Ryotaro Kato

School of Law: MD, Law | JD

Scholar:

Cohort 2006

Alumnus:

Graduated 2007

Partner University:

University of Tokyo

Biography

Career:  Vice President | Itabashi Chuo Medical Center | Tokyo, Japan


Scholar Highlights

Universal Health Insurance and Lifetime Employment in Japan

According to a World Health Organization report in 2000, Japan’s health care system ranked in the top in the world in terms of overall goal attainment. In fact, Japanese people live the longest in the world at one of the lowest costs among the developed countries. Many think that the reason is the excellent access to health care provided by Japan’s universal health insurance.

In Japan, people can visit any hospital anywhere in the country (and often even outside the country) at any time, and be billed the same amount. All they have to do is to present their insurance card to the provider. Everyone in Japan has an insurance card from an employer or if one is unemployed, self-employed, or a pensioner from a municipality.

Both employers and municipalities are legally required to provide health insurance. Of course, employees must chip in toward insurance premiums, which are usually automatically deducted from their salaries. Residents are also required to make monthly payments to their municipalities. Furthermore, they are all required to pay a 30% co-payment at the hospital, an amount that can be substantial despite catastrophic caps based on age and income.

Many Americans wonder why people in Japan accept universal health insurance that forces them to pay for the health care of others, especially when the costs can be substantial. One factor that may facilitate the Japanese system is the culture of life-time employment prevalent in Japanese society.

Traditionally, Japanese employees do not change jobs. At least 40% of the employees will stay at their companies until mandatory retirement at age 65, and more than 50% will work for the same company for more than 25 years. This is true regardless of the size of the employer, though numbers tend to be higher for government employees.

A high rate of lifetime employment is important because it creates a unique work environment where one’s company becomes almost like a family.

In fact, it is not uncommon for Japanese employees to eat dinner at work and to go out for drinks afterwards to strengthen bonding among colleagues, and this is believed to facilitate their work.

Some view life-time employment as a remnant of Japan’s feudal system that dates back to 12th century and say the emphasis on loyalty is carried on by today’s companies. Others explain it in terms of economic incentives. For employers, it makes sense to keep the same employees to minimize training costs, and employees prefer job stability. Whatever the reason, the Japanese workplace is a close-knit environment, and the existence of strong camaraderie makes it very difficult for employers not to offer health insurance.

During the early 1990s, however, when the economy of Japan plummeted and the ability of Japanese companies to compete internationally was called into question, many criticized the culture of lifetime employment. There seemed to be less economical sense in paying high salaries for older employees with mediocre performance. Yet, many companies could not fire their long-time employees, choosing instead to reduce new hiring and to rely on part-timers. This has resulted in large segment of young college graduates working on an ad hoc basis as part-time employees which pays them at least as much as other full-time jobs. The trend continued until the early 2000s as many young graduates chose not to work full-time. Furthermore, many men had confided in the past that they preferred life-time employment because the stability made it easier for them to find wives. This has also changed as women become more independent with their improved status in Japanese society.

Today, there is substantial sentiment in Japan for deregulating the health care market even at the risk of a collapse of universal health insurance. There are myriad reasons for this, and the evolution of employment culture may be one. The demise of life-long camaraderie makes it difficult for the younger generation to see why they should pay for health care of older generations, especially in light of soaring medical costs. Yet the vast majority of the population continues to support universal health insurance, and a recent poll showed that nearly 90% of the population agreed to life-time employment as a good culture, up from 76.1% in 2001. It will be interesting to follow the evolution of employment culture as it further affects the universal health insurance system in Japan.

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