Why Nationalizing Health Care Increases Market Competition


Registration at a hospital in Japan

A common misconception among Americans about single-payer health care systems or hybrid health care systems with private supplemental insurance is that when you nationalize health insurance, you will see INCREASE in market competition, not a reduction in the means that matter to consumers of health care.

Indeed, when there is nationalized health coverage, there is no “in-network” or “out-of-network” provider. Every clinic, hospital and medical center. Every emergency care provider, every emergency room. Everything is covered by insurance. You don’t have to go to any particular location or a very limited selection of locations.

You can enter any location in the country with confidence that you are covered by your insurance.

I speak from my personal experience in American health care and in a country with real nationalized health coverage: Japan.

I am a Japanese American who grew up in the United States. I started working in the United States, but my job took me to Tokyo for 3 years. As a liberal throughout my adult life, I’ve always supported single-payer or nationalized health insurance, but living in Tokyo – and my wife giving birth to our oldest child there – has really opened my eyes to some benefits of nationalized health care that I hadn’t really heard highlighted in the United States.


Japan has the longest life expectancy in the world, thanks to one of the best health and insurance systems you can find.

Japan has a hybrid system of a nationalized healthcare system that enrolls 99.7% of all Japanese nationals and foreigners who reside in Japan for more than a year, with private supplemental insurance that people can choose to purchase for additional coverage. For example, a common supplemental insurance coverage is “cancer insurance” which helps cover medical costs associated with cancer treatment – less than 20% of Japanese enroll in private insurance, finding that Kokumin Kenko-Hoken (National Health) coverage is sufficient.

The amount you pay is based on your income – for low-income people, insurance is free. insurance coverage for minors is free. For children below kindergarten age, not only is insurance free, but health care (including medicine and treatment) is free.

Japan achieves this through a combination of factors

Higher taxation: tax rates in Japan are significantly higher than in the United States. I’ve lived and worked in New York and California, where state tax rates are some of the highest in the country, but taxes in Japan are 5-10% higher than in the US in most brackets, or even more among the highest income brackets.

Negotiated price controls for medical care: This is an oft-discussed benefit of national health insurance, so I won’t dwell on it, but the Japanese insurance commission negotiates with representatives of the private and public hospital and pharmaceutical industries to set the price according to insurance rates. Since more than 99% of Japanese residents are covered by national health, this de facto sets prices for the Japanese medical market.

Most medical treatments are significantly cheaper in Japan. When I first came to Japan, due to an immigration issue, my wife was not covered by health insurance for the first 6 weeks we were there before her coverage ended. comes into force. She was 3 months pregnant, so it was important that she be examined. .

Without insurance, my wife could see a doctor for 4,000 yen, or about $30.

An incident that really marked me. The doctor noted that my wife needed a test but warned me that it would be very expensive as she was uninsured. I kept asking him, how much does the test cost, how much does the test cost. The doctor looked at me apologetically and explained that the test would cost 10,000 yen, or about $70. I literally laughed.

I can’t stress that enough. it’s CRAZY that in America getting an IV costs $300-400, having a hospital bed for 3 hours in the ER can cost you hundreds or even thousands of dollars.


But here’s a benefit of nationalized health care that I don’t think most Americans realize: It’s the end of worrying about “in-network” and “out-of-network” distinctions. In addition, it creates real competition between doctors to provide quality services to patients.

If you are part of an HMO in the United States, you are essentially limited to one provider. Even many mainstream healthcare plans will strictly limit you to certain providers, or you’ll be hit with major reduced out-of-network coverage.

If you’re traveling out of state and have an accident or illness, good luck paying that.

None of that is a problem in a place like Japan.

Every health care provider is covered by your insurance. You have complete freedom to go to any clinic or hospital. If you’re traveling domestically, you know your insurance is good wherever you go. Travel 800 miles from Tokyo to Kyushu, if your little one has a fever and you want them checked out by a doctor, you can go to any clinic you want with confidence, not just your health insurance is good there, but all treatment is… free.

Plus, doctors really need to care about how they treat their patients.

If a doctor is rude and sexist with his patients, his patients can just flip the bird and go to the clinic down the street.

What surprised me is that there are clinics in Tokyo that are open from 6 p.m. to 2 a.m., or on weekends. If you need a checkup, you can easily find a clinic that will drive you home after work or schedule you for a weekend away.

Indeed, clinics want your business and they cannot simply rely on an insurer to force you to use their services. They have to… compete.

Hospitals and clinics in Japan therefore bend over backwards to try to meet the needs of their patients and provide prompt and efficient service. Large hospitals invest money in treating as many patients as quickly and as pleasantly as possible. I don’t think I’ve ever been made to wait more than 20 minutes for a date in Japan, while waiting an hour or more doesn’t seem at all uncommon in the US.

Basically, in the US, “free market” proponents focus on how insurance companies compete (in theory). While they ginoer, evidence-based insurance creates small de facto monopolies for healthcare providers that allow them to ignore the needs of their patients.

In a system where every clinic and every hospital is on a level playing field, they compete to provide better services, and the patient wins.

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