Private health insurance in Japan, Republic of Korea and Taiwan, China

Japan, the Republic of Korea and Taiwan, China are neighbouring high-income countries with some similarities in health systems policy. All three have historically organized publicly financed health coverage around the labour market, with the government paying for some or all of the costs of self-employed, retired or poorer people, but Japan has a much higher share of public spending on health and a much lower share of out-of-pocket payments than the other two. All three rely heavily on the private sector to deliver health services. And in all three, private health insurance plays a supplementary role, offering subscribers daily cash benefits in case of hospitalization or lump sum payments in case of severe illness such as cancer. Although private health insurance markets in these countries are marginal in terms of spending on health, they cover relatively large shares of the population. This chapter reviews the origins and development of private health insurance in the three countries and considers why the market is not larger in terms of health spending, especially given the relatively high share of out-of-pocket payments in the Republic of Korea and Taiwan, China and the widespread use of cost sharing for publicly financed health services in all three countries.