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Professor Naoki Ikegami delivered the Malcolm T. MacEachern Memorial Lecture at Kellogg on May 9. He discussed how Japan is responding to its aging population.

A second opinion on the healthcare landscape

U.S. healthcare policies can benefit from international perspectives, say experts at annual Kellogg symposium and MacEachern lecture

By Adrienne Murrill

5/15/2007 -

 Professor Naoki Ikegami asks his students at the Tokyo-based Keio University School of Medicine if they enjoy talking to the elderly. If these future medical professionals do not, he said, then they are in the wrong industry.

Ikegami delivered the 30th Malcolm T. MacEachern Memorial Lecture May 9 as part of the Kellogg School’s 3rd International Healthcare Symposium, held at the James L. Allen Center. Titled, “Population and Ageing: Japanese response and lessons for the U.S.,” Ikegami’s presentation was the latest in the series that honors Dr. Malcolm T. MacEachern, who founded the school’s Health Industry Management Program in 1943 and pioneered international patient quality standards and modern hospital management.

This year’s lecture provided five insights into how Japan is handling the world’s largest and fastest-growing population of elderly — and how those methods could benefit America’s aging citizens.

Long-term care is one of Ikegami’s specialties, said Kellogg Professor Joel Shalowitz, and Japan is on the vanguard of these issues. “Japan has an ancient history of revering the elderly, and I feel confident that Japan’s approach will be thoughtful and respectful,” said Dr. Shalowitz, professor of health industry management and director of the Kellogg Health Industry Management Program.

The Japanese system aims to contain healthcare costs by setting fee and drug prices and the conditions for which services may be billed, said Ikegami. Unlike most markets, healthcare expenditures have declined over time and are expected to continue to do so. Another important element of the Japanese system is to provide universal coverage and equal benefits. Incremental adjustments have been made to compensate for differences in income and health status among plans, he said. For example, the government subsidizes plans based on their number of clients who are age 70 and older, or from lower income brackets.

Ikegami also pointed out that benefits are decided upon independently of age. “As an individual, your values and health status do not change on the date of your 65th or 75th birthday,” he explained. For Japan to offer this coverage, the system uniquely emphasizes prevention. Insurance plans are required to screen those they enroll, providing mandatory counseling on how to exercise, diet and quit smoking. This plays a key role in the country’s long-term care insurance, which is financed by taxes and premiums and provided by a combination of low-wage staff, such as visiting nurses and social services.

Following the memorial lecture, Bruno Palier, a political scientist from Sciences Po in Paris and a visiting scholar at Northwestern University, discussed European healthcare systems’ coverage and cost. “The most universal and egalitarian healthcare systems are also the cheapest,” he said. Not only are they cheaper, but his presentation showed that they are more controllable as well.

After a brief history of how universal coverage arose in Europe, Palier presented differences in the two types of systems that occur in Europe: the national health system, which is seen in Sweden and Great Britain, and the health insurance system, which is found in countries such as France.

There are four dimensions to any healthcare system that affect its functioning, Palier explained: access (who is covered and what a client can do in the system), services (what is provided to the client), financing (how does the system receive money and how do funds reach the providers), and organization and regulation (who decides how the system works). The measure of a system’s performance, however, is rated on equality, cost control, health of the population and satisfaction of the system’s users, including doctors and patients.

There is, however a dilemma, said Pailier: “You cannot achieve at the same time the four goals of healthcare,” which are equality and freedom of choice, and quality versus financial viability. “The price of freedom is social inequality.”

The afternoon’s final presentation was by Richard Clarke, the CEO of the Healthcare Financial Management Association, who offered his perspective on lessons the U.S. could learn from Great Britain’s NHS. One of the most important of these is that payment systems rarely align incentives well enough to achieve good, fast and cheap healthcare. Some systems, like that in the U.K., are adequate and cheap but waiting times have been a problem. In the U.S., healthcare can be quick, but customers pay a premium for that benefit.

Each lecturer had important analyses to share about what frameworks and policies have and has not worked in other countries and how the U.S. system could benefit from those experiences.

“As we approach an election year, [healthcare] is an incredibly relevant issue,” Shalowitz said. “Some people want to go all the way into public systems, some people think it ought to be kept private, some say a combination. Most countries have a combination of public and private, but we need to know what the role is, what’s worked and what hasn’t.”