Japan’s Health Insurance System: Interesting Comparisons to the Affordable Care Act

The life expectancy of the average Japanese individual is 84 years, according to The Diplomat, which makes Japan a leader in population longevity (for comparison, the U.S.A.’s is 78.5 years). Apparently, the Japanese are clearly doing something right. While some say it’s their diet or lifestyle, most experts believe that Japan’s universal health insurance system deserves some of the credit.

A Summary of the Health Insurance System in Japan

For starters, the health insurance system in Japan is mandatory and regulated by the government. It covers all medical, dental, and prescription drug needs that may arise, and a patient cannot be denied coverage because of a pre-existing condition. When a Japanese individual walks into a hospital, they know they will receive care and they can go to any doctor they choose.

Additionally, The Washington Post reports that the Japanese health insurance system regulates costs by requiring every doctor and hospital to abide by the government’s pre-designated fees. Moreover, while monthly insurance premiums are relatively low (usually about $300/family), if the premium cannot be paid, the government will step in and cover the costs.

The health insurance system in Japan also provides subsidies to the elderly to make sure they can get the care they need, and the additional long-term care coverage required for residents over the age of 40 ensures that everything from nursing home stays to in-home care is covered.

How the Affordable Care Act Compares

It’s interesting to see how our Affordable Care Act (“ACA”) compares to the Japanese healthcare system. For example:

  • Under the ACA, health insurance coverage is now mandatory for all citizens. Non-insured citizens have to pay a penalty.
  • Insurance companies can no longer deny a claim due to a pre-existing condition.
  • There is a cap on the amount of out-of-pocket expenses a family has to pay each year.
  • Preventative care now has to be covered at 100%.
  • There can no longer be an annual or lifetime limit on the amount of money an insurance company will pay out for medical procedures.
  • Insurance companies are restricted from increasing their rates by more than 10% without first justifying the reason behind it to the policyholders.

Although there are those who would point to Japan to justify that the ACA is a success, there are major differences in both the Japanese and U.S. economies, lifestyles and culture which makes an “apples to apples” comparison more difficult. What works in Japan may not work well in the U.S. Nevertheless, it is interesting to compare both systems and learn from them as well.

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