The determinants of demand for private health insurance in Japan

Abstract

Objective:

Japan's public health insurance system has been internationally highly acclaimed, however, there is a growing concern about its sustainability. A governmental long-term strategic proposal, "The Japan Vision: Health Care 2035", suggests the establishment of new financing scheme to complement the public system. In developed countries where private insurance markets play complementary roles, regulations or assistance have been set for high risk or low income population due to equity concerns. In Japan, whether the health risk or income status determines the demand for private insurance is still unclear. This paper aims to find the determinants of the demand for private health insurance, and examine the need for regulations in order to maintain equity in the health system if the role of private insurance is to expand.

Methods:

Demand models for private insurance were estimated on the data from "Survey on Life Protection 2001-2013". Two types of insurance policy, which dominate the market, were targeted: "health insurance" and "cancer insurance". Purchase of both policies was also taken into account.

Results:

The purchase of "cancer insurance" policy only was found to be rare, so the samples were classified into three groups: those with no private insurance policy; those with "health insurance" policy only; and those with both "health insurance" and "cancer insurance" policies. The multinomial regression showed that individual's health risk (age, health concerns) and socioeconomic status (household income, occupation) were the determinants of the demand for private health insurance. Furthermore, the predictive values from the model, i.e., the possibility of the individuals with no private insurance, decreased by the increase of individual's age. The possibility of purchase increased among those in 50's and 60's in the year of 2013, when compared with year 2001. Regarding the socioeconomic status, the possibility of purchase increased by an increase in household income. This tendency was found to be more remarkable among those with both policies, i.e., the choice of more generous coverage.

Discussion:

If the vision of expanding the role of private health insurance is implemented, as in "The Japan Vision: Health Care 2035", concerns on equity cannot be ignored according to our findings which show that health risk and/or socioeconomic status are the determinants of the demand for private health insurance. Regulations set for private insurance market would be necessary to protect the vulnerable population.