Naoki IKEGAMI

WHY DOES FRANCE SPEND MUCH MORE THAN JAPAN
FOR ITS HEALTHCARE SYSTEM FOR EQUIVALENT RESULTS?

Naoki IKEGAMI (Keio University)

France and Japan share many features in their health care systems. In financing, both are based on the social health insurance (SHI) model, with contributions from employers and employees, but also subsidized by taxes. In delivery, both are a mix of public and private providers, with solo-practice the dominant pattern in clinics. In payment, both are set by a national tariff and fee-for-service is the rule in outpatient care. Finally, both systems are managed by the welfare elites in the Ministry.

The most glaring difference is in the percentage of the GDP devoted to health expenditures: in France, it is 10%, in Japan, it is 8%. Why is there this difference? First, unlike France, the financing from taxes is not through an ear-marked CSG, but through general revenues. After the economic bubble burst in 1991, Japan’s tax revenue has plummeted so that the government had to rely on debt financing. Health care came to be targeted for cost containment because one quarter of the health expenditures in Japan is financed from general revenues, and this amount is equal to one tenth of the budget. Financing social security benefits takes up about half of the budget and, compared to pensions and to the newly implemented long-term care insurance, health care appeared to have more room for efficiency savings.

Second, Japan has the means to contain costs through the tariff, the payment set by the Ministry which controls the flow of money from all SHI plans to virtually all providers. The tariff is revised every two years according to the following three steps. First, at the macro level, the cabinet decides the global rate: the volume weighted rate for all services and drugs. Since the volume of services will remain essentially the same, revising the global rate effectively determines next year’s expenditures, and the amount that must be allocated from general revenues. This decision must be made by mid December in order to draw the budget for the next fiscal year starting in April. Second, the price of drugs is revised based primarily from the result of a market price survey. It normally finds their selling price lower than those set by the government because of competition among the distributors. The tariff price of each drug is individually revised so that it would be only 2% more than its volume-weighted market price. Third, the tariff for services is revised for each procedure. The impact of each revision of any particular procedure on the macro revision rate is calculated from its volume that is estimated from the Ministry’s survey of the insurance claims data. The revisions are made on an ad hoc basis but their cumulative effect must be equal to the macro revision rate. For example, in the 2002 tariff revision, the macro revision rate was minus 2.7%, but, for MRI (magnetic resonance imaging), the tariff was lowered by more than 30%. Thus, the increase in costs that had resulted from the increases in its volume was more than cancelled out by the decrease in its price.

Third, apart from the doctors based in clinics who are united in the Japan Medical Associations, providers have remained weak so that the government has been able to over-ride their objections to the lowering of the tariff. Specialist organizations have not developed to the extent found in France. Doctors in Japan have the freedom to profess any specialty. Although two-thirds have some accreditation as a specialist, one half of them has not gone through the formally recognized training and examination process, but has been “grandfathered” in. Doctors tend to identify more with the university from which they have graduated than with their professional peers. Most tend to spend their entire professional career practicing in the hospitals affiliated with the university’s clinical department, so that there has been less need for formal accreditation. When doctors go into private practice, since the tariff is the same for all and favors services in primary care, most tend to focus in this field. Doctors are not allowed to demand more than the tariff, nor charge for services outside the tariff in order to be reimbursed by SHI in Japan (if they do so, it must be all private pay).

The above description may be a dream come true to the French Finance Ministry. Although French doctors may condemn the Japanese system for not adequately rewarding professional quality, the macro indices of health, such as life expectancy at birth at 60, are the best in the world. These health outcomes may be due more to better life style, than the health care system. But if so, why should France allocate so much more? The reason appears to be more due to the political power of the provider organizations and the extent to which they have managed to convince the public that quality can only be assured by having professional qualifications. In Japan, it would be unthinkable to restrict the diagnosis of Alzheimer’s disease to neurologists.

However, things are slowly changing to global standards, and thus closer to France, in Japan. With the departure of Prime-minister Koizumi in 2006, his cost containment policy in social security became discredited. Medical professionals issued dire warnings that the system is collapsing because of the lack of funding, which fell on the sympathetic ears of the media. The current ruling party came into power in September, 2009, promising reform. For the first time in ten years, the macro revision rate was positive at 0.19%. Moreover, increases have been focused on the high-tech procedures. Whether health expenditures will start to increase dramatically remains to be seen. Half of this year’s budget was financed by debt, which now amount to twice the GDP. Thus, taxes must be increased. But Prime-minister Kan has just lost the July upper house election by making an ill-timed announcement to increase the VAT. Perhaps something like the CSG would receive a more positive reaction? France and Japan have much to learn from each other’s experience.

Tokyo, June 2010

Naoki Ikegami (池上直己), est professeur et détenteur de la Chaire de politique et management de la santé à l’Ecole de médecine de l’Université Keio (Tokyo). Il est président de l’Association japonaise d’économie de la santé. Il a été consultant à l’OMS et à la Banque Mondiale et est membre de plusieurs comités gouvernementaux. Ces recherches portent sur la politique de la santé et sur la dépendance.

Il a publié de nombreux articles et livres dont : The Art of Balance in Health Policy - Maintaining Japan’s Low-Cost Egalitarian System (Cambridge University Press, 1998; édition japonaise, 1997) avec John C. Campbell; “Measuring the quality of long-term care in institutional and community settings” in “Measuring Up – Improving Health Care Performance in OECD Countries” (OECD, 2002) avec John Hirdes and Iain Carpenter.