Tuesday, August 25, 2009

A Comparative Look at Japanese Health Care

. Tuesday, August 25, 2009

The NY Times interviews U. of Michigan political scientist John Creighton Campbell, a comparativist who specializes on Japan and its health care system. The Japanese are some of the healthiest, longest-living people on the planet, and Campbell acknowledges upfront that this is largely due to lifestyle factors like diet and lower rates of violent crime. But they do have a very low-cost, universal health care system. How do they manage it, and what can the U.S. learn from it?

Reimbursement rates to doctors and hospitals are negotiated and set every two years. The fees are quite low, often one-third to one-half of prices in the United States. Relatively speaking, primary care is more profitable than highly specialized care, so Japanese doctors face different incentives than U.S. doctors. As a result, the Japanese are three times more likely than Americans to go to the doctor, but they receive many fewer surgical operations.

Slashing the pay of doctors is not feasible in the current U.S. political climate, but that's a large reason why we'll always have significantly higher costs than France, the U.K., and Japan. Even if we could control costs by limiting doctors' pay, it may not be desirable. Low pay for doctors and emphasis on primary care has led to shortages:

Financial stringency and organizational rigidities have led to inadequate hospital services in some areas, particularly in emergency care, where patients in ambulances are sometimes turned away. There also are doctor shortages in some regions and specialties. Consultation times can be too short for complicated diagnoses and for psychotherapy. ...

Many of the problems are largely due to underinvestment, and the severity of the cost control has become an issue in the current election campaign.

Several Los Angeles hospitals drew plenty of ire for dumping poor patients on the streets a few years back, and they deserved all of it. But would it have been better if the patients had not been admitted in the first place? Or if there are no specialists to see them at all? I'm sure this is not widespread practice in Japan; then again, it's not widespread in Los Angeles either. Strangely, Campbell doesn't see see this as rationing:

In the 1980s, health care spending was increasing as quickly in Japan as in America, but the Japanese government learned how to influence medical care provision without rationing by manipulating how it paid for services. Annual spending growth has thus been quite low despite a rapidly aging population.

Creating a shortage of doctors by limiting their pay is most certainly rationing. Of course, in the U.S. we ration in the other direction -- if you or your insurance company can pay for it, you get it; if not, good luck -- but not for emergency care. That's pretty much the only part of the U.S. health care system with more-or-less universal access (excepting some homeless in L.A., of course). This may not be as bad as it sounds, since it's likely true that Japan needs less emergency care than the U.S. due to aforementioned lifestyle factors, but it does sound bad.

Still, Japan has a lot going for it and the problems in the system could be lessened to some extent by increased funding. This may be more difficult as the population continues to age, but right now Japan spends less per capita on health care than almost any other industrialized country. Interestingly, their system is not single-payer (except for the elderly, as in the U.S. currently): private insurance covers most people, but is strictly regulated. Health care premiums are paid for via a progressive tax. It sounds like Japan has mandates for purchasing coverage but no public option, although Campbell doesn't speak directly to those points.

In short, Japan shows one way to bend the cost curve: pay doctors less, and accept the shortages that follow. It might work well enough in a country with such healthy lifestyles, but I have a feeling that that would be a recipe for disaster in the U.S. Which is probably why you seldom hear American health care reformers citing Japan as a possible model for the U.S., despite the low costs.


A Comparative Look at Japanese Health Care
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