July 1999 Reform of Medical Insurance System (Proposal)

1. Title

   Reform of Medical Insurance System

2. Initiators

   Ruling parties (at the time, the Liberal Democratic Party [LDP], Social Democratic Party [SDP] and New Party Sakigake) Ministry of Health and Welfare, Ministry of Finance.

   National Federation of Health Insurance Societies (Kenporen), financial, business and economic circles

3. Funding

   Not yet to be determined

4. Beginning, expected end and duration

   To be determined (April 2000 is the government's official target)

5. Background and rationale of the reform, expected results

   Problem of imbalance between increase in expenses for medical services and economic growth.

   Criticism of health system for the elderly given the rapid aging of the population.

   Demand to reduce the portion of cost for medicine (including injections) within the total medical cost which is high in comparison with those in other OECD countries.

   Demand for suitable distinction between acute and chronic phases of medical care, demercation of roles between hospitals and clinics.

6. Country-specific context

   Japan has accomplished almost complete "free acceess" to medical facilities, but this has hampered the adequate working of referal system.

   Given the fast pace of population aging, the rapid rise of medical expenditure for the elderly has created a severe financial burden on the medical insurance system.

   An strong interest group, the Japan Medical Association, has gained even more strongfold than before due to electral reform, and thus making reforms described above politically difficult.

7. Target groups and target regions

   The elderly

   Medical institutions, pharmaceutical manufacturers, patients in general

8. Content and objectives

   The objective of the reform is to realize radical reform of medical insurance and medical service supply system to ensure that medical services of quality can be received comfortably in the 21st Century.

9. Concrete changes vis-a-vis the status quo

   Review of medical service system for the elderly

   Reform of drug tariff (At first, a Japanese model introducing a "reference pricing" system was sought, but this was abandoned in April 1999 due to strong opposition from the Japan Medical Association and the pharmaceutical industry. New directions for reform are now under consideration.)

   Reform of medical fee system

   Review of medical service provision system

10. Major conditions for success

    See above.

11. Arguments raised by opponents of the reform

    The Japan Medical Association and other organizations of medical care institutions are opposing the reform of the drug tariff (opposition to introducing the "reference pricing" system), and proposing establishment of independent medical insurance system for the elderly, etc.

    Pharmaceutical manufacturers and US government are opposing the reform of the drug tariff.

12. Effects on other policy fields

    Long-term care insurance system (to be implemented from April 2000)

    Pharmaceutical industry policies

13. First results

    Not yet to be implemented

14. Personal judgement

    -

15. General available references

    Annual Report on Health and Welfare

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