Ronald Kessler’s insurance “free choice” hits the Japan Times

The Japan Times’ “Zeit Gist” for this week features Ronald Kessler, the chairman of the Free Choice Foundation, a group that seems to be dedicated to allowing private health insurers in Japan to do whatever they want. No, no. In fairness, let’s discuss what Kessler talked about.

Ronald Kessler makes some good points along the way about the fact that many foreigners in Japan are excluded from the shakai hoken system — even if Japanese employed in the same company are included! That’s just plain wrong. So anyone speaking out about that I have to give a nod in agreement.

Especially nowadays with the totalization treaties, this sort of discrimination should really be called to the attention of the embassies and other people with enough power to do something about it.

But on the general issue of “preferring” some kind of private health coverage, Kessler makes just three main points:

The reasons why foreigners (expatriates) in Japan might not want to be enrolled, as suggested by Kessler, are:

Communication – Ronald Kessler says that foreigners do not communicate well with Japanese doctors.

Level of service– Ronald says that the level of service in the Japanese health system is not a favorite of foreigners residing in Japan.

Repatriation of remains – Ronald also says that the Japanese-endorsed health insurances will not pay, basically, to fly a dead body home.

Apparently, there are medical professionals in Japan who are practicing outside of the national health system. I take it that overwhelmingly, these doctors and support staff cater to the non-Japanese community. As I’m not familiar with any hospital that is outside of the system, I have to assume that we are talking about medical professionals in clinics, like the highly regarded one in Ebisu.

I know that there are doctors all over Tokyo who speak English. But if for some reason you wanted to deal with a doctor from back in the home country, then you might be at a loss.

One possibility is simply to bring these doctors into the national program. That is, for whatever reason they are refusing the national health insurance, write a rule that permits them to accept it where the bill payer is an expatriate.

For the flip-side of the language barrier, these doctors might not be able to communicate well with Japanese patients. But that doesn’t mean there isn’t some remedy possible that everyone who practices in Japan can be under the one system.

On level of service, I’m a little lost. When I got very sick around Christmas Day (104 fever), I went to a hospital in Shibuya Ward. Although the building wasn’t elegant, the service itself was very good. In fact, the medical staff said I had a choice to check in overnight or go home (provided I went right home). Insurance would have covered the overnight stay, and the indications I get are that in Japan this price is reasonable.

All in all, the hospital care on my visit there was top-notch.
So opting out of this system, what do people here get? Where is the mysterious Oshare Byouin that Japanese can’t get into?

I think Ronald Kessler’s “level of service” is a canard. The service you get in a hospital in Japan is as good as what one might expect. You can always argue the exceptional situations, but they exist in every country.

As far as repatriation of remains, to me this seemed to have been added primarily to beef up the overall argument for letting people buy a private policy and sliding on enrollment in a recognized health insurance. No country that I know of covers sending one’s body back to the home country. And as Ron Kessler points out, embassies will handle this matter but there likely is a charge.

What disappoints me is that Kessler is suggesting that you need health insurance for those kinds of situations, when in fact what you would need is burial, or even better, life insurance. Once you are gone, you aren’t here obviously. So if you have a term life policy, the policy pays out—and at a cost of a lot less than if it’s buried in an “expatriate health insurance” policy.

You might buy $1,000 of coverage at a rate of $1 per year, depending on your age. So how much do you think it costs to cover something like that? Twenty-five dollars a year maybe.

This is an issue for why you wouldn’t want Japanese health insurance? Sorry. That last one in my view is just a ruse.

So what I’m left with is that Ronald Kessler feels that the private insurers–purportedly gap insurers—should be considered “as good as” regular Japanese health insurance because some people want to go “out of system” (as we say in American Health Maintenance Organization lingo) for their care.

OK, so what is wrong with that? Nothing really, except:

If people want to pool their money to insure themselves against charges for health care by practitioners here who aren’t in the National Health Insurance, why can’t this just be done by a government program?

It seems to me that if the gap insurers are carefully avoiding covering any services that would otherwise be covered by the regular Japanese plans, then the money they are collecting from expat insureds would cover this “alternative choice” treatment.

However, if what’s really going is that the gap insurers are paying the bills for services provided in the Japanese health insurance system, then they are just piggy-backing on the built-in subsidies the Japanese are providing to (real) plan participants.

For example, if a visit to the hospital for a stomach virus and 104 fever runs about 6800 yen (at 30% coverage), and would otherwise be charged 26,666 yen—but actually cost 60,000 to provide—then the gap insurer rides on the internal system subsidy. (I am assuming that certain fixed costs like the hospital itself are not included in the charge for services, but rather are paid through the premium payments charged to resident Japanese and resident non-Japanese).

It really isn’t all that clear how the price is being determined. But for sure, the overall Japanese insurance system, with its insurance premiums based on a progressive sliding-scale by income, provides various subsidies to one group or another.

So when a gap insurer comes in and says they’ll gladly cover the bill, the question is whether the bill is the real cost of service. Or a subsidized cost.

I highly doubt that the gap insurers are just charging $500 a year for the foreigner clinics. They are covering people who use the national health system hospitals and accept the 100% bill.

Although Ronald Kessler paints the picture that those who carry “private insurance” are rejecting the Japanese medical system, in fact how I think these companies make their money is that they agree to pay the charges from the Japanese hospitals and doctors at “100%”. Because they are picking up the built-in subsidies, they walk away with a profit.

Then, if for some reason an expat insured really needs serious medical care here (beyond the 2,000,000 yen gap policy), then the expat just runs down to the Ward office and joins the regular Japanese health insurance. So the risk of catastrophic coverage is being picked up by the rest of us.

I think the Viva Vidas, Interglobals, and Global Healths have that factored in, too. They limit their losses to about $20,000. If it turned out the charges out of the hospital would run to $80,000, they won’t cover, and additionally they know that their insured can just go run and join the national system.

My own suspicion is that most charges in the Japanese system don’t exceed $20,000, and so this is probably a rare event. But the kind that quickly wipe out profit.

It will be interesting to hear from Ronald Kessler how the gap insurers are able to provide the kind of coverage that they do at such a reasonable cost. For an “IT consultant to the health care industry”, he didn’t say very much about that.