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The

panies. Most of the rest are industry-based.

A number of small programs exist to han-

About 26 percent of the population partici-

dle special populations such as farmers, fisher-

reimbursement

pates in these plans.128

men, and government workers. The unem-

schedule for

ployed remain under their former employers'

Such plans are financed through manda-

physicians creates

plan, although they are not required to contin-

tory employer and employee contributions,

ue contributing. Private supplemental insur-

effectively a payroll tax. The total contribu-

an incentive for

ance exists, but very few Japanese carry it.

tion averages around 8.5 percent of wages. It

them to see as

Private health insurance pays for less than 1

is generally split evenly between employer

percent of total Japanese health care spending.

and employee, although some companies

many patients as

Benefits under all four schemes are

assume slightly more than half the contribu-

possible. The

extremely generous, including hospital and

tion. As a result, workers contribute about 45

result is assembly

percent of payments overall.129 It should be

physician care, as well as dental care, maternity

care, prescription drugs, and even some trans-

noted that studies have found that the

line medicine.

portation costs. There are no restrictions on

majority of the burden of the employer's con-

hospital or physician choice and generally no

tribution to health insurance is borne by the

employees in the form of reduced wages.130

preauthorization or gatekeeper requirements.

Significant copayments accompany most ser-

These contributions are frequently insuf-

vices, ranging from 10 percent to, more com-

ficient to operate the insurance plans. In

2003, more than half lost money.131 A num-

monly, 30 percent (capped at $677 per month

for a middle-income family). As a result, the

ber of companies have responded by dissolv-

average Japanese household pays about $2,300

ing their individual plans and entering larger

per year out of pocket.135 Overall out-of-pocket

industry-based plans. However, growing

costs continue to pressure many businesses.

expenditures amount to roughly 17 percent of

Workers in businesses with fewer than

total health care spending.

700 workers must enroll in the government-

The vast majority of hospitals and clinics in

run, small-business national health insur-

Japan are privately owned, but because the gov-

ance program. This plan covers about 30 per-

ernment sets all fee schedules, the distinction

cent of the population and is funded primar-

between privately and publicly owned is irrele-

ily through mandatory contributions,

vant for patients. Reimbursement for both

around 8.2 percent of wages, and supple-

hospitals and clinics is on a fee-for-service

mented by government funds.132

basis, with the government setting fees and

prescription prices.

The self-employed and retirees are covered

The fee schedule is identical for inpatient

under the Citizens Insurance Program admin-

and outpatient treatment. Because hospitals

istered by municipal governments. Funding

must absorb both physician and capital costs

comes primarily from a self-employment tax,

from the same level of reimbursement, the ten-

but additional revenues come from an assess-

dency has been to shift patients to outpatient

ment on the society-managed insurance pro-

services.136 Recently, some attempts have been

grams discussed above and the small business

program. General revenue contributions from

made to introduce alternate reimbursement

the national government are used to plug

mechanisms for hospitals, including DRGs

shortfalls.

and Diagnosis and Procedure Combinations--

Finally, the elderly are covered through a

classification systems that tie reimbursements

fund financed by contributions from the other

more closely to the resources that a particular

three schemes, as well as contributions from

patient consumes. But the medical establish-

the central government. The elderly do not pay

ment has resisted, and only about 80 hospitals

participate in the experiment.137

directly into this plan, known as the Roken, but

contribute to the plan they were enrolled in

Hospital physicians are salaried employees.

while employed. The Roken is simply a cost-

Nonhospital physicians work in the private

sharing mechanism.134

sector, and the government sets their reim-

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