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Health care systems in East Asia

Jason Shafrin2 Comments

A recent Health Economics article by Adam Wagstaff gives a good comparison of five East Asian countries: Japan, Hong Kong, Korea, Singapore and Taiwan. While Japan (1961), Korea (1989) and Taiwan (1995) have introduced universal health insurance, Singapore and Honk Kong have not. Singapore began using medical savings account (MSAs) in 1984, but MSAs only make up a 8%-10% of health care spending. Below is a table which summarizes some of the distinctions between the health care systems in each of the five countries.

  Hong Kong Japan Korea Singapore Taiwan
Finance Taxes, OOP Soc. Ins. Soc Ins., OOP OOP Soc Ins., OOP
Who pays? Progressive Regressive Proportional   Proportional
Payments FFS FFS FFS FFS FFS
Clinic Ownership Private Private Private Private Private
Hosp. Ownership Public Private Private Public Private
           

Financing the Health Care System

From the chart above we can see that there are a variety of mechanisms to pay for medical care. Private health insurance pays for less than 10% of care in all of these countries, likely due to the universal health insurance (UHI) introduced in 3 of the countries. These three countries with UHI systems are mostly funded through a social insurance scheme. Hong Kong mainly uses money from general revenues while most citizens of Singapore pay for a large portion of their medical care from their own pockets [i.e.: out-of-pocket, (OOP on the chart)].

Because Hong Kong relies so heavily on general revenue and because taxation is progressive, Hong Kong has the most progressive health financing system. Japan has the most regressive system due to the fact that its social insurance scheme has contribution ceilings.

Payment and Ownership structure.

All five of the countries pay primary care providers on a FFS system, but some are experimenting with per diem rates for secondary and tertiary care. Japan uses a ‘diagnostic-procedure combination’ (DPC) groups for the prospective portion of its payments to hospitals. Taiwan has attempted to use a DRG system for the 50 most common diseases and Korea launched a DRG pilot program in 1997 for inpatient care.

Primary care clinics are privately owned in all countries and hospitals are privately owned in Japan, Taiwan and Korea. In Hong Kong, general revenue funds hospital operations. In Singapore, the government has created a single corporation which now controls about one quarter of Singapore’s hospitals and one half of its stock of beds.