JANUARY

JAPAN
incentives for providers to contain cost, although the correlation has not yet been formally evaluated. Episodebased
payments are not used.
Mental health care: Mental health care is provided in outpatient, inpatient, and home care settings, with
patients charged the standard 30 percent coinsurance (although there is reduced cost-sharing and other
financial protections for patients in the community). Covered services include psychological tests and therapies,
pharmaceuticals, and rehabilitative activities. Specialized mental clinics and hospitals exist, but services for
depression, dementia, and other common conditions are integrated with primary care. Most psychiatric beds
are in private hospitals owned by medical corporations (MHLW, 2014c).
Long-term care and social supports: National compulsory long-term care insurance (LTCI), administered by the
municipalities, covers those age 65 and older and some disabled people ages 40 to 64. It covers home care,
respite care, domiciliary care, disability equipment, assistive devices, and home modification. Medical services
are covered by the PHIS, as are palliative care and hospice care in hospitals and medical services provided in
home palliative care, while nursing services are covered by LTCI. Long-term home care services can be
considered a part of home hospice services as dying patients become eligible.
Roughly half of long-term care financing comes through taxation and half through premiums. Citizens age 40
and over pay income-related premiums along with PHIS premiums. Employers pay the same premium as that
of their employees. Premiums for those age 65 and older, also income-based (including pensions), and set by
municipalities based on estimated expenditures, are paid only by the beneficiaries. A 10 percent coinsurance
rate applies to all covered services, up to an income-related ceiling. There is additional copayment for bed and
board in institutional care, but it is waived or reduced for those with low income (all costs for those with meanstested
social assistance are paid from local and national tax revenue).
Eligible people are entitled to use long-term services up to needs-based ceilings (called “care levels”) set by
local LTCI boards, according to assessment of physical and mental conditions. People are not allowed to buy
unlisted services or services from non-LTCI providers with the budget provided, but they can purchase such
services with their own money. Care management—covered by LTCI and offered by public, not-for-profit, and
for-profit providers—is available to help people arrange long-term care services.
The majority of home care providers are private; 64 percent were for-profit, 35 percent not-for-profit, and 0.4
percent public in 2013 (MHLW, 2014a). While for-profits are not allowed to provide institutional care under LTCI,
there are private nursing homes for which residents pay full costs (MHLW, 2013).
Family care leave benefits (part of employment insurance) are paid for up to three months when employees take
leave to care for their families. Additionally, more than half of the municipalities have established marginal
financial supports, mostly limited to those with lower incomes, with their own financial capacities and
legislations (Kwon, 2014).
What are the key entities for health system governance?
The Social Security Council, a statutory body within the Ministry of Health, Labor and Welfare, is in charge of
developing national strategies on quality, safety, and cost control, and sets guidelines for determining provider
fees. Within the Ministry, the Central Social Insurance Medical Council defines the benefit package and fee
schedule. National government and prefectures devise cost-control plans (described below).
The Japan Council for Quality Health Care, a nonprofit organization, works to improve quality throughout the
health system and develops clinical guidelines, although it does not have any regulatory power to penalize
poorly performing providers. Specialist societies themselves also produce clinical guidelines.
Technology assessment of pharmaceuticals and medical devices is conducted by the Pharmaceutical and
Medical Devices Agency, a governmental regulatory agency. It also sets the Public Health Insurance Drug Price
List, which is a list of pharmaceuticals and their prices covered by the PHIS (English Regulatory Information Task
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The Commonwealth Fund