The Fraser Institute: Japan’s Universal Health Care System a Model for Canada in Reducing Costs and Wait Times

“In 2009, Canada’s health expenditures were 87 per cent higher
than Japan’s and 26 per cent higher than the average developed
nation with universal health care. Yet Canadians still face some of
the longest waits for treatment in the developed world,” said
Nadeem Esmail, Fraser Institute director of health policy studies
and author of

Health Care Lessons from Japan

.

“Japan’s experience shows it is possible to provide quality
health care to all citizens regardless of their ability to pay, and
at a reasonable cost to taxpayers.”

Health Care Lessons from Japan
is part of a Fraser Institute series examining the way health
services are funded and delivered in other developed countries with
universal-access health care.

The report outlines how Japan’s health policy framework differs
from that of Canada:

• Cost-sharingfor all forms of medical services
• Largely
  private provisionof acute-care hospital and
  surgical services
• Activity-based fundingfor hospital care
• Privately funded parallel health care
• Statutory
  independent insurersproviding universal services
  on a premium-funded basis (commonly known as a social insurance
  system).

“Emulating Japan’s approach to health care would require
substantial reform of the Canadian system including, most
significantly, a shift from a tax-funded government insurance
scheme to a system of independent insurers offering premium-based
coverage,” Esmail said.

“The Japanese system of multiple health insurers is regulated by
the federal government to ensure the entire population has access
to health care with taxpayer-funded support for those who cannot
afford coverage.”

The report argues that all Canadians would benefit from health
policy reforms based on Japan’s proven framework for providing
high-quality, universal health care at a reasonable cost:

1. Implement activity-based funding models for hospitals
and surgical services.

Activity-based funding creates incentives for hospitals to treat
more patients and to provide the types of services that patients
need most. While global budgets (the dominant form of hospital
funding in Canada) disconnect funding from service provision,
studies have shown that activity-based funding can lead to a
greater volume of services being delivered, reduced wait times for
patients, improved quality of care, more rapid diffusion of medical
technologies and best practices, and greater overall
efficiency.

2. Allow private provision of hospital and surgical
services.

Some 70 per cent of Japanese hospitals are privately owned,
comprising 55 per cent of total beds; however, 74 per cent of
acute-care beds are found in private hospitals compared to 26 per
cent in the public sector.

“The key advantage of introducing more private provision under
activity-based funding in health care is that it fosters greater
competition, putting pressure on all providers, both public and
private, to operate more efficiently,” Esmail said.

3. Introduce cost-sharing regimes for universal health care
with reasonable annual limits and automatic exemptions for
low-income populations.

A lack of cost-sharing (i.e. when patients are required to pay
for a portion of their insured medical services) has resulted in
excessive demand and wasted resources in Canada’s health care
system. Cost-sharing encourages patients to make more informed
decisions about when and where it is best to access the health care
system, thus increasing the cost efficiency of health care
(ultimately reducing total spending) and improving access to
treatment for those in need. Cost-sharing policies have been shown
not to have an adverse effect on health outcomes as long as
low-income populations are exempt.

4. Develop a social insurance construct for universal
coverage with premium funding, along with taxpayer support for
those who cannot afford insurance.

The Japanese social insurance system (which relies to a large
extent on private ownership and competition) provides rapid access
to high-quality care at a lower cost than Canada’s approach.
International research shows that social insurance models
frequently outperform government-run health insurance systems on
measures of timeliness, quality of care, and access to advanced
medical technologies.

“One of the central differences between a social insurance
construct and a government insurance system is the
de-politicization of decision-making,” Esmail said.

“The independence of providers from government puts a greater
focus on the needs of consumers as opposed to administrators.”

Follow the Fraser
Institute on
Twitter

Like us on
Facebook

The Fraser Institute is an independent Canadian public policy
research and educational organization with offices in Vancouver,
Calgary, Toronto, and Montreal and ties to a global network of 86
think-tanks. Its mission is to measure, study, and communicate the
impact of competitive markets and government intervention on the
welfare of individuals. To protect the Institute’s independence, it
does not accept grants from governments or contracts for research.
Visit

www.fraserinstitute.org.