3 Lessons Studying Japanese Healthcare. America Pay Attention.

Japan wins in spite of Employer-Sponsored Healthcare, not because of it.


I’m convinced that a major splinter in America’s healthcare system is employers. Employers act as a middle man, reducing consumer buying power and preventing the market from efficiently balancing prices and supply.

Employers provide very little value other than serving to collect money (by law) from employees so the government doesn’t have to. It’s a nice way for the government to tax people without increasing taxes.

America does not have a purposeful “system” of health care as much as a tradition of laissez-faire practices developed over time. The involvement of employers in the healthcare system wasn’t by design (it makes no sense intuitively). It was a consequence of a war time law in 1942, intended to slow inflation by freezing wages. The effects snowballed over the years, becoming worse with a more complex healthcare system.

After researching and attending healthcare conferences, I became convinced that the United States makes a big mistake by involving employers at all.

No other country has adopted this unorthodox method of healthcare.

Except one. Japan.

Japan has “employer-sponsored” health insurance similar to the United States; however, outcomes from the two countries couldn’t be more different.

Japan is winning in every category

Japan ranks as one of the top performing healthcare systems in the world, by any meaningful measure. Japan has the longest life expectancy of any major country. Also, no one from the island nation of 130 million has gone bankrupt due to medical fees. Meanwhile in the U.S., 643,000 Americans go bankrupt every year over medical bills.

Japan spends $4,150 per capita on healthcare; the United States more than double at $9,451.

Japan ranks #1 in infant mortality; the United States… bottom of the pack. It’s almost hard to believe.

These statistics boggle the mind considering Japan is also the oldest major country. The median age is 46.9 years old, almost a full 10 years older then people in America!

Let this sink in.

If Japan were a person he would be 10 years older, live 6 years longer, spend 50% less then his American friend for health care, and have no risk of bankruptcy. Very impressive my friend.

Japanese culture and lifestyle

Now, you’re probably thinking that’s not a fair comparison since Japan has a much healthier culture, and you’d be right. This study researched the differences in smoking, drinking and eating between US and Japan, with stunning results.

Japanese people smoke (29.7% men and 9.7% women) more than Americans (17% avg) and drink slightly more, but the overwhelming difference is in obesity rates.

Consider that only 3.7 percent of Japanese are obese, compared to 38.0 percent of Americans!

The correlation of obesity to healthcare costs is well documented. Obese adults are 42 percent more costly, with the morbidly obese at 81 percent, than people at a healthy weight. Every year obesity costs the US over $200B.

There are strong links between weight and heart disease, as well as hypertension, hyperlipidemia, diabetes, cancers, strokes, atherosclerosis and osteoarthritis.

All this puts a much greater strain on the US healthcare system.

2017 Obesity report by OECD

If the US had a population as thin as Japan, things would look differently. It’s as if US is sailing a boat in a hurricane, while Japan is in a swimming pool.

The only thing more difficult to change than regulation, is culture. The culture in Japan emphasizes healthy eating, a healthy body and daily mindfulness.

So where’s the magic — Japanese lifestyle or their healthcare?

Did the health system cause the healthy population, or vice versa?

Admittedly it’s both, the healthy population shapes the system and the system makes the population healthier.

Although, there is nothing specifically unique about Japan’s system contributing to the great health outcomes. The magic of Japanese health is heavily influenced by their daily habits in life rather than by healthcare.

Japanese walk more as part of their daily lives; 3.5 miles compared to the 1 mile Americans walk. They walk more due to higher costs of driving in Japan. The cost of food in Japan is also more expensive, giving incentive to eat less, (Japanese eat 200 fewer calories per day) and traditional meals have many more vegetables and fruits.

Japan already has a healthier population, making the job much easier for its healthcare workers. If the 130M Japanese people traded places with Americans, it’s likely that Japan’s healthcare costs would skyrocket.

Understanding Japan’s healthcare system

History of Japan’s healthcare

National health insurance emerged in Japan beginning in 1905, when the Kamegafuchi Textile Company limited health benefits for its employees.

In 1927, a law passed (inspired by the German system) mandating coverage by employers. It created a government role in the provision of health insurance to those individuals not covered by employers.

After World War II, the effort to rebuild Japan gave new impetus to the achievement of universal coverage. In 1961, Japan passed a law calling for universal coverage. Now, nearly all Japanese are covered by either employers or the government.

Japan has a fixed fee schedule, meaning that costs for procedures and drugs are the same everywhere.

Because the prices are fixed, employers have no buying leverage to reduce insurance premiums, minimizing the impact of employers.

Japan’s Universal Healthcare System is far from ideal

Universal, fixed-price healthcare comes at a major cost, and shouldn’t be considered the only option for America.

While all prices are fixed and everyone has access to care, the quality of care is lower, wait times are higher and further medical innovation is reduced.

“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.” — Naohiro Yashiro, a professor of economics and health-care expert at International Christian University in Tokyo

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

Japanese are less likely to have heart attacks than Americans, but their chance of dying is twice as high.

The Japanese visit a doctor 14 times a year, more than four times as often as Americans.

Yusuke Tsugawa — a physician and research associate at Harvard University who specializes in health care economics — says “the days Japan can boast low-cost, high-quality health care are over, pointing to the nation’s soaring medical spending in relation to its gross domestic product.”

3 Lessons To Learn

I believe a major flaw in America’s system is employer-sponsored healthcare. However,using a similar system, Japan achieves great outcomes. I wanted to understand exactly how they do it.

I walked away with 3 lessons.

  1. Japan is thin — because only 3.7% of Japanese are obese, (compared to 38.0% of Americans) the need for healthcare in Japan is much lower.
  2. Prices are fixed — because employers don’t have buying leverage, insurance is significantly less expensive for the self-employed etc.
  3. Flaws are reduced — because the population is so healthy, every flaw in the system (doctor shortages, long wait times etc) are minimized.

What Can America Learn From Japan?

There is danger in comparing international healthcare policies without considering the difference in culture and health. Widespread obesity is a plague. Obesity leads to severe health problems and overloads the healthcare system. Japan gets away with universal, fixed-price healthcare because they are a much healthier society. The U.S. should aim to improve the health of its citizens with the same attention and vigor given to reforming the system.

Originally posted on Harvey’s blog: https://www.goharvey.com/blog/3-lessons-studying-japanese-healthcare