The ways in which Japanese Health System achieves greater access and quality improvement - Essay Example

Topic: Examine the ways in which Japanese health system is managing to achieve greater access and quality improvement in the context of rising health spending Introduction Japan is one of the most advanced countries in the world. Its population is estimated to be 130 million people. The country has one of the highest life expectancy at birth of around 60 years and the lowest birth and infant mortality on earth. This is despite the fact that its health expenditure is nearly that of United States. The country spends only 8% of its GDP on health and this is considered to be relatively small compared to the quality health care it provides to her residents (Campbell and Ikegami, 2010). WHO (2010) observes that Japan’s impressive health care record can be attributed to the fact that low demand is placed on the health system in respect to crime, drug abuse, road accidents and HIV incidences as compared with that in majority of developed States. Campbell and Ikegami (2010) further note that the impressive health care record can also be linked to life style factors like low obesity rates and widespread access to high-quality health care. Japan’s health care system is credited for securing universal coverage and equal access to care. Each resident in the country is covered by insurance for both medical and dental care as well as drugs (Reid, 2009). Individuals pay health insurance premiums relative to their earnings to join the insurance pool ascertained by their workplace or residence (Ikegami, 2007). There is little if any competition among insurance companies as they all insure similar services and drugs for the same price. Patients freely select their providers and physicians freely select the procedures, medical tests and treatment for their clients (WHO, 2010).This paper examines the ways in which Japanese health system is managing to achieve greater access and quality improvement in the context of rising health spending. It will do this by depicting Japan’s health care delivery and financing systems in relation to cost control strategies. The paper will wind up by explaining the present reform plan and its potential for success. Japan Health System Japan Health System shares a number of fundamental features with the other Health Systems, especially the U.S health system (Nomura and Nakayama, 2005). Nearly 84% of Japanese hospitals are privately run (Reid, 2009). The same is applicable to almost 90% of her clinics. Japan Health System has no limitations on capital development except for the regional cap on hospital beds according to views by Campbell and Ikegami (2010). Globally, the country has the highest per capita number of CT scans and MRIs according to WHO (2010) reports. Japan Health System differs from other health systems in the world in a number of ways. Firstly, the health system is not tightly organized as is the case with others. This is attested by the fact that nearly all health care clinics are owned and run by their practicing medicals doctors, whereas majority of the hospitals are doctor-owned free standing utilities (Reid, 2009). Nevertheless, the prominent hospitals are either public or owned by learning institutions particularly universities and colleges as well as other not-for- profit bodies like the Red Cross (Campbell and Ikegami, 2010). The government of Japan prohibits business people from operating clinics or hospitals for profit. In this view, Japan’s law requires those opening clinics or hospitals to be qualified medical doctors (Klazinga, 2010). Secondly, health care providers in Japan are far less functionally differentiated than those in the other developed countries as noted by WHO (2010) reports. The sick may visit clinics or hospitals without referral or appointment and are attended and treated on the same day (Reid, 2009). A large percentage of hospitals keep big outpatient departments from which they take their in-patients. With the exception of doctors who own and run private clinics or hospitals, all medical workers are employed and get fixed pay in line with existing rates. The hospital-based doctors comprise about 60 percent of the total (JICA, 2005) while the remaining 40 percent practice in private clinics. These unlike other health system like the US deal with specialties where several have complicated devices on-site like a MRI (Campbell and Ikegami, 2010). Nevertheless, as clinic-based doctors rarely have any hospital benefits, majority tend to concentrate on primary care. Ikegami (2007) indicates that Japanese hospitals have less functional differentiation between acute medical care and long-term medical care. According to this claim, most hospitals have long-term medical care units and several have become real nursing homes. But Reid (2009) further notes that these long-term medical care excludes beds and makes the mean length hospitals’ stay to be 20 days. This implies that the acuity of care is not intense in the country (Klazinga, 2010). Thirdly, Japan does not have much standardization and quality control as observed by Nomura and Nakayama (2005). Majority of graduate medical doctors are indicated to join university clinical sections and finally spend their medical career within the closed chains of hospitals associated with each section (Klazinga, 2010). Since hospital-based medical doctors have been employed in this method, the need and creation of official certifications have been slower in Japan than in other countries especially the United States (WHO, 2010). Though nearly 60 percent of the medical doctors are currently certified as professional doctors, only about 50 percent have undergone the official training process (Ikegami, 2007). As per hospitals or clinics, a certification body was formed in 1997 with support of the Ministry of Health and Welfare, Japan Medical Association (JMA) and other healthcare providers and tax-payer institutions (Nomura and Nakayama, 2005). Though nearly 25% of all hospitals and clinics are presently certified according to numerous survey results, the certification process has not essentially granted tangible benefits to the hospitals in the way of more repayment or elimination of government inspections (Campbell and Ikegami, 2010). Financing of Japan Health System Japan health system is financed by numerous payers including the national government, employers and individual co-insurance payments. Nearly all people in Japan are, as a rule covered by the social health insurance (SHI) plan as reported by Fukawa (2002). Those who are employed are similarly covered by their employers while the self-employed and pensioners secure their insurance from the respective municipalities where they reside. Dependants on the other hand secure their health cover through the insurance plan of the household head (Campbell and Ikegami, 2010). Japanese have no choice of health insurance plans, either by the employer or the worker because all health insurance plans offer basically similar benefits. These benefits include unlimited access to all health care providers, drugs, dental health care and numerous preventive services among others (Ikegami, 2007). The co-payment is 30 percent but those aged above 70 years pay 10 percent while children under three years pay 20 percent (Fukawa, 2002). Individuals with designated chronic diseases are exempted from co-payment. Nevertheless, if the monthly co-payment sum exceeds on average $800, then the rate above this sum is decreased to 1 percent as explained by (Campbell and Ikegami, 2010). Japanese social health insurance plans could be categorized into three groups in respect to the degree they depend on subsidies from the government (Ikegami, 2007). Similarly, each of these groups is entitled to enroll about 30 percent of the country’s populace. The first group comprise of plans instituted by the public sector, mutual aid association (MAA), large organizations as well as Society Managed Health Insurance (SMHI) (JICA, 2005). The national government does not provide subsidies to this group. The second group is a single plan administered by the MHLW and GMHI for those working in small to medium size organization (Ikegami, 2007). This group receives 13 percent of its benefit expenditures from national government as a subsidy (Campbell and Ikegami, 2010). The third group comprise of plans instituted by the municipalities and CHI for individuals in private business and pensioners. This group receives 43 percent of its benefit expenditures from national government also as subsidy (Matsuda, 2002). These government subsidies, together with the pooling fund to back the health care costs of the aged towards which all plans ought to contribute on an equal basis have bridged the disparities in the premium rate among the health insurance plans (Ikegami, 2007). Payment of Japan Health System The payment system is very important in linking the health provision and financing systems. This is because it acts as a valve that regulates the fund flowing from all health insurance plans to nearly all health providers (Campbell and Ikegami, 2010). Despite having multiple payers, Japan’s health system has only one payment system that is used by all. This kind of payment system ensures equity because the benefit package is basically the same for all social health insurance plans. Additionally, this payment system substantially reduces administrative costs as the insurance plans and providers do not negotiate with each other on an individual basis (Reid, 2009). Reimbursement is based on a fee-for-service basis with the exclusion of inpatient care in nearly 30 percent of the common beds that are paid by ‘a case mix based per diem rate’ (JICA, 2005). The fees and prices are uniform all over Japan. Both universities and clinics charge the same fees which are not adjusted to fill the gaps as a result of regional differences in the living cost/salaries. Whereas this approach may seem not fair, it has led to uniform distribution of healthcare staffs (Nomura and Nakayama, 2005). This has led to healthcare workers practicing in small rural hospitals to be engaged at lower salaries unlike their counterpart specialists who would only be attracted to practice in the same setups if offered higher salaries (Klazinga, 2010). This is unlike other countries like the US where physicians practicing in cities are usually paid highly. Japan heath system principally prohibits ‘balance billing and extra billing’. In the events when they are offered, then all expenses must be remitted out-of-pocket (Reid, 2009). This is in order to prevent exploitation by health providers. Other sources of income to health providers are limited to the subsidies given to health care facilities that are not part of the legal benefits like beauty surgery. The availability of the subsidies from the government to the public health facilities enables them to offer quality health care at a price lower than their costs (Campbell and Ikegami, 2010). Containing Health Costs Japan effectively contains its health costs via the macro and micro regulation of the reimbursement system (Klazinga, 2010). First, various key players are involved in containing the costs at the macro level. The cabinet in every two years makes a political resolution on the global rate of revision which covers all services and drug prices as noted by Klazinga (2010). The Ministry of Finance (MoF) demands for a decrease of the rate while the JMA lobbies for an increase. As indicated by Reid (2009), the MHLW plays the important role of providing information and technical expertise. Similarly, successful revision of global rates determines the subsequent fiscal year’s overall health costs. This is because the annual volume of medical services and drugs remains basically the same (Ikegami and Campbell, 2004). Since a fixed portion of about 25% of the overall health costs is financed from general revenues, this revision ought to be set so as to draw the following year’s budget (Ikegami and Campbell, 2004). Secondly, the cost of drugs set by the payment system is reviewed based on the findings of the market-price survey (Reid, 2009). The government evaluates the present price of each drug via onsite assessments of the distributors’ sales records. According to JICA (2005), the government usually controls the distributors’ prices to be lower than those set by health insurers. Consequently, each drug price is individually adjusted to mirror its volume-weighted mean market price as reported by Klazinga (2010). It should be noted that drugs in Japan are covered by insurance with nearly 50% of all prescriptions distributed by the hospital pharmacy or by the clinic (Klazinga, 2010). Additionally, price of new drugs with greater sales than the volume anticipated by producers and that of drugs which have had generics since the last price revision are both unilaterally reduced (Klazinga, 2010). These approaches have considerably led to a constant decrease of the price of drugs and the savings accrued have been allotted as supplementary funds for reviewing service fees (Matsuda, 2002). But drug costs have been contained less as a result of the introduction of new drugs. The setting of the price of new drugs is done by examining the degree of creativity and efficacy with a comparator (Campbell and Ikegami, 2010). In the same manner, the price of medical devices is determined and reviewed (Reid, 2009). Thirdly, service fees are separately revised as reported by Ikegami (2007) and Klazinga (2010). Fees revision is usually done within the budgetary limits determined by the first two factors discussed above. But when revising service fees, the global revision rate is not applied as a conversion factor (Matsuda, 2002). Here, the fees for services that have demonstrated exceedingly large increases in quantity may be reduced significantly. Thus, cases of cost containment through micro-management of the payment system in the biennial fee reviews have been magnified many times. These in essence have barred increases in service costs resultant from the improved application of high-tech devices (Nomura and Nakayama, 2005). It should be noted that although fee reductions for a MRI had also been made earlier, it has not prevented their propagation since these fee reductions have promoted the growth of low-priced kinds of MRI (Campbell and Ikegami, 2010). With proper price control therefore, progress in technology may indeed lead to cuts in cost (Klazinga, 2010). The second and third factors are affected by the Central Social Insurance Medical Care Council (CSIMCC) which is a body within MHLW and is made up of representatives from providers and payers, economists and scholars (Campbell and Ikegami, 2010). The basis for reviewing individual fees is provided from the survey of the financial state of health provision facilities made by the MHLW. Additionally, the MHLW carries out a survey of the claims data to approximate the amount of each item so that the effect of adjusting any item on the overall health costs can be determined and the net impact will match the agreed global revision rate (Reid, 2009).Though the revision procedure tends to be heated as the specialty and hospital groups lobby the MHLW and the JMA, caution has been taken to keep harmony among the providers (Klazinga, 2010). This harmonizing principle has barred rapid transformations and lowered conflict. Policy Options for the Future So as to attain equal provision of services to all residents, costs must be kept within the government’s budgetary limits as a first step. Secondly, the fees and drug prices must be micro-managed so as to mirror volume expansions and moribund costs to the health provider (Klazinga, 2010). The third option is that: “health providers must be compensated the same amount for the same service so as to prevent patients from being discriminated in respect to their insurance plan” (Reid, 2009). Even though the government has been able to meet these conditions, there is rising pressure for reforms due to economic stagnation, the aging of society and the growing demand for better quality (Klazinga, 2010). In the health delivery system where doctors are allowed to open clinics and practice any specialty has led to their irregular distribution. Specifically, there is a deficiency of hospital-based pediatricians and obstetricians as their work-load is huge and rewards are low as compared to clinic-based doctors (Campbell and Ikegami, 2010). Likewise, Reid (2009) notes that the patient’s trust has eroded as medical errors have come to be recorded in prominent hospitals. Moreover, WHO (2010) reports that in the health financing system, the aging of society is growing persistently at the rate of 1% in every two years. To face the above challenges, the government has adopted a number of reforms geared toward the provision of an efficient health system. First, policies have been passed to decrease the mean length of hospital stay with a provision to reduce long term care hospital beds to a maximum of 150,000 from the current 380,000 by the end of this year. The difference will be converted to long term care health insurance hospital beds and assisted living (Klazinga, 2010). Secondly, there are plans to systematize the prevention of the metabolic syndrome (Nomura and Nakayama, 2005) where the government is reported to have already determined the percentage of the general populace to be screened. Similarly, the proportion of those affected is slotted to be counseled on dietary and exercise patterns (Nomura and Nakayama, 2005). Thirdly, Japan has set policies that will compel health facilities to disclose information on the number of residents who have been treated suffering from stroke, acute myocardial infection and diabetes (Klazinga, 2010). The hospitals are also required to disclose information on referral networks they have build with primary care clinics and other health providers (WHO, 2010). Alongside the planned reforms in the financing system, the government plans to upgrade prefectures to regional units with autonomous health insurance plan enrolling for those over 75 years. It also plans to merge the municipality based CHI health plans. The current health plan for elders receives 50% from general revenues, 40% from all other health insurance plans and the rest from the aged themselves via deductions from their pensions (Nomura and Nakayama, 2005). Moreover, prefectures CHI have been persuaded to merge by reducing the threshold amount that is compulsory reinsured. This is the monthly medical cost insured by the reinsurance plans, which the government has decided to reduce drastically. This is thought to minimize the gaps in their premium rate (Campbell and Ikegami, 2010). Further, there are plans to upgrade the GMHI premium rate from national rate to one which reflects gaps in regional health costs. This is planned to take place after the completion of the ongoing revision of age structure and income levels of those registered in each prefecture (Klazinga, 2010). In addition to large SMHI, there are initiatives to adjust the premium levels to reflect regional health costs levels according to Fukawa (2002). This in turn will put pressure on the prefectures to improve their health delivery system. The government has further put in place a mechanism that penalizes SHI plans that fail to meet the targeted objectives. Inefficient SHI plans would thus face fiscal sanctions by the MHLW in the form of increases in their contributions to the new health insurance plan for elders (WHO, 2010). A sound balance ought to be sustained between the demands to increase costs as a result of the patients’ needs for quality health care and providers’ pressure for increased compensations. Additionally, there is a need to contain costs as a result of the demand for an equal system and the employers’ pressure for lesser labor costs (Reid, 2009). At the moment, Japanese health system has managed to achieve greater access and quality improvement in the context of rising health spending. Whether such trend will be sustained should be closely examined. Conclusion Globally, Japan has been said to have the lowest per capita health care expenditures. It is also believed to have the healthiest population in the world (Reid, 2009). This is attributed to the widespread accessibility of high-quality health care to all (Ikegami and Campbell, 2004). Other factors that may have contributed to a health population are lifestyle aspects like low rates of obesity and violence (Nomura and Nakayama, 2005). All residents in Japan have health insurance cover for drugs, services and dental care. They remit insurance premiums relative to their income levels to join the insurance pool ascertained by their workplace or residence (Ikegami and Campbell, 2004). Health cover providers do not compete since they all provide the same health insurance for the same price. Residents freely select their insurers and health care providers who likewise freely choose the treatment for their patients. Reimbursement rates to physicians and health facilities are revised biennially. fees paid to physicians and health facilities in Japan are quite minimal, frequently close to 30% of the one in other advanced countries (Reid, 2009). Comparatively, provision of primary care in Japan is more lucrative than provision of more specialized care. This means that physicians get different incentives than US physicians. As a result, the Japanese are three times more likely than Americans to go to the doctor, but receive fewer surgical operations (Campbell and Ikegami, 2010). Japan is a classless country and health care impoverishment is unknown. One’s income level has perhaps less influence on the volume and quality of health care received compared to other States. Insurance premiums are trivial concerns for majority and low-income earners and the aged receive subsidies to meet health care costs (Reid, 2009).The Japan health system is best in the world for chronic care. This is attributed to its relative large population of those over 65 years old. Besides proper health care, the country also offers long-term care (TLC) to all elders who need it via a public health insurance plan (Klazinga, 2010). In the late 20th century, health care expenditure was rising rapidly in both Japan and US (Ikegami and Campbell, 2004). As a result, Japan learned how to manage health care delivery without rationing but by strict control. Annual health care expenditure growth has therefore been quite minimal despite a fast aging population (Campbell and Ikegami, 2010). Taking everybody on board in a manageable health care plan was a precondition. Although the country is not a single-payer system, it has managed to regulate health care costs by tightly managing multiple insurers (Ikegami and Campbell, 2004). Japanese enjoy a universal health care coverage system and some of the excellent health providers in the globe. Nevertheless, there are difficulties. Japan is struggling under the twin loads of an aging population and mounting health care expenditure (Reid, 2009). In the near future, retirees are anticipated to be more than active workers. During the decade, health care costs per person have nearly doubled and continue to increase (Klazinga, 2010). This is not health in a place with minimal immigration and low birth rates. Japan’s response to the above challenges has been by reducing her expenditure on health care (Reid, 2009). To resolve the situation, the government has a compulsory co-payment of 30% of all health care costs with several forms of medical services or diagnostic testing not insured at all (Campbell and Ikegami, 2010). It is argued that the financial burden on each resident may escalate and has formed one of the many reasons why private insurance policies give cash compensations in the event of sickness. Bibliography Campbell, J. C. and Ikegami, N. 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