to low income citizens and disabled; specifically, this insurance “covers very poor pregnant women, children, disabled, and parents” (Chua 2006, 2).
As for its administration, Medicaid is paid for by the state and the federal government. At the very least, the federal government pays $1 for every dollar that the state pays for (Chua 2006, 2). Unlike Medicare, Medicaid offers a more comprehensive health benefits. S-CHIP is like Medicaid as regards administration but it is specifically for children whose parents do not qualify for Medicaid due to their income but still do not make enough money to provide insurance for their children. VA is a state-sponsored health insurance service for the veterans of the military.
This insurance provides comprehensive health benefits that make the veteran spend almost nothing for health care. Employer-sponsored insurance refers to private health insurance services the premium of which are largely paid for by employers. Under this system are the many organizations that offer health maintenance (HMOs). This is where corporations like Aetna and Kaiser Permanente fall. The coverage offered as well as the degree of co-sharing by the different HMOs differ also (Chua 2006, 3).
Private non-group health insurance is the sort of insurance availed by those who are self-employed and those that could not avail of employer-sponsored insurance. This sort of insurance allows the insurance company to impose rules regarding pre-existing conditions. Usually, pre-existing conditions are not covered by the insurance. This sort of insurance is fully administered by the HMOs and the benefits vary widely as well. B. Characteristics and Problems of the American Health Care System The American Health Care System is mostly a combination and interaction of public and private entities.
This is most exemplified by the two general types of health insurance services: the public and the private. This fact could be demonstrated by a 2003 statistics on Health Insurance Coverage of the nonelderly (in Chua 2006, 1). This statistics shows that 62% of nonelderly Americans receive private employer-sponsored insurance, while 5% purchase their insurance in the market (Chua 2006, 1). 18% of these nonelderly individuals are in public insurance like Medicaid or Medicare, while the remaining 15% are uninsured (Chua 2006, 1).
Elderly Americans aged 65 years and above are mostly insured through Medicaid (Chua 2006, 1). Or, better yet, we might as well look at statistics from the Centers of Medicare and Medicaid represented as a pie graph in figure 2(American Hospital Association 2005, 6). In the 2003 statistics on the “Distribution of US Health Care Expenditures by Payer Source,” of the total $1. 7 trillion expenditures on health care, more than half are paid for by private entities. The lion’s share goes to private insurance. In this statistics, 35.
8% are paid for by private insurance (American Hospital Association 2005, 6). Consumer’s out-of-pocket spending on health care account for 13. 7% of the 2003 health care expenditure, while other private expenditure account for 4. 8% of the expenditure. Medicare, a government health insurance system, pays for 17% of health care expenses, while Medicaid, another government health insurance system, shoulders 16% of the expenditure. The remaining 12. 7% of expenditure is paid for by other government systems like the S-CHIP and VA (Centers American Hospital Association 2005, 6; Chua 2006, 2).
As such, we could see that the American Health Care System’s expenditure is more than 50% private. In spite of the big percentage in the budget that the federal government allots to health care, probably the biggest budget allotment in the OECD countries, a big percentage of health expenditures is handled by private entities. It is worth mentioning that America is spending on the average 15% of its GDP on health care when the average on OECD countries is only 8. 6% (Chua 2006, 5).
This also means that America has the highest per capita spending on health care compared to other OECD Countries. It was documented that almost 10 years ago, the US was already the biggest per capita spender among its OECD colleagues. It spent $4,178 per capita while Switzerland, then second to the US on per capita spending, spent only $2794 per capita on health care. In spite of the big role of private entities and the high percentage in budget that health care system has, a big percentage of non-elderly adults are uninsured (15% are uninsured as we saw above).
This means that millions of adults in the working age have to spend their own money for health services. This also means that probably America is the only developed country that does not provide health services to all its citizens (Bureau of Labor Education in the University of Maine 2001, 3). Another problem is the fact that the United States has a high infant mortality rate compared to the other OECD counties. In fact, the United States ranked 26th in infant mortality rate among the industrialized countries (Bureau of Labor Education in the University of Maine 2001, 5).
Neither did America rank well in disability-adjusted life expectancy ranking 24th among OECD countries (Bureau of Labor Education in the University of Maine 2001, 5). This means that a number of Americans expect to live parts of their lives in disability which probably is a consequence of not having access to health care (as a big percentage of nonelderly are uninsured). Aside from these problems, American health care is also characterized by a deficit in resources as most emergency departments in hospitals report of being “at” or “over” capacity (American Hospital Association 2005, 25).
In figure 3, we could see a bar graph showing how some hospitals (especially teaching hospitals) could be at 43% beyond capacity. Such a lack could be accounted for largely by the lack of critical care beds, and not necessarily by overcrowding, in these emergency departments (American Hospital Association 2005, 27). This would mean that a number of hospitals, both in their emergency departments and intensive care units, would need to spend time on diversion (American Hospital Association 2005, 26). These are all ironical problems in a country that is supposed to be most advanced in economy and technology.
The Japanese Health Care System A. The Framework of the Japanese Health Care System The Japanese Health Care System, in contrast to the American system, offers coverage for all the citizens. This system offers services that are fairly comprehensive. Currently, the Japanese Health Care System provides “a basic package of benefits (including medical consultation, drugs, and other materials; medical treatment, surgery, and other services; home care treatment and nursing; and hospitalization and nursing at medical institutions) and they may offer additional benefits (e.
g. , funeral benefits, maternity allowances) under the collective scheme” (Ward and Piccolo 2004). This system is best illustrated by figure 4. Health services are paid for in four ways: health insurance contributions, by patient co-payments, by taxes, and by out-of-pocket payments (Jeong and Hurst 2001, 10). Health services are given by providers which could be categorized according to the following: hospitals, doctors’ clinics, health centers, and pharmacies. Most hospitals are categorized as general hospitals which mean that beds are allocated for long term care.
These hospitals are closed to doctors who have clinics, these clinics being capable of minimum bed capacity of 12 (Jeong and Hurst 2001, 11) and may have the latest medical devices needed for diagnosis. Pharmacies may have their own doctors who may dispense their own prognoses and prescriptions. Nursing services are also considered as health providers. The insurance services, though provided by more or less 5,000 HMOs, are largely non-autonomous non-governmental bodies (Jeong and Hurst 2001, 13). These HMOs are basically in charge of operating the compulsory national health insurance system (Jeong and Hurst 2001, 13).
These HMOs experience control by the national and local governments. In fact, even doctors’ fees as well as other health services fees are standardized. The Japanese Health Care System may be categorized into two big divisions: the Social Insurance System (SIS) and the National Health Insurance (NHI) (Ward and Piccolo 2004). People are assigned to a health insurance such that those who are working in a company or office are assigned in the SIS, while everyone else who cannot be classified as working in a company or office (including self-employed professionals) should fall under the NHI (Ward and Piccolo 2004).
63% of the population is insured under the SIS. Under the SIS, employers pay 50 to 80% of the premium while employees, depending on their income, pay around 8. 5% of their income for health insurance premium. In this system, the insured and their dependents pay 20-30% of in-patient and out-patient costs, at the same time act as co-payers in prescription drugs (Ward and Piccolo 2004). The NIH system, on the other hand, covers the remaining 37% of the population. Premiums paid by the insured depend on incomes and assets. The insured as well as their dependents are required to be co-payers of 30% of the cost.
In spite of the requirement for co-payment, Japan offers a co-payment cap: “The cap is at ? 63,600 (US$600) per month, with the average monthly disposable income being ? 561,000 (US$5,300)” (Ward and Piccolo 2004). In addition, those who are elderly may benefit from long-term insurance which covers 90% of long-term maintenance costs. B. Problems with the Japanese Health Care System The Japanese Health Care System boasts of having state-of-the-art equipment accessible to its citizens. In fact, Japan has the highest CT and MRI scanners per capita among all countries.
Japan also has low infant mortality rate in spite of lower GDP spending (7. 6%) for health care, well within the OECD median (Ward and Piccolo 2004). Japan is also able to provide co-payment cap though like the United States, Japan’s health system is also highly paid for by private entities: “Japan spent ? 29. 8 trillion (US$280 billion) on healthcare, of which 53% was covered by insurance, 32. 3% by the government, and 14. 8% by patients’ co-payments” (Ward and Piccolo 2004). Nevertheless, the Japanese Health Care System has its own share of problems.
For one, unlike in most Western countries, specialization does not matter as much as in America. What matters is where a doctor is affiliated, thus making the distinction between a general practitioner and a specialist blurred. This makes having a “family doctor” difficult to have and standardization difficult to come by (Jeong and Hurst 2001, 13). Also, Japan has 2 to 3 times longer hospitalization time compared to other countries which means that Japan would need more beds to accommodate patients (National Coalition on Health Care, 3).
Probably the biggest problem that the system is facing is the increasing number of elderly population which would obviously strain (National Coalition on Health Care, 3). There is also the problem of weak preventive care as well as low public awareness on “taboo” illnesses such as HIV and AIDS (Ward and Piccolo 2004). Comparison Between the Two Health Care Systems In the introduction, we spoke of the WHO requirement for good health, responsiveness, and fairness in financing. Let us evaluate the two systems based on these WHO goals.
The American system, aside from the problems posed above, obviously lacks in its ability to provide “good health” for the entire population. For one, the American health care system does not cover the entire American population. There is just no mandate for such. The Japanese system is obviously different. Japan has a national mandate for universal coverage. This means that the Japanese system is made in such a way that all Japanese would have to fall into one of the two insurance systems.
The fact that all Japanese are insured at the same time Japanese spending on health care against GNP is well within the OECD median is something that Americans would have to learn from. The very concept of a co-payment cap is a very good thing that makes health care more responsive to the call for “good health for the entire population. ” As regards responsiveness, the fact that millions of Americans are uninsured automatically makes them not capable of even evaluating client/patient relations for issues such as dignity, respect, etcetera.
Nevertheless, the Japanese system also has room for improvement as the existence of “taboo” sicknesses would obviously compromise the treatment of patients with dignity and respect. Lastly, as regards the requirement for fairness in financing, the Japanese system is way better than the American system. To a certain extent, the American system would make it difficult for certain parts of the population to be insured as they are not too poor to qualify for Medicaid but they are also not employed nor financially endowed enough to pay for private insurance. This is totally not a problem in the Japanese system.

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