Health care in Japan: perfection

Health care in Japan: perfection
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Is this your future?

Let me start with the conclusion: I get treated medically same day (literally – sometimes same hour) for barely no fees in Japan with a speed I have never seen anywhere else on the planet. All hospitals in Tokyo treat me like a prince when I walk in, they all welcome me with a smile and polite greetings, and take care of me with the kind of service and attention you barely would expect when you walk into a high class French luxury restaurant in an expensive hotel in a big city. All for the equivalent of a couple of dollars.

I can hear the NY Times journalists and other quack economists shouting already, yes but the weather in Asia is different!, in Japan surely central planners ban profits!, it is thanks to the fact that government controls and limits doctor fees! it is the health ministry which fix prices! Complete and total non sense. Japan’s healthcare is privatized. End of the story.

And not privatized like the complete and appalling mess they have in the US, where tremendous and outrageous government regulations unfairly help keep poor patients completely captive of rich doctors (and/or of too big to ever fail insurance companies).

Here is the way it works in Japan, 30% of the medical fees (for people my age, for older people it is kept at 20%) will come out of the patient’s pocket on the day of the visit (think of it as a co-payment for the visit), while 70% of the fees are billed to the patient through taxes (i.e. the doctor bills 70% to the government who then bills 70% – plus the government’s commission of course – to the patient back through taxes). Said differently “30% is private and 70% is public”. The co-payment is so cheap (10$? 20$?) that nobody even notices. Sure, with 70% of the activity managed by the central planning government, you still get a lot of irregularities here and there in the system, you will hear stories about paramedics being in slightly insufficient number one day in some remote hospital, or you may hear about how high and useless government regulations for OBGYN making pregnancy a somewhat costly experience. Every country has its challenge and its bureaucracy.

But in reality the whole system in Japan works surprisingly well and the patients are in full control of the industry. All doctors in all hospitals are exactly where they should be. 30% of co-payment is all it takes. In fact, even 5% of co-payment, perhaps 1% of co-payment would suffice plenty enough to give the right economical “signal”, and feed with a correct “indicator” as to where to assign which doctor when and to what department. Allocation of capital is optimized and as a result not a single building or department or nurse, in fact not a single seat is where it is without a real purpose. All resources (human, tools, etc) are all precisely where they need to be, hospitals seldom overbuy big machinery for nothing, in fact if anything hospitals seem to all manage to do very well with all of the very finest and latest equipment in all departments. And all of them somewhat manage to turn in profits. And listen to this, Japan has a system that costs half as much and often achieves better medical outcomes than its American counterpart, even though Japanese patients visit doctors on average 15 times a year (versus 3 for Americans). Japanese have nearly twice as many scans as Americans do. Japanese insurers are also a lot more accommodating than their American counterparts, in fact I still have to see or hear them deny a claim – they all have to be quite careful with their reputation.

In Japan the healthcare fees are so cheap – I could most surely pay for my friend’s fees if I wanted to. In fact, I probably could even pay for healthcare for the homeless, if I made an effort.

Also, for those who still doubt, by the numbers:

  • Japan life expectancy: 83 years
  • Japan total health spending as a percentage of GDP: 8%

Instead of forcing patients to pay through taxes, patients have the right to (at least up to 30%) freely choose their doctors and pick their favourite hospital.

This in return:

  • Forces Japanese doctors to keep prices very low (on all services and on all drugs as well)
  • Invites all Japanese people to pay some attention to what they eat (or how much they walk every day, etc)
  • Creates a strong incentive for all in the country to be somewhat careful with money, and not burn all of life’s early savings immediately on a useless noisy SUV or on endless greasy burgers.

Also, the math is amazing, for even if Japan has one of the biggest aging population around the world, it holds the lowest per capita health care costs among the advanced nations of the world, and its population is thought by many to be the healthiest.


Let’s talk about Canada for a second. I hear (correct me if I’m wrong) it takes today something like 2 to 4 months just to get to see a basic doctor in Canada – unless of course, “you know someone who knows someone”. If you know what I mean. You do not. Let me rephrase this last bit then. Unless you are “rich”, and you have “rich” friends, who are friends enough with “rich doctors” to ask for favors. Two… months for poor people with no “personal” connections to see a doctor?!? Waiting even just “one single day” to get to see a doctor in any civilized country makes no sense to start with.

What is this. The Soviet Union? The Third World?

People need… months? Not weeks. Months? And as in, like… “many & several” months? Rumor also has it that when you walk into a hospital in Canada it sometimes feels as if you have to wait several minutes before someone will start greeting you, or you may have to wait for a bit inside the waiting room until you get to first chat with the doctor, and that it sometimes feels as if not a single paper registration procedure has been optimized for decades. People should be on their knees begging for an improvement.

Central planned government managed socialized tax based national healthcare medicine services (call it what you will) maybe worked once or twice in some movie somewhere in the past, but in real life it just cannot function, mathematically it is impossible, it did not work in the USSR in 1950, it is not working in Canada today (at some point people will need to start facing it), and it would not work if you were to try it in Africa in the year 3,050.

The Fatal Conceit of Single Payer is on life support – time to pull the plug.

  • Marc Abela

    Hello Rodolfo,
    Thank you for your answer. The system is never "paid by the government". The government you call "Canada" of "the city of Montreal" is nothing but a company which takes its revenues through the taxes you pay when you drink a beer, when you smoke a cigarette, in the form of taxes. So when you write "it is paid by the government" – the government does not give people things, it merely "gives back" things to people. And so, the patient always pays for 100% of all his medical treatment fees. Two ways for him to pay – one through paying at the door in the hospital, and one through paying when they pay taxes (minus the commission the government will take for their salary).
    If you say "let's have the patient pay 100% of his medical fees through his taxes" – then it's a matter of time for the system to loose its structure. However if you say let's have the patient pay 100% of his medical bill when he goes to the hospital (i.e. a fully private option) then suddenly stuff starts working again.
    So yeah, agreed, human being, first, and as such, the only way to make things work so that the "human being" is treated properly, is to allow patients to pay for their medical fees when they go to the hospital, not 24/7 when the patient pays taxes.

  • rodolfo marcelo kohn

    I think, after reading all the letters and the article, that the commentators forget one thing ,and that is that the important part of all the "plans" and theories forget:the patient!
    who cares if the system is private or payed by the government.The important thing is that it works! and that the patient is treated quick, correctly and as a human being .If you want to defend capitalism or socialism , do it but NOT on health and education issues…the important thing is always the human being, and I say that if there is a system that works dont destroy it and COPY it.

  • Marc Abela

    Dear Abdel,
    Sorry to hear your story with your friend. I hope she's better now. The system is already indeed somewhat broken or at least clearly light years away from being optimized (in most countries that is) – we can only strive at making sure we leave a better system behind us for kids and for generations to come. Centralizing, taxing, coercion – is a bit like dust, if you ask me. You have to clean – regularly. And even if you do – it'll come back. And if the guy behind you didn't clean much, then you have twice as much cleaning to do…
    Anyway, keep the comments coming. And keep the fight going.
    All the best,

  • Marc Abela

    Hello Rod,
    Very well said – and accurate too.
    Yes, if the government still pays for 70% – it's everything "BUT" privatized. Having said that, I see so many articles arguing "it works in Japan <because> of central planning", I had to raise a hand and bring back sanity to the debate. It works well "because" it is privatized (from 20% up to 30% in the early 2000 decade) – and not the other way around.
    Regarding fighting armies and stuff – sorry but I will probably have to disagree. The sickness of healthcare in Canada has very little to do with Canada bombing third world countries. Both are big serious social problems – but there is no real "causality" between both problem (they simply coexist in time).
    > If there healthcare were truly private, it would be even better and cheaper.
    You wrote a much better conclusion than I did (thanks, well done indeed).

    • Rod

      the fighting armies does not really apply to Canada, I should have written a bit more clearly, but it does apply to other rich countries.

      Canada is not as rich as Japan, therein lies the difference as far as Canada goes.

      • Marc Abela

        Hello Rod,
        Forgot to reply.
        Just to make sure, Canada (whichever matrix you use) is much (much) richer than Japan. Almost 10,000,00 km2 (of abundant natural resources) to be shared by 33 million inhabitants versus 400,000 km2 for Japan (of 75+% forested, mountainous, and unsuitable for agricultural, industrial, or residential use) to be shared by 130 million people. All of the money Japan has, Japanese people worked for it and saved accordingly. All the money Canada owes, Canadians borrowed it and spent accordingly. So we should at least (at least) be:
        (10,000,000 / 500,000) * (130,000,000 / 33,000,000) = 80
        80 times richer, assuming we simply worked "just as seriously" and saved a bit instead of simply spending it all…
        Not only that, but we (the company we call "the government of Canada") owe tons to foreigners, while the Japanese government owes mainly to its own citizens… so in fact, the ratio would even be bigger than 80.
        I know my math probably does not mean much… but still…

  • Abdel H. Bioud

    I went with a friend to the emergency room, she was bleeding somewhat badly.

    They made us wait 5 hours.

    Once the doctor came, she lost so much blood that she lost conscious.

  • Rod

    "Japan’s healthcare is privatized. End of the story." No, not the end of story if the government still pays 70%. We have private delivery in Canada too; doctors running their own practice and private clinics are private contractors as well.

    Japan is a very wealthy country that does not have a combat army fighting wars around the world, and that's why their standard of living is higher, reflected not only in their healthcare but also in other aspects of life.

    If their healthcare were truly private, it would be even better and cheaper.

  • Marc Abela

    Dear Ohhh Henry,
    Yes, agreed, well written, needless to say that doctors in Canada are all still "humans", so if someone walks in with a cancer or something terrible like a motorbike accident, they all have the immediate moral decency to make him walk first and work on him day in day out. Back in the days where I used to live in Ukraine (30+ years ago), people were extremely (extremely) generous – in amounts that probably provided for a palliative option for all the mess they were constantly bombarded with. People would always offer you lifts in their Lada, they would share half and more of their food with unknown people, etc etc.
    Regarding bankruptcy in Japan – the main thing bankrupting the country is Japan being forced/coerced into buying US treasuries. It's the main problem in Japan. Nothing more. Since 1971 the US has been forcing Asia (through intense military presence) to buy up their treasuries – for decades in a row now. China and Japan today hold a trillion and some (if not many trillions?) in treasuries, not only that but they started buying them at 320 JPY a $ and now they only get 80 JPY back (if not less).
    I doubt Japan and Canada will find an incentive to do the right thing until the day the people wakes up. Also, most economists are so "off" in their evaluations that they are clearly not helping, average people have given up on trying to understand how the whole system works thanks to Keynesian non-sense which keeps good/moral/intelligent people away from the whole math…
    Anyway, thanks for the reply.

  • Marc Abela

    Hello Maureen,
    Thank you for taking the time to read.
    Well, I will not deny that with 70% of the system "socialized and managed through central planning", it is a bit of a stretch to call the system a "privatized system". Also, it's always the same thing, when something works say in Canada, all the charlatans in the city will argue it is "thanks to the government!", while all the working people and struggling businesses will shut up knowing it's mainly thanks to them. It's a bit like when the Soviet Union fell – everybody in town (but for Al Gore maybe) was asking for a minute of television, all the Karol Wojtyl and others saying "I did it all! it's me!". I know for a fact for living in Japan for working in the industry and for being sick once in a while thus using the industry – that it works "thanks" to the fact that the doctors can only force patients to pay 70% (i.e. only 70% is public and paid through taxes) and that the patients can opt to direct the last 30% to which hospital they choose. If Blaine Harden thinks it's thanks to "correct central planning" that the whole thing works in Japan – then it's up to you who you to choose to believe…

  • Ohhh Henry

    Unless you are “rich”, and you have “rich” friends, who are friends enough with “rich doctors” to ask for favors. Two… months for poor people with no “personal” connections to see a doctor?!?

    Of course the "rich" can always pay at for-profit clinics (such as the ones in Quebec) or they can go abroad. But you forgot to mention the importance of "political friends". It is well known that politicians move to the front of the line, especially party leaders, ministers, top bureaucrats and back-room insiders. It is less well know what kind of corrupt influence these people have on helping friends, cronies and even anonymous political supporters to jump the queues.

    Two cases come to mind. One was a good friend with a relative dying of cancer. This friend complained privately but very insistently to the office of the provincial minster of health that unless their relative was given better care, they would make very loud complaints to the press about what they considered to be incredibly crappy standards of care for the average patient. An assistant to the minister telephoned them and made a deal – we will tell the hospital to give your relative the VIP treatment – as long as you agree that you will say nothing to the press.

    Another case I heard of from someone who called in to a local radio show. They said that on the news coverage of a certain provincial election several years ago, a reporter asked a campaign worker who was at the premier's celebration party why they had come out to volunteer for the premier. "Because I was on a long waiting list for an MRI. I phoned the premier's constituency office to complain and he got me an MRI right away, so when the election was called I came out to work for him out of gratitude."

    Call these anything you like, but I say the first one was extortion and the second one was a kickback. This is the inevitable situation whenever the patient is only paying zero percent, or 30 percent, or even 90 percent of the costs with the government paying the rest. Free markets work because people's greed is severely curtailed by the ability of the public to reject and shun them for bad business practices. Unfree markets fail because the existence of the army, police and a massive propaganda system mean that there are essentially no checks on the greed of the people who control the markets.

    I don't think that Japan taxpayers "only" paying 70 percent of health care costs is a good situation, even if the 30 percent patient cost does send market signals that are missing in a single-payer system like Canada's. Japan may only be paying 8 percent of GDP on health care, but it's obvious that the sum of all Japanese government spending is driving the country into bankruptcy. Nobody can borrow money forever, and sooner or later the Japanese debt pyramid will come crashing down, with devastating short-term results for the poorest people in the country – elderly, students, sick and unemployed. Where will these people get their health care when the government who previously provided 70 percent of costs is bankrupt, and their own personal savings have been wiped out through inflation?

    The people who control the Japanese government happen to have not focused very strongly on health care as the specific means to control and plunder the people, but have chosen other "priorities" such as massive infrastructure spending and gigantic bailouts and support of banks and publicly traded corporations. Those who control Canada's government have taken their queue from the radical leftwing nutbar Tommy Douglas – they chose 100 percent taxpayer-provided health care as the most amenable road to achieving personal wealth and power. Both governments are running the same scam on exactly the same principles, with only slight, superficial variations in their priorities and rhetoric. No social democracy has a balanced budget no matter how "enlightened" their brand of socialism. None will be able to continue borrowing and inflating forever and none of it will end well for the average voter and taxpayer.

  • Maureen

    You can read more about Japan's health care system here:

  • Maureen

    My new colleague here at the Wyoming Liberty Group, Ben Barr, made a couple of enlightening points regarding this article:

    "Yikes, I would never have thought the Von Mises Institute would be celebrating the socialized medicine of Japan.

    As I recall, Japan sets heavy wage controls on its doctors, essentially dictating what they may earn in a year. As described by the Washington Post, Japan realizes its cost savings "by banning insurance company profits, limiting doctor fees and accepting shortcomings in care that many well-insured Americans would find intolerable." The Independence Institute reports, "In Japan, government-subsidized physicians commonly have to see more than forty patients a day in order to realize sufficient revenues. Patients covered under government-sponsored health plans often use the private sector for faster, better-quality aid. If they can’t break into the shortage of private health care services, infirm Japanese have been known to pay steep bribes to circumvent the rationed health care system in order to get direct access to health care providers being reimbursed by the government through its global budgeting policies on what it will spend for the citizenry’s health care."

    • Redmond

      Thanks Maureen – Make sure he knows it is Mises Canada and not Mises USA!

      Anyways it is good to get people talking and pointing out the issues.

      But I wonder what he thinks of the 50% of the health care spending in the USA that is done by the Government!

      Hardly a free market system…

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Marc Abela is a Canadian entrepreneur, currently living in Japan. A graduate in electrical engineering with executive education from Tokyo University, Harvard, and Insead, he runs his own import-export company based in Tokyo. Marc has worked both for public and private structures, from small ventures to NASDAQ quoted companies, and was fortunate enough to experience and consult for different industries, from software to medical equipment, through space science and telecommunications.

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