National Health Insurance vs Private Health Insurance

In the Piqniq FORUMS section there was a recent discussion about the merits of Japanese National Health Insurance. The discussion can be found at: http://www.piqniq.jp/node/3370

Since proper health care is SO important to ensuring the quality of our lives (no matter where you live) I thought this would make a good topic to discuss in our blog.

National Health Insurance (NHI) in Japan is designed to provide affordable health care to everyone who intends to remain a resident in Japan for at least a year. And it is fair to say that they have been fairly successful in providing a decent standard of care. While you will no doubt find someone willing to share a horrific Japan hospital story with you; personal anecdotes ignore the fact that in the year 2000 the World Health Organization ranked Japan as having the tenth best health care system in the world.

If you are planning to stay in Japan for only a year, then NHI is quite affordable since your costs are based on your income from the previous year. And as a new arrival in Japan there is no existing record of earnings so your charges are initially at the lowest possible rate.

Many of the problems that foreigners experience with NHI begin in the second year. After you have declared your income taxes for the first time, your NHI bills will raise by several multiples of what you were previously paying. The exact amount is determined by your total income from the previous tax year. In this regard, a private health insurance solution is generally more cost effective. National Health Insurance is designed to protect people living throughout all of Japan. This means that the people living on the smallest island in the most remote part of the country are required by law to have access to the same quality of health care you would find in large urban areas. Providing a high standard of care over a wide area is of course very costly.

Another issue for people considering NHI is that despite paying high monthly premiums, the plan only covers 70% of your health care costs. A private health care solution, while costing less, will generally cover 100% of expenses, depending on your chosen deductible.

Choosing between National Health Insurance and a private health insurance option is NOT a decision to take lightly. These days most ward offices are linking the NHI directly with the National Pension scheme. When you join NHI you are automatically enrolled in the National Pension. While NHI has some features that foreign residents in Japan may find attractive, there are few positive things that can be said about the National Pension scheme. Virtually all foreign residents are better off with a private pension solution than joining the scandal-ridden National solution. And once you are collectively enrolled into the national health and pension plans, it is VERY difficult to be removed, short of leaving Japan.

If you are not certain about whether to begin with NHI, or to try a private plan then it is usually better to start with the private option. You can always leave the private plan should you choose. That option is not readily available to you with National Health Insurance.

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