Right now, in the midst of a global pandemic, there is nothing more relevant than a discussion of world healthcare markets. While there are a wide array of models across the globe, this essay will focus on the differences between the model in the United States and the model in Japan, and how those two models have handled the coronavirus crisis differently. The differences between the two have become especially pronounced during this pandemic due to vast differences in care, quality, and most importantly for this essay, price and access to care. Only in the United States are we seeing reports of COVID-19 treatments costing upwards of $34,000 as nearly 40 percent of people earning under $40,000 per year have been laid off, thus losing their access to healthcare insurance (Abrams, 2020). Another report states that 1 in 7 Americans wouldn’t seek treatment for COVID-19 because it would cost too much (Pesce, 2020). When public health experts are expecting that possibly millions of people across the United States will need to be hospitalized for COVID-19 in the foreseeable future, these reports should be alarming.
This essay will compare the healthcare markets in the United States and Japan and then compare their response to the COVID-19 crisis and how the differences in their markets predict differences in their outcomes. As Lindblom stated, market variations depend on the level of state control, so here we are examining the differing levels of governmental control between two healthcare markets and the different improvements, such as universal healthcare or lack thereof, that different states attach to their market systems (Lindblom, 2001). I have chosen these two cases because of their stark differences, as I believe these are more advantageous to compare. I hypothesize that Japan’s universal healthcare system is better equipped to handle a pandemic and will by far handle the challenges more smoothly than the United States.
Overview of the United States Mixed Model System
The United States is currently the only developed country in the world that has not implemented universal healthcare. While there have been attempts, most recently ‘Obamacare’ or President Obama’s Healthcare Reform efforts in 2010, these have failed to successfully institute a universal healthcare system but have succeeded in making strides toward that effect. Culturally speaking, the United States has generally been unsupportive of adopting a universal healthcare system because many believe that it is ‘socialized medicine’ and would thus deprive people of their freedom to choose their own form of health insurance, or their choice to have no insurance at all (Reid, 2010). The United States is a country where the basic principles include freedom and individual responsibility, which extends to its healthcare market. However, in the case of a highly contagious virus pandemic, you are only as safe as the person who is the worst insured, meaning that if one person does not have access to treatment and preventative medicine then they will be able to spread it to many others (Kano, 2011).
As in many of the developing countries that have not yet instituted universal healthcare, the U.S. system requires that patients pay for their healthcare services out of their own pockets. In this model, people are generally insured through private insurance companies and then must go to doctors, clinics, or hospitals that are within the network that the health insurance company has designated for them (Reid, 2010). However, people in certain groups do receive government-funded healthcare. This makes the U.S. system a mixed model, where some people receive healthcare from the government but most are insured by the for-profit companies that they pay individual out-of-pocket payments to, or voluntary private insurance (Kano, 2011).
As mentioned, there are different groups in the U.S. healthcare market; the first group comprises those who have subscribed to one of the many private for-profit health insurance companies. These people pay monthly insurance premiums to their insurance company, and if they are employed then their employer can pay the premium for them (Reid, 2010). For most people, their health insurance is tied to their employer, which can be dangerous when a pandemic causes a recession where many people lose their employment and subsequently lose their healthcare.
In this first group, patients receive healthcare services from a home doctor, a clinic, or a hospital that has been pre-selected as ‘in-network’ by their insurance company. The clinic or hospital then sends a request for payment to the insurance company, who then reviews whether the treatment or prescription is deemed medically necessary or appropriate (Reid, 2010). The insurance company employs medical doctors to do this review, and then review whether the patient is subscribed to an insurance policy that entitles them to receive insurance for this treatment. Some insurance companies or policies do not cover all the treatments that may have been performed by the doctor or hospital, or may only cover patients for a certain amount of money or duration of time. In cases where the treatment is deemed unnecessary by the insurance company or the patient has reached their maximum, they would then pay out of pocket for the treatment (Kano, 2011).
The second group of healthcare recipients in the United States consists of veterans, military personnel, and Native Americans. These patients receive free healthcare services from specific hospitals and clinics, such as Veterans Hospitals, which are funded through the Federal and State Governments by taxation. The third group consists of people over 65 years old and those who have extremely low income, as well as people with end-stage renal disease (Reid, 2010). To give an example of how people qualify for the low income ‘Medicaid’ program in 2010, they had to earn below $8,479 in New York State and $3,790 in Missouri State (Reid, 2010). Essentially, Medicaid is reserved for those whose incomes are so low that they are not liveable wages, and this depends on each state to set the limits. President Obama’s Health Reform in 2010 did raise the upper limits so that 16 million more people were able to receive Medicaid coverage, but the limits are still extremely low. Whereas Medicaid covers low-income patients, the ‘Medicare’ program covers patients over 65 years old and those who suffer from end-stage renal disease (Kano, 2011).
The fourth and final group of healthcare recipients is made up of those who are uninsured (Reid, 2010). This may be a personal choice or an unfortunate circumstance due to the loss of employment or being unable to qualify for a private for-profit health insurance company due to pre-existing conditions. A number of those in the fourth group do not have insurance because they are confident enough of their health status that they do not want to pay a high premium each month to subscribe to a health insurance company and would rather take the risk of being uninsured until they either have employment with a higher income or would simply rather pay out of pocket entirely. However, there are many who do not have access to health insurance because they have a pre-existing condition that disqualifies them from receiving insurance. These people instead have to pay out of pocket for the care that they receive (Kano, 2011).
It is possible to receive free service for ordinarily earning people in the U.S. if they go to the hospital for an emergency case. However, this is extremely unlikely and the decision to give free care does not rest with the physicians in charge, so anytime a patient goes to a hospital for treatment without in-network health insurance they are risking extremely inflated high prices for the services that they receive, such as the previous example of one woman paying $34,000 for her COVID-19 treatment (Abrams, 2020). Even people who have good health insurance must pay attention to which hospitals or doctors they go to, otherwise their insurance company has the right to deny coverage of all expenses and thus they will pay the full amount out of pocket as if they were uninsured (Reid, 2010).
Overview of the Japanese Universal Healthcare System
In stark contrast to the United States healthcare system, Japan has adopted the universal healthcare system similar to France, Germany, Switzerland, and Taiwan which means that they have universal healthcare through health insurance premiums. The Japanese government supports universal healthcare financing through general taxation (Kano, 2011).
Under the Japanese system, patients pay approximately 30 percent of the total price of their treatment after each visit, until the overall total per month reaches a fixed amount, which is currently JPY 80,100 or roughly $750. When the copay exceeds JPY 80,100, then the patient pays only one percent of the total price exceeding the fixed amount. However, the patient still must pay the 30 percent after each visit but is later refunded the excess amount after one or two months (Kano, 2011) .
Unlike the mixed model system in the United States, patients in Japan can visit any hospital or clinic and the patient can make the appropriate choice themselves. There is the possibility of an additional charge if the patient goes directly to a higher tier hospital without first obtaining a reference letter from a clinic or a lower tier hospital instead (Kano, 2011).
In Japan, the national government is responsible for regulating the general framework of health insurance for its residents, especially regulating the prices of basic healthcare services so that they do not exceed an affordable amount like in the United States as previously discussed. The basic principles of healthcare in Japan are that all independent adults must be insured and pay a premium for their insurance, and that the amount of the premium paid to the insurer will not necessarily be the same for each person (Kano, 2011). The system is focused on fairness, as demonstrated by the healthcare service price regulation by the Ministry of Health (Kano, 2011). Furthermore, healthcare service prices are mandated to be the same for each treatment, medicine, and other service items regardless of which health insurance category the patient is registered with and which health service provider they are treated by. These measures are meant to succeed in not only providing fair service to all residents in Japan but also to control the government’s total expenditure on healthcare (Kano, 2011).
To give a bit of background about the Japanese system that can explain some of its flaws, the current universal healthcare system was created and then adopted in 1961, nearly sixty years ago (JICA, 2005). This means that it has not been sufficiently updated to account for changes in its demographic structure, which demands a number of improvements upon the current system to stay efficient and effective. As time has gone on, the amount of personal financial assets held per age group has tiled more and more towards the older generation, with residents over 50 holding more than sixty percent of the total financial assets (Kano, 2011). In Japan, people over sixty years old hold financial assets totaling greater than 6.5 times the amount of Japan’s annual national budget (JICA, 2005). This leads scholars to believe that the older generation is hoarding these financial assets to prepare for their old age healthcare, which would not be necessary if Japan’s system were more similar to the United Kingdom and Scandinavian countries where the government provides sufficient pensions and free healthcare to people in their old age (Kano, 2011). In order to find a solution to the current healthcare budget deficit and improve facilities and conditions for the healthcare staff, the elderly could instead invest in an organization which would then ensure that they would receive healthcare throughout their end of life and would then invest their money in the healthcare sector (Kano, 2001).