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Healthcare coverage in the US and Japan

A comparison

Ruggles, Bernadette Martin DNP, MSN, RN, CMSRN, CEN; Xiong, Amy DNP, MSN, FNP-BC; Kyle, Brittany DNP, MSN, CCRN

Author Information
doi: 10.1097/01.NURSE.0000553277.03472.d8
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THE US HEALTHCARE SYSTEM is one of the largest and most complex in the world. Most patients receive coverage through a wide array of private insurance plans and public programs. In contrast, Japan has offered full healthcare coverage to its population for almost 60 years. Compared with the US system, Japan's healthcare system costs half as much and produces better medical outcomes.1 It provides a more effective and equitable system that protects many vulnerable patients while controlling healthcare costs.2 These strategies of socialized medicine provide longevity, reduced mortality, and effective treatment by utilization of prescription medication for chronic and terminal illness.2

Although the Japanese system has many benefits, it is also a very fragmented system that may not be fiscally sustainable in the future, particularly as the population ages.3 Both countries will experience a demographic revolution in the decades ahead, which will pose healthcare challenges as the needs of the general population change.4 This article compares the two countries' healthcare systems and examines possible solutions for their future challenges.

The evolution of national health insurance

National health insurance began in Japan in 1905 when the Kanegafuchi Textile Company provided employee benefits for the first time.4 The Health Insurance Act of 1922 was modeled after the German system established by Chancellor Bismarck in 1883. This system extended healthcare coverage to industrial workers and miners, which led to government-mandated health insurance for individuals not covered through employment. The Health Insurance Act proposed in 1938 and The Medical Care Act of 1948 provided the entire Japanese population with healthcare by 1961.5 These initiatives form the basis of the law that now governs the Japanese healthcare delivery system.4

Japan's national health insurance program is a hybrid system regulated by the government. It has three pillars of funding: government-managed plans, society-managed plans, and mutual aid associations.4

Government-managed plans are funded by small organizations with 5 to 300 employees and a set premium fixed rate of 8.2% of monthly income before taxes. Society-managed plans are funded by larger organizations with more than 300 employees and payroll contributions of 5.8% to 9.5% of grossly monthly income. Mutual aid associations are funded by government employees with payroll taxes of 8.5% of employees' wages. Independent plans for day laborers are also available for individuals who work less than 2 months during the year.4

As in Japan, early efforts to provide universal government-funded healthcare in the US date back to the late 1800s, culminating in the American Association of Labor Legislation in 1906.6 Unlike Japan, the US repudiated the German socialist system with the introduction of the first modern group health insurance plan through a nonprofit organization called Blue Cross. Prepayment plans were negotiated with physicians and hospitals for increased volume and timely payments.5

By World War II, Blue Cross plans existed in 13 states, covering less than 10% of the US population.6 Many American presidents proposed healthcare systems with minimal success until Lyndon B. Johnson created the Medicare and Medicaid systems in 1965.7 Little progress followed until President Barack Obama introduced the Patient Protection and Affordable Care Act of 2010 (PPACA), also known as the Affordable Care Act or Obamacare. This comprehensive healthcare reform allowed access to health insurance for over 17 million Americans. The US healthcare system includes many diverse types of insurance plans and programs, with the main sources being the federal government, state governments, commercial insurers, and self-insurance. (See A guide to health insurance in the US.)


Japanese residents (both citizens and noncitizens) are required to enroll in the universal health insurance system.9 Employed individuals and employers support the universal health insurance system through payroll taxes. Self-employed individuals pay a premium based on their income, and government employees are covered by Mutual Aid Societies. Undocumented immigrants and visitors are not covered by the universal health insurance system.9

Like PPACA, the Japanese system requires participation in a healthcare plan. Japan's universal health insurance system also offers life insurance and requires individuals over age 40 to have long-term-care insurance. Older adults are automatically enrolled into healthcare plans funded by taxpayers.9 Japan's system provides the same benefits to those who are employees and those who are self–employed, and covers the cost of hospitalization and primary and specialty ambulatory services.

Like the Japanese, Americans receive healthcare insurance from various entities, but to ensure that all Americans have access to health insurance, PPACA utilizes a shared responsibility between the government, employers, and individual subsidization to low- and middle-income individuals through expanded Medicaid.

Private insurance companies can be for-profit or not-for-profit, are regulated by state insurance commissioners, and are subject to state and federal regulation. In contrast, Japanese insurance companies are barred from making a profit or advertising.1

Undocumented immigrants in the US are ineligible for public coverage, but most state and local governments provide coverage for undocumented women and children. In addition, hospitals must provide emergency care to undocumented immigrants and they must allow them to apply and qualify for emergency Medicaid for stabilization care.9

Financial expenditures

Under Japan's universal health insurance system, reimbursement is paid to healthcare providers through a fee schedule set by the government. Neither physicians nor hospitals can bill their patients more than the authorized fee, but they can bill for amenities, beds, experimental treatment, after-hour services, and hospitalizations of 180 days or more.4 The government revises the fee schedule every 2 years based on public healthcare expenditure rates. Plans do not have deductibles, but participants may have copayments at the point of service.9

Cost-sharing in American PPACA insurance plans varies greatly. Most insurance plans require copayments for outpatient physician visits, hospitalizations, and prescriptions. Most insurance plans prohibit providers from charging patients more than the copayment required by their insurance plan. Many insurance plans, including Medicare, require a minimum annual deductible with various ranges.9

Health resources

Japan has an abundance of ambulatory clinics, but wait times are long (over an hour) and appointments often last just a few minutes.1 In addition, the high amount of ambulatory care has caused a shortage in emergency care services.4 Physicians have little incentive to work in hospitals and EDs due to low wages, long hours, and high-stress environments.1 Without hospital privileges, many clinic physicians do not have the ability to collaborate with specialists.4

Primary care in Japan has been found to be less effective than in the US. Many patients visit primary care providers for various reasons, including mental health issues. Studies have reported that patients in Japan are two to three times more likely to access healthcare than other countries and average 13 visits to the physician each year.3 Allowing patients to consult any primary care provider encourages an increased length of stay (LOS) in hospitals along with higher readmission rates with full insurance coverage.3,10

Without restrictions on access to care, patients can consult any provider and receive the same insurance without penalty, thereby occupying a bed for a less urgent condition.3 Furthermore, most government facilities cover the cost of all pediatric healthcare, including prescriptions. This contributes to an overutilization of the system, and there are neither consequences nor a “gatekeeper” to monitor health maintenance.1

Quality of care

Japan and the US have independent agencies that oversee the quality of healthcare and the accreditation of hospitals and other healthcare providers. (See Healthcare by the numbers, US and Japan.) Emergency resources and hospital services in the US offer a higher quality of care compared with Japan.3 EDs are mandated by state and federal regulations to stabilize all patients and provide emergency care regardless of capacity.11 One study found that 40% of unintentional deaths in Japan could have been avoided if emergency care had been accessible.12

Nursing implications

Understanding different models of healthcare worldwide as well as the sociocultural patterns of health, behavior, and disease while examining the benefits and challenges of those systems can help the US improve its healthcare system. This will become even more important as healthcare costs undergo anticipated increases due to an increasing need for mental health services and aging populations in both Japan and the US. In addition, the dramatic rise in healthcare enrollment in the US has presented challenges for hospitals, and more specifically EDs across the country.13 This increased complexity of patients and decreased resources will continue to result in greater patient volumes, causing overcrowding, lengthy wait times, inefficient systematic throughput, and potential safety and quality concerns requiring additional healthcare providers. Enhanced public policies will provide initiatives for nurses and other healthcare associates to reinforce universal healthcare for improved outcomes.

Taking a closer look at Japan's healthcare system9,16,17

Learning from each other

Understanding the model of healthcare used in Japan, with its similarities and differences compared with the US model, can help the US control expenditures on health services and emphasize preventive maintenance. The goal is to provide quality care that is cost-effective and accessible to all Americans in the face of ever-expanding financial constraints and changes in the population.

A guide to health insurance in the US

Depending on what is offered in each state and/or through employers, some or all of the following types of insurance plans may be available to US residents.

  • Exclusive Provider Organization: A managed-care plan in which services are covered only for patients who use physicians, specialists, or hospitals within the plan's network, except for emergency care.14
  • Health Maintenance Organization (HMO): HMO plans usually limit coverage to care from physicians who work for or contract with the HMO. These plans usually will not cover out-of-network care except in an emergency. An HMO may require patients to live or work in its service area to be eligible for coverage. HMO plans often provide integrated care and focus on prevention and wellness.14
  • Preferred Provider Organization (PPO): A plan in which patients typically pay less if they use physicians, hospitals, and other healthcare providers that belong to the plan's network. PPO plans may require patients to get a referral from their primary care physician to see a specialist.14
  • Point of Service (POS): Under POS plans, patients pay less for physician visits, hospital services, and other healthcare services that belong to the plan's network. POS plans require patients to get a referral from their primary care physician to see a specialist.14
  • Medicare and Medicaid: These government-funded health insurance plans are available for qualified individuals.9
  • High-Deductible Health Plan (HDHP): HDHP plans, with and without savings options, offer lower premiums in exchange for high deductibles.15
  • Flexible Spending Account (FSA): An account that allows patients to use pretax contributions to pay for healthcare expenses.
  • Other types of insurance related to healthcare include disability, workers' compensation, and long-term care.


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    Affordable Care Act; Japan; Japanese healthcare system; national health insurance program; Obamacare; Patient Protection and Affordable Care Act

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