Japan’s Health-Care System Has Many Advantages, but It May Not Be Sustainable!


After the last two posts pointing out the advantages of the Japanese health care system I thought that We should assess the viability or sustainability of their system before suggesting that we utilize their system to modify the health care program here in the U.S.

I chose an article by Blaine Harden of the Washington Post Foreign Service who wrote that there is a question regarding sustainability of the Japanese health care system. She pointed out the half a world away from our U.S. health-care debate, Japan has a system that costs half as much and often achieves better medical outcomes than its American counterpart. How does it achieve such high grades, it does so by banning insurance company profits, limiting doctor fees and accepting shortcomings in care that many well-insured Americans would find intolerable.

The Japanese visit a doctor nearly 14 times a year, more than four times as often as Americans. They can choose any primary care physician or specialist they want, and surveys show they are almost always seen on the day they want. All that medical care helps keep the Japanese alive longer than any other people on Earth while fostering one of the world’s lowest infant mortality rates.

Health care in Japan — a hybrid system funded by job-based insurance premiums and taxes — is universal and mandatory, and consumes about 8 percent of the nation’s gross domestic product, half as much as in the United States. Unlike in the U.S. system, no one is denied coverage because of a preexisting condition or goes bankrupt because a family member gets sick.

But many health-care economists say Japan’s low-cost system is probably not sustainable without significant change. Japan already has the world’s oldest population; by 2050, 40 percent will be 65 or older. The disease mix is becoming more expensive to treat, as rates of cancer, stroke and Alzheimer’s disease steadily increase. Demand for medical care will triple in the next 25 years, according to a recent analysis by McKinsey & Co., a consulting firm.

Japan has a stagnant economy, with a shortage of young people that hobbles prospects for growth and strangles the capacity of the debt-strapped government to increase health-care spending. Without reform, costs are projected to double, reaching current U.S. levels in a decade, according to the Organization for Economic Cooperation and Development (OECD).

For generations, Japan has achieved its successes by maintaining a vise-like grip on costs. After hard bargaining with medical providers every two years, the government sets a price for treatment and drugs — and tolerates no fudging.

As a result, most Japanese doctors make far less money than their U.S. counterparts. Administrative costs are four times lower than they are in the United States, in part because insurance companies do not set rates for treatment or deny claims. By law, they cannot make profits or advertise to attract low-risk, high-profit clients.

To keep costs down, Japan has made tradeoffs in other areas — sometimes to the detriment of patients. Some are merely irritating, such as routine hour-long waits before doctor appointments. But others involve worrisome questions about quality control and gaps in treatment for urgent care.

Japanese hospitals experience a “crowding out” effect, with space for emergency care and serious medical conditions sometimes overwhelmed by a flood of patients seeking routine treatment, said Naohiro Yashiro, a professor of economics and health-care expert at International Christian University in Tokyo.

“Patients are treated too equally,” he said. “Beds are occupied by less-urgent cases, and there are no penalties for those who over-use the system.”

The government has largely been unable to reduce the length of hospital stays, which are four times as long in Japan as in the United States. Hospital doctors are often overworked and cannot hone specialized life-saving skills, according to recent reports by McKinsey. Statistics show that the Japanese are much less likely to have heart attacks than people in the United States, but that when they do, their chance of dying is twice as high.

There are shortages of obstetricians, anesthesiologists and emergency room specialists because of relatively low pay, long hours and high stress at many hospitals, doctors and health-care analysts said. Emergency room service is often spotty, as ER beds in many hospitals are limited and diagnostic expertise is sometimes lacking. In a highly publicized but not unprecedented incident, a pregnant woman complaining of a severe headache was refused admission last year to seven Tokyo hospitals. She died of an undiagnosed brain hemorrhage after giving birth.

I also discussed the difference in the malpractice situation and I pointed out that Japanese patients seldom file malpractice claims. They do not claim as seldom as sometimes thought, but they claim less than patients in the United States and some other wealthy democracies. To date, most scholars have tried to explain the contrasts by identifying ‘‘faults’’ in the Japanese judicial system.

These scholars look in the wrong place. Part of the reason for the low claiming levels probably (the result is only suggestive) lies instead with the universal national health insurance program. Through the program, the Japanese government provides heavily subsidized medical care to all residents. To contain the enormous costs that such a demand subsidy would otherwise entail, it suppresses the prices it pays for most procedures. Crucially, it does not suppress prices uniformly. Instead, it suppresses most drastically the technologically most complex procedures.

These sophisticated procedures, however, are the very procedures most likely (in any wealthy economy) to generate malpractice claims. Physicians perform them in teams—increasing the transparency of the records avail- able to the patients (or their heirs). Japanese courts hold the doctors able to perform these procedures to higher standards of care—making it easier for patients to meet their burdens of proof. The procedures are intrusive, succeed less often than ordinary medical care, and cater to higher-risk patients—resulting in more adverse events. And some of the procedures seem to demand greater attention and effort—perhaps generating more cases of actionable negligence.

Part of the reason for the lower level of malpractice claims in Japan, in short, may lie in the very level of medical technology. To restrain the cost of its universal insurance, the Japanese government has lowered the technological level of medical services its doctors provide. In the process, it has cut the number of procedures most likely (for whatever reason) to generate malpractice claims. That patients file so many claims in the United States, as William Sage (2003: 3) put it, ‘‘is largely a product of modern medicine’s tremendous success in treating disease.’’ That they file so many fewer in Japan may be, in part, a product of the way the national insurance has pre- vented as many people from enjoying that modern success. Considering the changes in the progression of the health care system in that more and more of the Japanese physicians are coming to the U.S. for their additional specialty training. Will this additional success in treating diseases led to the plague of the American malpractice quagmire? Or will the culture of the Japanese families and the patients themselves keep the percentage of malpractice cases and rewards continually low? What about the new generations of millennials, etc.? Will their attitudes and expectations change also and will that increase the legal battles?

The importance of sustainability consideration in our choices is evident in light of the following news. Consider that several states that chose to expand Medicaid eligibility under ObamaCare now are facing deadline pressure to pay for it, the result of more signups than anticipated — and, a looming reduction in how much of the bill the federal government will cover.

At least seven of the 29 states (and the District of Columbia) that expanded coverage have experienced significantly higher-than-expected enrollment. The expansion of Medicaid, the government health care program for low-income people, now allows most low-income adults making up to 138 percent of the federal poverty level to qualify. An estimated 1.4 million more people than expected have signed up in those seven states since enrollment opened in October 2013 — with Illinois, Kentucky and Washington state more than doubling their projected numbers.

The experience is serving as a cautionary tale for states, including Florida, still debating whether to take the plunge and green-light the Medicaid expansion, which is optional.

The enrollment interest is definitely there — but so is a ballooning taxpayer bill.

Florida Republican state Rep. Paul Renner told the Florida Times-Union he worries about the potential, long-term effects expanding Medicaid might have on the state budget.

“It’s really not a free proposition for us to expand coverage here,” Renner told the newspaper. “We’re going to have to give up things that are very important, like education.”

Right now, federal funds cover 100 percent of the costs through 2016 for people now eligible for insurance through the Medicaid expansion.

However, the federal commitment decreases to 95 percent in 2017, 94 percent in 2018, 93 percent in 2019 and 90 percent in 2020 and beyond.

Florida is fiercely divided over the potential expansion, and Republican Gov. Rick Scott — a former supporter, now foe, of the move — told Politico it would cost his state $5 billion over a decade. A new, Senate-approved plan calls for using federal money to buy private insurance for poor residents who agree to work or attend school and share in the coverage costs — it’s unclear whether the federal government would go along.

States that already expanded enrollment and are seeing a surge, meanwhile, are trying to deal with the challenge. In Washington state, officials are optimistic they can meet budget costs, despite the growing rolls and the prospect of less federal money in the coming years.

“The decision … was a bipartisan decision,” Washington state Medicaid Director MaryAnne Lindeblad told FoxNews.com on Tuesday. “It has been an unqualified success. Expansion enrollment surpassed our 2018 projections within months of implementation.”

Lindeblad added:  “Our state saved about $350 million in state funds the first 18 months of expansion, and even with the move to a 90/10 match level, we continue to project continued savings in the out years.”

However, Hawaii is taking its troubled ObamaCare/Affordable Care Act insurance exchange off life support, the governor’s office announced Friday, the latest addition to a growing number of state exchanges forced to close after operations became unsustainable.

The once-highly praised Hawaii Health Connector has been “unable to generate sufficient revenues to sustain operations,” Gov. David Ige’s office said in a statement. The federal Centers for Medicaid and Medicare Services (CMS) informed the exchange last week that federal funds were no longer available to support long-term operations.

“The state is working with the Connector and CMS to determine what functions can be transitioned to state oversight to ensure compliance with the Affordable Care Act (ACA) by the next Open Enrollment in November 2015,” Ige said.

Ige said that Hawaii will maintain a Supported State-based Marketplace in which the state would provide local customer support.

Grant funds had been restricted in March after the exchange told officials it was not in compliance with the Affordable Care Act, which we know is commonly known as ObamaCare, due to fiscal instability and tech issues.

The shutdown comes after federal taxpayers “threw away” more than $200 million into the exchange, which critics called a waste of taxpayer money.

“The $200 million was a complete waste of tax dollars that could have been used for much more productive efforts,” Reg Baker, a well-known CPA in Hawaii who for many years was the chief financial officer for the health insurance plan, HMAA, told FoxNews.com last month.

While many of the state’s Democrats praised the ObamaCare exchange when it launched in October 2013, it was riddled with trouble from the start. The web portal never worked properly despite the state spending $74 million on a contract with CGI to build and maintain it. Does this ring a bell? Remember the Maryland Web site, which never functioned to handle the exchange requests and ended up costing the taxpayers around $300 million.

The exchange experienced tremendous staff turnover, with three executive directors appointed in two years. Enrollment reached just over 8,500 in the first year, and as a result, Hawaii was ranked the most costly exchange in the nation at more than $23,899 per person.

Enrollment never reached the 300,000 number then-Gov. Neil Abercrombie, a Democrat, enthusiastically predicted at the opening press conference launching the Connector. The enrollment number also never hit 70,000, the minimum needed to stay financially solvent. At its peak, enrollment reached 37,000, a fraction of the state’s 1.4 million people. Hawaii’s uninsured population, at 8 percent when the exchange opened, dropped just 2 percent.

“The state remains committed to offering health care coverage through the Prepaid Health Care Act as it has for the past 40 years,” Ige said Friday. “The state continues to provide millions of dollars to serve 300,000 Hawaii adults and children who receive health care coverage through Medicaid.”

Hawaii is not the only ObamaCare exchange to be plagued by troubles. Despite the government investing $4.5 billion into state-run exchanges, Oregon, Massachusetts, Maryland (as I mentioned regarding the problems) , Vermont, New Mexico and Nevada have also planned to shut down their operations.

The idea of Affordable Care Act was a noble venture but we have to continue to find ways to make the system work.

Lets continue the history lesson and try to extract some suggestions to make our American health care system the sustainable model.

I also want to thank Rick Kollinger for allowing me to include his editorial cartoons as part of my posts.

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