Competing interests converge on health care price-setting panel


Staff Writer

On Feb. 10, as hundreds of people in business attire watched from the gallery, a panel of experts under the Health, Labor and Welfare Ministry adopted a long list of proposals to revise the fees that can be charged by the nation’s hospitals and pharmacies for medical procedures and prescriptions under the public health insurance scheme.

While little known to the public, the Chuo Shakai Hoken Iryo Kyogi Kai (Central Social Insurance Medical Council), commonly abbreviated as Chuikyo, has long wielded a huge influence on charting the course of health care policy in Japan.

Under law, all residents in Japan must join the public health insurance system and pay monthly premiums in return for access to government-approved drugs and services for no more than 30 percent of the cost. With Japan’s medical expenditures topping ¥40 trillion a year, the smallest change in the fee of one procedure can lead to a difference of tens of billions of yen in the nation’s medical bills, and its financial impact on health care providers is huge. The panel’s meetings, which are open to the public, are thus packed with people representing various interest groups.

For the latest fee revision, which will take effect on April 1, Chuikyo members had months of heated, often emotionally charged debate over which medical procedures merit insurance coverage, and at what cost.

What are Chuikyo’s responsibilities?

Chuikyo, a panel of experts appointed by the health minister, is responsible for recommending a detailed price list of procedures and prescriptions that can be charged by hospitals and pharmacies. The health ministry then adopts the fee changes as recommended.

The panel is not responsible for deciding how much the nation spends on health care in total. That is determined by the government. But Chuikyo tweaks the fee table to make sure the total cost is kept in check.

For fiscal 2016, the government decided in December to increase total fees by 1.03 percent from 2015. Of the ¥40 trillion Japan spends on health care per year, roughly 70 percent is for medical care, 20 percent for prescription drugs and 10 percent for dentistry.

The fees are revised every two years, and Chuikyo members hold intense discussions over several months to accommodate the varying interests of the parties concerned, particularly doctors’ associations and insurance societies.

Who serves on the panel?

Under the Social Insurance Medical Council Law, the health minister must appoint 20 members, including seven from the “payer” side. They include officials from health insurance societies, a representative from business lobby Keidanren and the head of a municipal government.

The law also says seven members must come from the “supplier” side. Currently, members include three executives of the 167,000-member doctor group Japan Medical Association and another from the 100,000-member pharmacist group Japan Pharmaceutical Association. JMA has long had strong links with the Liberal Democratic Party, donating funds and supporting LDP candidates in elections.

The other six people on the 20-member panel are “members representing public interest” and are usually scholars specializing in public administration. The current panel chairman, Kuniaki Tanabe, a Chuikyo member since April 2014, is a public policy expert at the University of Tokyo.

While faces have changed over the years, the predominance of industry group representation at Chuikyo and its role as a price regulator has changed little since its launch in 1950.

How do the panel’s discussions take shape?

In most sessions, health ministry officials put draft proposals for fee changes on the table.

Members then exchange their views and seek to find a middle ground. The suppliers tend to call for more spending and more insurance coverage for patients, though their positions tend to be self-serving. The payers, especially health insurance societies, generally argue for fee cuts amid frustration with having to increase members’ insurance premiums in recent years as the population ages and medical costs soar.

The insurance societies mostly comprise workers representing individual companies or industry groups, and are particularly keen to curb the mushrooming costs to care for retirees. They tend to argue against what they see as excessive and wasteful spending by the government.

What issues were discussed this time?

Among the revisions included in a dictionary-thick list are the introduction of a mandatory ¥5,000 surcharge for people visiting large hospitals for the first time without referrals from their local doctor.

The surcharge, exempt for emergency visits, is meant to steer people away from rushing to large hospitals for simple complaints such as a cold. Another is limits on the number of medical heating and cooling pads orthopedic specialists can prescribe to 70 sheets per visit.

One of the most contentious revisions was a proposal to help younger people quit smoking.

The health ministry presented the idea of extending treatment to people aged under 35 as among measures to prevent cancer, saying that in the long run expanded insurance coverage would help reduce the cancer rate and save the nation nearly ¥13 billion in medical costs a year.

JMA members endorsed the plan, suggesting that underage smokers should also be included.

But Shuji Shirakawa, deputy chairman of the National Federation of Health Insurance Societies, better known as Kenporen, balked at the idea. Kenporen is the federation of 1,400 workers’ health insurance societies with 30 million members, a quarter of the entire population of Japan. Shirakawa maintained at a session in October that people smoked at their own risk, so insurance coverage should be limited.

“It is the policy of our country to insure sick people” and not to prevent people from getting sick, he said. “We don’t allow doctors to claim fees for helping people quit drinking, but allow them to do so for treating people suffering from alcohol addiction.”

Other members also argued that instead of subsidizing nicotine addiction treatment, the government should focus on educating the young on the health risks of smoking. Others pointed to the low success rate of the smoking cessation treatment, with only about a third of the 3,471 people who underwent it in 2009 completing the five sessions.

In the end, however, JMA’s argument won over the panel, and the treatment for younger smokers was included in the fee revisions.

Will the Trans-Pacific Partnership agreement affect the panel’s ability to set prices in the future?

Prime Minister Shinzo Abe has repeatedly denied that the nation’s universal health care system will be threatened in any way by the free trade deal.

“The annex (of the agreement) calls for transparency in the procedures to decide drug prices, but it falls within the current framework in Japan,” Abe told the Lower House Budget Committee on Feb. 15. But not everyone is convinced.

Norihiro Kimura, an associate professor of health care policy at Takasaki University of Health and Welfare in Gunma Prefecture, said U.S. pharmaceutical companies may still be able to sue Japan in connection with the TPP.

“I think it’s possible that in the future the pharmaceutical companies will invoke the ISD (investor-state dispute settlement system) of the agreement to make Japan raise drug prices,” Kimura said.