Japan's Social Health Insurance Laws

According to the Washington Post, the Japanese health-care system is a socialized system that takes up half as much gross domestic product (GDP) as the American health-care system. It has pros and cons, but everyone in Japan is entitled to affordable health care, which they pay for from their taxes.

Funding

• Japan's health-care system is funded by tax revenue and mandatory insurance. The latter is bought through companies via a payroll tax similar to FICA in the U.S.. This means workers pay more for health care than non-workers, as they pay income tax and for the mandatory insurance.

Cost-Cutting

• While Japanese people, on average, visit the doctor substantially more than do Americans, the overall cost of their health care is lower.This is accomplished through price-fixing by the governmental. The price of medical care and medication cannot exceed certain levels, adjusted annually.

  What this means is that the price to the user is zero (not including taxes) and the price to the government is relatively low. However, it also means that doctors are paid substantially less in Japan than they are in the U.S.--effectively, the cost has been passed onto medical personnel in the form of reduced wages. This is according to a 2009 feature article in the Washington Post.

Benefits

• Insurance companies in Japan have a guaranteed customer base. However, they are not allowed to make a profit. They also must cover every medical procedure--pre-existing conditions are not an issue in Japan.

  Because insurance companies do not deny claims (or even assess them) or set prices, they employ far fewer staff than do profit-driven American companies. This means that administration costs are substantially lower, with the savings passed on to the government and the taxpayers.

Drawbacks

• The major drawback of the Japanese health insurance system is that it is too generous. While it has worked for the past several decades, this was partly due to the demographic of the population. As of 2010, the Japanese population is growing much older and, therefore, has greater need for medical care. That financial burden is falling onto the system.

  As of 2010, the Japanese government is keeping costs down by setting prices lower and lower. However, this is not keeping them down but rather transferring them to health-care staff--and that cannot be done forever before doctors and nurses begin to look for work elsewhere.