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Updated: Jan 6, 2022


Japan has a population of 126 million, nearly twice the size of the UK population. Japan is the third-largest economy. The country has 47 prefectures and is one of the most urbanized countries in the world. The policy decisions are highly centralized and are made at the federal level.

Japan spends nearly 11% of GDP on healthcare. As of 2015, Japan’s 85% of health care spending is from public sources, which is more than the average of OECD countries (OCED average spending from public sources is 76%).

The life expectancy in Japan is nearly 85 years. The population in Japan is decreasing because of the aging population and low fertility rate.


Japan has a statutory health insurance system, providing universal coverage to the whole population. Funds are accumulated from the taxes and individuals. Japan’s health insurance system covers the Japanese people, foreigners, and expatriates. Patients usually prefer to have supplementary health insurance in addition to the statutory health insurance system.


In Japan, statutory health insurance covers 98.3% of the population and 1.7% is covered by the public social assistance program. The coverage includes hospital care, primary care, specialty care, and mental health. In Japan, health insurance covers nearly 5,000 medical procedures, dental care, and drugs.

The statutory health insurance is of two types:

1. Employers Health Insurance System: Employment-based plan which covered 59% of the population. It is of four types:

  • JHIA: For small to medium companies

  • SMHI: For large companies

  • MAS: Covers public servants

  • Seaman’s insurance: Covers seaman

2. National Health Insurance: Resident bases plans which cover people who are not insured and elderly population of age more than 74 years

Co-payments are paid at the time of every visit. The health insurance covers 70-90% of the cost; the co-payment pays the remaining amount. The employers pay 10% of salary for the insurance system, and the maximum cap for insurance in Tokyo is USD 1,370. Out of pocket spending accounted for 14% in 2015.


Central government

The federal government is involved in establishing and regulating the healthcare aspects, framing rules and regulations for insurers and providers—the Central government, along with the regional bodies, is responsible for delivering the healthcare services.

The Central government is responsible for setting the nationally uniform schedule for insurance reimbursement.


Prefectures are responsible for implementing the rules laid by the federal government. They are involved in maintaining regional healthcare delivery networks.


In Japan, municipalities are involved in health promotion activities, and they support prefectures in implementing residence-based health insurance plans.

Municipalities are involved in collecting the premiums.


Ministry of Health, Labor, and Welfare

  • The central body is the healthcare system, which is involved in drafting the policies

  • The MHLW is responsible for regulating the insurers.

  • The MHLW is involved in determining the prices of health care, medical devices, and pharmaceuticals

Social Security Council

It is involved in developing strategies to set quality, safety, and cost control.

Central Social Insurance Medical Council

  • It is involved in establishing the benefits package and fee schedule

  • It is also involved in making the list of pharmaceuticals that are covered by the Statutory health insurance

Pharmaceutical and Medical Devices Agency

It is involved in reviewing the quality, safety, efficacy of pharmaceuticals, and medical devices. The pharmaceutical companies submit new drug applications to PMDA, Pharmaceutical, and Food Affairs Council does the final review. Minister of Health, Labor, and Welfare is involved in making the final decision.


Insurances fund Japan healthcare system. Central government and municipalities are involved in collecting the taxes.

Insurance premiums contribute about 48.7% for healthcare expenses, 38.8% from public subsidies, and 11.7% from co-payments. The proportion of out of pocket payments reduced from 14.4% in 2005 to 11.7% in 2014. In 2017, Japan spent $278 billion on social security, which includes healthcare.


Primary care:

Clinics mostly owned by private physicians, provide primary care. A small portion of primary care centers is owned by the local governments, public agencies, and not-for-profit organizations.

Primary care centers consist of doctors, nurses, and clerks.

Prescription filled by pharmacists, 73% were filled by pharmacists in 2017.

In Japan, payments for primary care involved complex fee-for-schedule. Incentives are provided for caring for patients suffering from chronic diseases.

The government sets prices of primary care, specialized care, consultations, examinations, lab tests.

Out-patient services:

Hospitals and clinics usually provide Out-patient services. Salaries are paid to specialists working in hospitals. Physicians working in public hospitals are free to practice in private organizations after taking the prior approval from the public hospitals. SHIS sets the fees for private hospitals.


In Japan, the majority (85%) of the hospitals are privately owned.

Services for acute conditions: Hospitals taking care of acute diseases can charge as per fee-for-schedule or diagnosis procedure combination (DPC) approach. DPC approach is most followed by hospitals treating acute conditions.

Services for chronic conditions: Long-term care insurance (LTCI) covers patients age 65 years and older, patients aged between 40 to 64 years with severe disabilities.

End-of-life care: SHIS and LTCI are involved in providing end-of-life care.


The MHLW is involved in determining the prices of health care, medical devices, and pharmaceuticals. The prices are revised once two years.

The prices are set based on the market surveys; prices are set based on resource-based. HTA pilot program considering cost-effectiveness methods were started in 2016.


MHLW decides on the coverage and prices of the drug. MHLW consults Central Social Insurance Medical Council (Chu-I-Kyo) to determine drug prices. The prices are revised every two years.

In Japan, the manufacturer has to submit an application requesting the listing in the NHI price list. Further Drug pricing organization holds a meeting, and if no problems arise, a pricing draft will be submitted to Chu-I-Kyo. Following this, the drug enters in NHI drug price list.

The prices of drugs are determined using two methods:

  • Similar drug method: In a similar drug method, price is determined considering the per day cost of the similar drug and the new drug

  • Cost calculation method: This is usually considered for those drugs for which there are no comparisons

  • New cost = total cost X additional rate x additional factor

  • The additional factor depends on the transparency index

  • > 80% transparency index: 1.0

  • 50-80% transparency index: 0.6

  • <50% transparency index: 0.2


The health and welfare-related information is available on the MHLW website, and the government encourages to propose ideas and recommendations on the policies.


1. WHO’s Japan’s healthcare system Available from

2. Commonwealth Fund’s Japan Healthcare system Available from


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