Health care has emerged as perhaps the most urgent issue in America, and health care reform as the most ambitious initiative in domestic policy since the New Deal as I have pointed out before. Japan, on the other hand, already boasts the world’s lowest infant mortality rate and longest life expectancy, while achieving more success than America at containing medical costs: in 1991, spending on health care accounted for a mere 6.6 percent of Japan’s total gross domestic product versus 13.4 percent of America’s. How does Japan do it? What aspects of the Japanese model might be applicable to the United States?
As supporters and opponents of the Affordable Care Act debate the best way to overhaul a clearly broken health care system, it’s perhaps helpful to put American medicine in a global perspective.
The infographic below is based on a recent Bloomberg ranking of the most efficient countries for health care, and highlights enormous gap between the soaring cost of treatment in the U.S. and its quality and effectiveness. So, can we learn from the other countries who seem to be doing a better job?
InternationalLiving.com’s annual Global Retirement Index reports that France, Uruguay and Malaysia provide the best and most affordable health care in the world.
The Health Care category in the Index considers the cost of care and the quality. Also considered are the number of people per doctor, the number of hospital beds per 1,000 people, the percentage of the population with access to safe water, the infant mortality rate, life expectancy, and public-health expenditure as a percentage of a country’s GDP.
France comes in first in this category as the best country in the world for health care.
It’s remarkable how low America places in health care efficiency: among the 48 countries included in the Bloomberg study, the U.S. ranks 46th, outpacing just Serbia and Brazil. Once that sinks in, try this one on for size: the U.S. ranks worse than China, Algeria, and Iran.
But the sheer numbers are really what’s humbling about this list: the U.S. ranks second in health care cost per capita ($8,608), only to be outspent by Switzerland ($9,121) — which, for the record, boasts a top-10 health care system in terms of efficiency. Furthermore, the U.S. is tops in terms of health care cost relative to GDP, with 17.2 percent of the country’s wealth spent on medical care for every American.
In other words, the world’s richest country spends more of its money on health care while getting less than almost every other nation in return.
It’s important to note that this data doesn’t necessarily reflect the best health care in the world; it is simply a measure of overall quality as a function of cost. Bloomberg explains its methodology as such:
Each country was ranked on three criteria: life expectancy (weighted 60%), relative per capita cost of health care (30%); and absolute per capita cost of health care (10%). Countries were scored on each criterion and the scores were weighted and summed to obtain their efficiency scores. Relative cost is health cost per capita as a percentage of GDP per capita. Absolute cost is total health expenditure, which covers preventive and curative health services, family planning, nutrition activities and emergency aid. Included were countries with populations of at least five million, GDP per capita of at least $5,000 and life expectancy of at least 70 years.
So what can the U.S. learn from the many countries that get more bang for their health care buck? Unsurprisingly, there is no one formula for success when it comes to efficient medical care. The systems that rank highly on Bloomberg’s list are as diverse as the nations to which they belong. The unifying factor seems to be tight government control over a universal system, which may take many shapes and forms — a fact evident in the top-three most efficient health care systems in the world: Hong Kong, Singapore, and Japan. Will our Constitution, the lawyers, lobbyists and the voters allow such government control?
Ranking third on Bloomberg’s list, the Japanese system involves universal health care with mandatory participation funded by payroll taxes paid by both employer and employee, or income-based premiums by the self-employed. Long-term care insurance is also required for those older than 40. As Dr. John W. Traphagan notes in The Diplomat, Japan controls costs by setting flat rates for everything from medications to procedures, thus eliminating competition among insurance providers. While most of the country’s hospitals are privately owned and operated, the government implements smart regulations to ensure that the system remains universal and egalitarian. We will look more at Japan’s healthcare system in more detail later in this and next week’s post.
Meanwhile, Singapore’s health care system is largely funded by individual contributions, and is often hailed by conservatives as a beacon of personal responsibility. But as conservative David Frum notes, the system is actually fueled by the invisible hand of the public sector: individuals are required to contribute a percentage of their monthly salary based on age to a personal fund to pay for treatments and hospital expenditures. In addition, the government provides a safety net to cover expenses for which these personal savings are inadequate. Private health care still plays a role in Singapore’s system, but takes a backseat to public offerings, which boast the majority of doctors, nurses, and procedures performed.
Despite being considered by some as having the freest economy in the world, Hong Kong’s universal health care system involves heavy government participation; its own health secretary calls public medicine the “cornerstone” of the system. Public hospitals account for 90 percent of in-patient procedures, while the numerous private options are mostly used by the wealthy.
All this government care isn’t taking much of a bite out of the state’s bustling economy: According to Bloomberg, Hong Kong spends just 3.8 percent of GDP on health care per capita, tied for the third-lowest among nations surveyed and good for the most efficient health care system in the world.
The United States and Japan now face similar problems. Both countries face a demographic revolution in the decades ahead as the population ages. Medical expenditures, as a proportion of GNP, are increasing at similar rates, but the U.S still spends much more than Japan. Both governments face fiercely competing demands for resource allocation among prevention, treatment and basic science interest groups. Both medical care systems face a diverse mix of patients with increasing rates of functional disability. Both systems are financed by a large number of employer-based private insurance plans in addition to public insurance for the poor and the elderly. These issues may determine the sustainability for their health care programs.
In this information era, we face a world hungry to know what works in health care and what it costs. One of medicine’s great challenges is to inform policy-makers and the public of long-term productive benefits and costs to our society of preventing and postponing disability. Many initiatives in the United States will require fundamental change. The most cost effective will be those targeted with sensitivity and respect for cultural tradition to reach the myriad of groups in our pluralistic society. Enlarging our understanding of socio-cultural patterns of health behavior, disease and economic productivity and costs calls for increasing international communication and research partnerships.
As I pointed out before, Japan’s health care system is characterized by universal coverage, and has the advantages of free choice of health care providers by patients, a multi-payer, employment-based system of financing, and a predominant role for private hospitals and fee-for-service practice. Virtually all residents of Japan are covered without regard to any medical problems they may have (so-called predisposing conditions) or to their actuarial risk of succumbing to illness. Premiums are based on income and ability to pay. Although there is strong government regulation of health care financing and the operation of health insurance, control of the delivery of care is left largely to medical professionals and there appears to be no public concern about health care rationing.
Like the Australian, Canadian and many European health care systems, Japan’s national health insurance program is compulsory. But Japan surpasses all 24 member countries of the Organization for Economic Cooperation and Development (OECD) in life expectancy at birth and also has the lowest infant mortality rate. It achieves these successes at a cost of only 6.6 percent of gross domestic product, $1,267 per capita – half that of the United States (Table 1) .
Japanese-style national health insurance raises a fascinating question: how has Japan reduced financial barriers of access to medical care and achieved a No. 1 ranking on health status at a cost that is among the lowest of wealthy industrialized nations? In addressing this question, we begin with a comparative analysis of health care resources and the use of medical care in Japan, the United States and other OECD countries. Next, we review the financing and organization of medical care in Japan, evaluate some strengths and weaknesses of the health care system, and explore possible lessons for health care reform in the United States.
Japan has 15.8 inpatient hospital beds per 1,000 persons, the highest number among OECD countries and more than three times the American ratio. By contrast, with 1.6 physicians per 1,000 populations, Japan has the fifth lowest physician-per-person ratio, 43 percent less than the American rate of 2.3 per 1,000. Japan also has one-half to one-third the American number of intensive care beds per capita. And Japan is tied with Austria for the lowest hospital staffing ratio (that is, the number of employees per bed) among OECD countries.
As for the use of these resources, at 8.3 percent, Japan admits a smaller proportion of its population to hospitals every year than any other OECD country except Turkey, a rate barely over one-half that of the United States. On the other hand, of all OECD countries, at 50.5 days, Japan has the longest average length of stay for inpatient hospital services, more than five times that of the United States.
Although Japan has one of the lowest physician-to-population ratios among OECD countries, at 12.9, Japanese doctors have the highest number of physician contacts per capita, more than twice the American rate. It must be noted, however, that the average length of a physician visit in Japan is only 6.9 minutes, compared to over 20 minutes in the United States.
To the extent that OECD data are available on hospital admission rates for selected procedures, with the exception of appendectomies, Japan’s rates are lower than those in the United States. Comparative survey data indicate that surgeons in Japan perform fewer than one-fourth the number of operations per capita that their colleagues in the United States do. This pattern is supported by findings on cesarean section rates, which are half as frequent in Japan as in the United States.4 The United States is known abroad for its unusually high cesarean section rate.
It would be wrong to conclude from these data that Japan rations high-tech medical care. On the contrary, among OECD countries, Japan has the highest number of computerized axial tomography (CT) scanners per capita, the highest number of extra-corporal shock wave lithotriptors per capita, and the highest number of patients per million treated for end-stage renal disease failure. In addition, Japanese spend more than any other nation on drugs as a percent of total health expenditures, more than twice the American rate.
Japanese doctors’ clear preference for non-invasive procedures is demonstrated by the kinds of medical technologies imported and exported. Equipment requiring invasive operations (e.g., pacemakers and artfficial heart valves) is almost all imported, whereas diagnostic equipment (e.g., CT scanners) is produced in Japan and exported in large quantities.7
In contrast to the United States, Japan’s low rate of hospital admissions reflects its tendency to emphasize ambulatory over inpatient hospital care. But once hospitalization occurs, as we have seen, Japan holds the OECD record for long lengths of stay and low hospital staffing ratios. This is encouraged by a reimbursement system that pays hospitals on a per diem basis and a style of medical practice that emphasizes bed rest and complete recovery while a patient is still in the hospital.
Beyond these more measurable differences in resource availability and use of medical care in Japan and United States, there are a host of political-institutional and cultural factors that reinforce each health care system’s distinctiveness. The United States is a federal system whose 50 states have significant autonomy on matters of health insurance and public health policies. Although the federal government exercises a dominant role over the Medicare program and regulatory aspects of health policy, Americans are multiethnic, suspicious of excessive governmental authority and inclined to solve social problems at the local level and therefore the governmental control as seen in Japan and many other countries will never fly…or will they???. Japan is a centralized, unitary state with a highly homogeneous population and a tradition of powerful state intervention in the economy, including its many health insurance plans.
Hold these thoughts and let’s look at a few other details as well as sustainability in next weeks post.
Happy Memorial Day to you all.