The national health insurance system
Japan is recognised worldwide as a society of health and longevity at relatively low costs. Like most developed countries, it has a universal health insurance, referred to as the national health insurance system (NHIS), which was established in 1961 (see Section II below), but Japan also has a privately initiated medical care provision system. These two systems are sometimes called the 'publicly funded and privately delivered' system.
However, the sustainability of the NHIS has been questioned because of the rapid rise in healthcare costs due to the low fertility rate, ageing population, growing use of expensive technologies and Japan's general economic slump for the past two decades.
To tackle those challenges, Japan adopted several reforms, including the following:
a The Medical Care Plan (see Section II below) was adopted in 1985.
b The Long-term Insurance System, which is a social insurance system for those aged 65 and over who require long-term care and social services, was introduced in 2000. This system is reviewed and revised every three years in order to maintain sustainability.
c The concept of the Integrated Community Care System, which is a comprehensive system at the community level that integrates the provision of healthcare, nursing care, prevention, housing and livelihood support, to enable the elderly to live self-sufficiently in environments that are familiar to them, was widespread as a matter of national policy from 2012.
d The Comprehensive Reform of Social Security and Tax was started in 2012. This reform consisted of joint reforms of the social security and taxation systems to improve the fiscal sustainability of Japan's social security system. This cross-system reform plan includes measures for the support of children and child-raising, the employment of young people, the reform of medical and long-term care services, pension reform, measures against poverty and income inequality, and measures for low-income earners.
e The Regional Healthcare Vision (see Section II below) was started in 2015.
Moreover, Japan's privately initiated medical care provision system has been gradually shaped by a planned economy approach to make the healthcare economy more efficient.
Hot issues to be tackled with assistance from professionals
The following are some of the hot issues that we believe will eventually require the support of financiers as well as lawyers, accountants and other professionals.
UNEVEN DISTRIBUTION OF PHYSICIANS
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The phenomenon of karoshi (death caused by overwork or job-related exhaustion) is a reality in Japan, even in the medical industry. In 2017, the karoshi of medical interns in 2015 and 2016 in severe working environments were determined as workers' accidents. Although it is anticipated2 that supply and demand of physicians will balance out around 2028 (on the premise of 60 working hours a week and other conditions) or 2033 (on the premise of 55 hours a week and other conditions), the uneven distribution of physicians, in both geography and practice areas, and their severe working environment remain a major problem. See Section IX below.
AGEING AND DETERIORATION OF MEDICAL INSTITUTIONS
The number of medical facilities rapidly increased from the late 1970s to the early 1980s in anticipation of the introduction of restrictions on the number of hospital beds in 1985. The statutory depreciation period for steel-reinforced concrete buildings of 39 years, which apply to these facilities, is expiring. In addition, these facilities do not satisfy the latest earthquake resistance standards. Therefore, we anticipate that a considerable number of medical facilities will need large-scale repairs, if not complete reconstruction. See Section IX below.
FAMILY-ORIENTED GOVERNANCE OF MEDICAL CORPORATIONS
Medical corporations are corporate bodies that are operated by administrative bodies for medical care service programmes without losing the non-profit status of the medical practice.
The seventh major revision of the Medical Care Act (the '7th Revision') promulgated in 2016 and enforced in April 2018 statutorily obligated a certain scale or category of medical corporations to comply with the Japan GAAP for medical corporations, accept external audit procedures, and publish written reports on transactions of a certain scale with their directors, close relatives or other specified persons. As a result, a review of corporate governance systems, especially in family-owned medical corporations, is anticipated. See Sections VI and IX below.
NEW INDUSTRIAL TECHNOLOGIES
Ultra-expensive pharmaceuticals, radiotherapy facilities, ICT, AI, robotic surgery and other industrial technologies have evolved and will keep evolving. These technologies increase and deepen inter-relations between the medical industry and for-profit corporations and organisations that confront the conventional philosophy on the non-profit status of medical practice in Japan. See Section IX below.
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II THE HEALTHCARE ECONOMY
I General
Although Japan residents avail themselves of private health insurance, Japan boasts of a working NHIS for its residents. The NHIS possesses the following features, namely, (1) legal residents in Japan are required to enrol in the public health insurance system, (2) there is freedom of choice of medical institutions (so called 'free access'), and (3) medical services, medication and medical devices that are covered by NHIS are available at a low cost under a nationwide uniform price system.
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