The Washington Post gets to the bottom of Japan's health care system quoting a professor of health policy that: "more than one-third of the workers' premiums are used to transfer wealth from the young, healthy and rich to the old, unhealthy and poor." That's a striking statement. Fire insurance transfers wealth from people who don't have house fires to people who do. Car insurance transfers money from people who don't have car accidents to people who do. This is the basic concept of insurance. It protects people from bad events, transferring money from people who don't have bad events to those who do. In other words, this quote is telling us that Japan's health insurance system is operating like a health insurance system. The article is also quick to tell readers that Japan's system may be unsustainable. Its subhead is: "aging population could strain system." It is worth noting that Japan's population is already far older than the U.S. population. If the United States had the same age distribution as Japan, its health care costs would almost certainly already be above 20 percent of GDP, compared to the current 17 percent.
--Dean Baker
