Political choices that transcend borders

Political choices that transcend borders

As Japan has demonstrated, universal health coverage starts with a political choice and requires unwavering commitment

By Shinichi Kitaoka, president of the Japan International Cooperation Agency

Universal health coverage is a fundamental and significant political choice that every country should make. No one should be denied quality health care because of the cost or unavailability of services. Japan made that choice early in its economic development and achieved universal health insurance coverage in 1961.

Japan continues nevertheless to make policy choices even today to sustain universal health coverage amid growing healthcare expenses due to population ageing and technological innovation, against the backdrop of sluggish economic growth.

Japan in the 1950s enjoyed a rapid economic recovery from the devastation of World War Two. But it was challenged by remaining poverty that left 10 million people barely above the level of needing state welfare. About 30 million people were excluded from existing health insurance plans. It was evident that poor welfare conditions could create serious social instability. The 1958 Citizen’s Health Insurance Act mandated local governments to enrol all people not covered by other plans. It was no coincidence that the idea of universal coverage was conceived and promoted at a time of increasing political challenges from the socialist party, reflecting the socio-economic landscape at the time.

Features of the system

One prominent feature of Japan’s universal health insurance system is the combination of employment-based and residence-based health insurance. It can be broken down into four tiers. The oldest two tiers belong to employment-based insurance, the origin of which can be traced back to 1922 when the Health Insurance Act was enacted. The employees of big corporations and civil servants are covered by health insurance associations, while those in small to medium-sized enterprises are covered by a single association managed by the government.

Reflecting Japan’s pre-war demographic profile, when many people resided in rural areas without formal employment, the Citizen’s Health Insurance Act was enacted in 1938 as the third tier. It was the predecessor of the 1958 act. The fourth and latest addition is the Late Elders’ Health Insurance established in 2008 to provide mandatory coverage for people aged 75 and older. A fairly complex system operated by more than 3,000 insurers, it resulted from political choices to accelerate the achievement of universal coverage.

If the political choices made in the 1950s were instrumental for achieving universal health coverage in Japan, the ones made in the 1980s were pivotal in containing costs and enhancing sustainability. Political rivalry, fuelled by demands from people increasingly dissatisfied by the gap between the national economic achievement and their own welfare, created the impetus for policy choices to expand the depth of the coverage. In 1973, the government introduced a reimbursement scheme for catastrophic medical expenses exceeding a certain threshold.

Co-payments by people who were 70 years and older were removed. Unfortunately, the economic recession resulting from the oil shock that same year – and rapid increases in medical expenses due to the generous package – created a significant financial burden on the system. The government enacted the Elderly Health Act in 1982 (later transformed into the Late Elders’ Health Insurance), which reintroduced co-payments and created cross-subsidy transfers among the insurance plans with different demographic profiles. Together with the revision of the Health Insurance Act in 1984, it  signified a turning point in Japan’s welfare policy.

Learning from experience

As Japan’s experience indicates, universal health coverage is only achieved and sustained by continuous political choices. The choices made in 2006 that resulted in the late elders’ health insurance in Japan included several measures to control medical expenditures. In 2018, to improve financial viability, financial responsibility for managing citizen’s health insurance was transferred from municipalities and villages (the third tier of local governance) to prefectures (the second tier). With the share of people over 65 years expected to rise from the current 28% to 30% in 2025 and the increasing availability of effective yet expensive medical technologies, further political choices are inevitable.

Despite the challenges Japan faces, its experiences and lessons are shared with our partner countries to encourage and facilitate their informed policy choices. In Kenya, for example, where we extended policy support through technical advisers and a $36 million loan to accelerate reforms related to universal health coverage, President Uhuru Kenyatta made universal health coverage one of the four pillars of his national development agenda.

Health insurance coverage for the poor increased from 17,000 households in 2015 to 182,000 in 2017, through the concerted efforts of the government and various partners. In Senegal, where we provided a similar package with a $78 million loan, the percentage of remote health facilities staffed with a nurse and a midwife increased from 41% in 2015 to 92% in 2018, and health insurance coverage for the poor increased from 186,000 in 2015 to 1,342,000 in 2018, under the strong leadership of President Macky Sall.

It is my sincere hope that many other countries will join hands through this new platform in making such choices, so universal health coverage can be achieved collectively by 2030.

Japan has made many choices in the past, and still makes them today. Some were good and some were bad. We are more than willing to share our experiences with our partner countries and global communities so that people can learn from our experience.