On the surface, Japan’s health care system seems robust. The country’s National Health Insurance (NHI) provides for universal access. Japan’s citizens are historically among the world’s healthiest, living longer than those of any other country. Infant mortality rates are low, and Japan scores well on public-health metrics while consistently spending less on health care than most other developed countries do.
Yet appearances can deceive. Our research indicates that Japan’s health care system, like those in many other countries, has come under severe stress and that its sustainability is in question.1 The conspicuous absence of a way to allocate medical resources—starting with doctors—makes it harder and harder for patients to get the care they need, when and where they need it. A vivid example: Japan’s emergency rooms, which every year turn away tens of thousands who need care. Furthermore, the quality of care varies markedly, and many cost-control measures implemented have actually damaged the system’s cost effectiveness.
Meanwhile, demand for care keeps rising. For a long time, demand was naturally dampened by the good health of Japan’s population—partly a result of factors outside the system’s control, such as the country’s traditionally healthy diet. Yet rates of obesity and diabetes are...