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Socio-Economic Considerations of Universal Health Coverage: Focus on the Concept of Health Care Value and Medical Treatment Price

Written By

Tomoyuki Takura

Submitted: February 21st, 2022Reviewed: April 4th, 2022Published: May 13th, 2022

DOI: 10.5772/intechopen.104798

Health InsuranceEdited by Aida Isabel Tavares

From the Edited Volume

Health Insurance [Working Title]

Prof. Aida Isabel Tavares

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Healthcare systems generally help improve clinical outcomes by increasing public financial investment. Reasonable policymaking is crucial for identifying the financial burden involved, and analytical tools related to the relationship between universal health coverage (UHC) and socio-economic factors are essential. This study, along with the context and reports related to health insurance systems, examines the financial mechanisms that support UHC and the economic factors that dominate the clinical outcomes that benefit from it. The first section examines the socio-economic factors that affect universal coverage. Examples of methods for quantitatively evaluating the relationships and their analysis results are also summarized. The subsequent section summarizes the concept of medical value and the methodology for its evaluation, which are indispensable for examining the appropriate development of medical insurance systems. Research cases related to the significance of lifesaving and drug discovery are introduced, considering the possibility of allocating public resources. In the final section, the concept of price formation, which also considers medical value, is organized from the perspective of economics and medicine, with the optimization of medical treatment behavior in mind. For example, a report that analyzes the factors of price levels, focusing on Japanese private practices, is introduced.


  • medical fee
  • value of medicine
  • health insurance
  • cost accounting
  • cost-effectiveness
  • service coverage index
  • gross domestic product
  • health expenditure
  • poverty
  • population
  • utility theory
  • nephrotic syndrome
  • childbirth

1. Introduction

Answers regarding the value of a medical system can vary depending on various considerations and degrees of interest. Even when considering the universal values of human life and health, their implications are presumed to depend both on the sense of individual values and a country’s history, culture, national character, and surrounding socioeconomics [1, 2]. Meanwhile, if we discuss human dignity’s ethical and moral aspects, the fundamental values of health and life typically exhibit a consensus within the minimum necessary basic range. In other words, the value of the medical system can be considered a mechanism for stable supply (cultivation of a sense of security) that guarantees basic human rights. Given the socio-economic background, the significance of discussing the medical insurance systems of countries from this perspective has recently been increasing. Under these circumstances, the World Health Organization (WHO) has promoted universal health coverage (UHC).

UHC refers to universal access to all people for necessary healthcare services—irrespective of time, place, and their financial condition. UHC, a goal that the healthcare system must strive to achieve, includes basic health services: promotion, prevention, treatment, rehabilitation, and palliative care. This goal takes the civic perspective. Given this background, the understanding and contribution of all members of society (citizens) is essential to the realization of UHC. Its promotion requires a balance between the benefits and burdens at the citizen level. The aforementioned value trends were involved in discussing this balance. In other words, the choices and decisions of individuals and groups are influenced by values. However, issues related to equity and efficiency exist in allocating resources for public goods. The significance of applying value theory and market principles, although limited, has been discussed for a long time [3].

Therefore, the political dimension is also important when considering UHC progress. To promote UHC, some issues regarding evaluating the medical insurance system must be resolved. The increasing importance of socio-economic measures in medical insurance systems has attracted considerable attention. In general, the following three issues have been addressed: (1) The perspective through which the medical insurance system’s outcomes (goals and significance) must be discussed and evaluated. (2) The measurement and analysis of the impact of socio-economic factors on health insurance system outcomes. (3) Determining the operation of the medical insurance system (e.g., benefits and burdens, allocation of resources) based on the aforementioned issues. Each issue has a broad and complex context; thus, consistent effort is required.

The development of public medical resources, especially the financial investment system (national burden and insured burden), is indispensable for the sustainable operation of the medical system. Therefore, an analysis of the characteristics of each country’s political systems is required. As rational policy decision-making is imperative for discussing the financial burden, analytical tools such as those presented in this chapter are necessary. For example, in future studies, a cost-effectiveness analysis (CEA) could be conducted. Additionally, adopting a longitudinal research design (panel data analysis) would make it possible to account for the effects of fluctuations in external factors—such as the real economy—with high accuracy. For example, a report suggests that it is important to optimize resource allocation from the perspective of public interest rather than simply increasing the medical expenses per capita to develop the medical insurance system [4].

Based on the above, harmonizing the public and private sectors is a theme in healthcare insurance systems. This coincides with harmonizing the benefits and burdens of healthcare policy between individuals and society. This requires a macroeconomic analysis of the relationship between health sector outcomes and socio-economic factors. Therefore, this approach also involves financial aspect and discusses the relationship between the real economy and public interest activities. Regarding healthcare services, there is a lot of discussion about payment formulas and price levels in the relationship between stakeholders (economic payers, providers, and service recipients) [5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16]. In other words, there are themes related to the proper allocation of social security funds and the improvement of inefficiencies in the public market. Therefore, a microanalysis is essential in the discussion of healthcare insurance systems. From this perspective, utility theory and welfare economics are applied to elucidate the mechanisms of price formation and treatment selection behavior.

In particular, these themes are becoming more important in the quasi-public medical market, such as Japan’s universal health insurance system, medical resources consisting of social premiums, general taxes (including subsidies), and patient out-of-pocket expenses. For example, rising drug prices and procedure fees have a structure that rebounds from social and individual burdens. Therefore, the significance of comprehensively discussing phenomena and issues that straddle both macro- and micro-aspects has been emphasized (Figure 1). For example, high expectations for cost-effectiveness evidence can be applied to macro- and micro-issues to ensure the sustainability of the system and the appropriateness of resource allocation. From the above, three closely-related perspectives will be discussed: an examination of UHC considering socio-economic factors, examination of the significance of citizens’ value in resource allocation, and examination of price formation considering patients’ economic burden.

Figure 1.

Three closely related perspectives are examined: An examination of UHC considering socio-economic factors, the significance of citizens’ value in resource allocation, and price formation considering the economic burden of patients. Note: UHC, universal health coverage.

This chapter explains the concept of the approach required to address the aforementioned issues and introduces examples of related research reports as a guidepost for discussions in the areas concerned. In the first section, the socio-economic factors that affect UHC are examined, and examples of quantitatively evaluating these relationships and their analysis results are provided. Subsequently, the concepts of medical value and methodology, which are indispensable to the ideal development of the medical insurance system, are summarized. Research cases related to the significance of lifesaving and drug discovery are introduced, considering the possibility of allocating public resources. In the final section, the concept of price (fee, charge) formation, which also considers medical value, is organized based on the characteristics of economics and medicine. For example, a report that analyzes the mechanism of price levels, focusing on Japanese private practice (out-of-pocket), is introduced.


2. Progress in UHC: socio-economic impact

2.1 Concept of UHC and surrounding economic trends

Sustainable Development Goal (SDG) 3 comprises 13 targets related to “health and welfare for all.” The other 16 goals were either related—or indirectly contributed—to health. The SDGs aim to “leave no one behind” and are international objectives applicable to developing and advanced countries. UHC is a concept that includes 1) protection from financial risks for all, 2) access to quality primary health services, and 3) access to essential medicines and effective, high-quality, and inexpensive vaccines. Target 3.8 SDG 3, which involves achieving UHC and health improvement worldwide, is considered the most crucial task of the WHO [17].

The measurement approaches and definitions of the UHC index evolved between 2015 and 2019, and the index is now used in every global monitoring report [18]. UHC progress between regions and countries can be compared. Additionally, the UHC service coverage index (SCI) has been calculated as a single number (i.e., score) since the late 2010s, thereby improving comparability between nations. Although the performance of different countries can now be compared, global monitoring alone is insufficient to guide policymaking [19]. Therefore, each country should be encouraged to develop a country-specific global framework. The relationship between the environmental factors surrounding medical care and progress toward UHC should be analyzed to achieve this.

Healthcare systems generally help improve clinical outcomes by increasing public financial investment [20, 21]. Meanwhile, declining birth rates, aging populations, and the maturation of medical systems generally tend to reduce the baseline performance of medical systems. Some reports mention that unemployment and poverty, which are distant causes of catastrophic health costs, are factors that reduce service coverage index levels [22]. Therefore, there is room for countermeasures, including population policies and economic measures. For example, future economic growth strategies could include the promotion of healthcare and life sciences industries. Improvements in health care programs include disease prevention and medical insurance policies.

Problems regarding medical financial systems constitute a significant challenge to achieving UHC. According to the WHO, a healthcare financial system that eliminates the financial constraints of access to health services is crucial [23, 24]. Several previous studies have suggested that UHC is more likely to be achieved when patients’ out-of-pocket medical costs are low [25]. As rational policy decision-making is imperative for discussing the financial burden, analytical aspects, such as UHC and socio-economic factor relationships, are necessary. For example, CEA, a performance analysis of medical functions, is the most common approach for assessing the health benefits for each spent or the cost for each additional health unit. CEA is a tool used to enhance the sustainability of medical systems.

2.2 Relationship between UHC and socio-economic factors

This section introduces an example of the relationship between SCI and major socio-economic indicators to establish UHC levels and economic factors [25]. This study used SCI as a proxy for progress toward UHC in 11 Asian countries. A fixed-effects regression model was employed to analyze panel data from 2015 to 2017, and to explain the interrelationship between the SCI and major socio-economic indicators (health expenditure, unemployment, etc.) Performance analysis (to determine the ratio of the achieved SCI level to gross domestic product or health expenditure displacement) was also conducted. This analysis examines the balance between the degree of achievement related to UHC and a country’s economic level.

The gross domestic product (GDP) and SCI had a significant positive correlation (Spearman’s rank correlation coefficient [Rs] = 0.716, p < 0.01). Health expenditure and SCI were significantly and positively correlated (Rs = 0.743, p < 0.01). When both GDP and SCI indicators were transformed using logarithms, the abovementioned trend did not change significantly (Rs = 0.731, p < 0.01; Figure 2). The results of the panel data analysis showed that GDP per capita significantly contributed to SCI (standardized partial regression coefficient, 1.6129; partial regression coefficient, 0.0049; 95% Confidence interval [CI], 0.0025–0.0074; Table 1). The total population, governmental health expenditure, unemployment, and poverty rates were statistically significant, whereas health expenditure was not significant. The unemployment and poverty rates show a negative trend, and the entire model is statistically significant (R2 = 0.991, F-test: p < 0.001). The ROC curve for health expenditure per GDP for SCI showed a cutoff of 3.7% (p < 0.01) for the Youden index and 4.9% (p < 0.01) for the shortest distance (AUC = 0.8125, 95% CI: 0.6350–0.9899, p < 0.05; Figure 3).

Figure 2.

Relationship between economic level (GDP) and SCI (logarithmic transformation, 2017). Note: UHC, universal health coverage; SCI, service coverage index [21].

UHC index of service coverage (SCI)Partial regression coefficientStandardized partial regression coefficientSEp-value95% CI
Population (total: million people)0.00490.19210.00120.00010.0025–0.0074
GDP per capita (current USD)0.00171.61290.0002< 0.0010.0013–0.0021
Health expenditure (% of GDP)2.34810.41161.57480.136−0.7386–5.4347
Government health expenditures (% of general government expenditures)1.45110.65750.2804< 0.0010.9015–2.0006
Unemployment rate (%: ratio of unemployed persons)−1.4764−0.22530.71050.0377−2.8689–0.0838
Poverty rate (%: poverty gap)−1.6736−0.23030.46740.0003−2.5897–0.7575
Model: R2 = 0.991, F test: p < 0.001

Table 1.

Panel data analysis of the impact of economic level (GDP, health expenditure, unemployment, and poverty) on SCI.

Note: GDP, gross domestic product; UHC, universal health coverage; SCI, service coverage index; SE, standard error; CI, confidence interval [21].

Figure 3.

ROC curve of health expenditure (per GDP: %) for SCI (criterion: Score 70) [21].

From the results of the performance analysis after the logarithmic transformation of each index, South Korea (high-income country: HIC) scored the lowest (GDP: 0.12 SCI score/USD per capita, health expenditure: 0.07 SCI score/USD per capita; Figure 4), followed by Vietnam (lower-middle-income country: LMIC) and India (LMIC). Japan’s (HIC) performance was moderate, while Indonesia (UMIC), Thailand (UMIC), and Cambodia (LMIC) had relatively high performance. The Philippines (LMIC) had the highest performance (GDP: 1.84 SCI score/USD per capita, health expenditure: 1.04 SCI score/USD per capita). Myanmar (LMIC) was marked as the “dominant quadrant.” The more effective but less expensive quadrant exhibited the best performance in the cost-effectiveness analysis. When the relationship between the proportion of the population aged 65 and above was organized without logarithmic conversion, the SCI score increased with age (Rs = 0.779, p < 0.01), and the performance value decreased (Rs = − 0.830, p < 0.01; Figure 5).

Figure 4.

Performance status by country (broad cost-effectiveness analysis based on displacement from 2015 to 2017). Note: SCI, service coverage index. *1: Dominant is positioned in a more cost-effective dimension with increasing outcomes (SCI) even if the economy (GDP) declines. *2: Performance was a cost-effectiveness analysis (difference in outcome “SCI” ÷ difference in the economy “GDP”; displacement from 2015 to 2017). Both indices were logarithmically transformed to consider the elasticity [21].

Figure 5.

Trends in SCI and performance (economic level: GDP) with respect to the aging rate (percentage of the population aged 65 years and above). Note: UHC, universal health coverage; SCI, service coverage index. (†) Myanmar has a different quadrant (dimension) because it is “dominant” [21].

Each of the four SCI components had a different level of achievement (Figure 6). LMICs were most countries with SCI levels of 60 or below (i.e., Bangladesh, India, Indonesia, and Cambodia), where “infectious diseases” and “service capacity and access” were more widely dispersed. This was compared to the group of countries with SCIs of more than 80 (i.e., South Korea, Japan, Thailand, and China), HIC, and UMIC. Multiple regression analysis used SCI’s annual rate of change as the objective variable and SCI components as the explanatory variable. The results indicate that “service capacity and access” significantly contributed to the SCI level (standardized partial regression coefficient, 0.9209; partial regression coefficient, 0.3581; 95% CI, 0.3142–0.4019). Furthermore, when the GDP per capita and “service capacity and access” values of each country were relatively arranged, with Japan as the standard, a positive correlation was observed between the two indicators (i.e., single correlation: Rs = 0.901, p < 0.01) (Figure A1).

Figure 6.

Distribution composition of SCI components according to SCI level (≥ 60 and ≥ 80). Note: SCI, service coverage index [21].

2.3 Health economies necessary for the development of UHC

The present study used SCI as a proxy for the progress of UHC. Currently available service coverage metrics focused on infectious diseases and reproductive, neonatal, maternal, and child health [26]. In this study, the indicators for SCI-related data (Figure A2) were “reproductive, maternal, newborn and child health,” “infectious diseases,” “noncommunicable diseases,” and “service capacity and access.” In addition, the country-by-country socio-economic indicators included “total population,” “population aged 65 and above,” “gross domestic product (GDP) per capita,” “health expenditure per GDP/per capita,” “government health expenditures,” “unemployment rate,” and “poverty rate.” All data were converted into a panel from 2015 to 2017; SCI-related and socio-economic data were also compiled [27, 28, 29].

According to the analysis results derived by applying these data, UHC progress tends to increase as the share of the healthcare domain in government spending increases. Future studies on UHC development measures are important to discuss the appropriate form of resource allocation (public finance) according to sustainability-based productivity and efficiency or value evaluation (national consensus). Based on the statistical analysis results, some cases exist wherein SCI achievement levels differ even among countries at the same economic level. Furthermore, SCI improvement is small, even in countries with high economic investment levels. Exploring these factors and considering improvement measures are assumed to promote UHC progress. This study examined the influences of the maturity of the medical system as an additional country-specific factor (rather than the social system, national character, and culture).

The results showed that when aging and health expenditure exceed a certain level, UHC performance decreases as a country’s need to raise its goal increases. Additionally, the weight of “service capacity and access” to SCI was considerable. This secondary index, which embodies the environment of the healthcare system, can be considered a surrogate index that predicts the maturity of social and medical care. The considerable impact of these factors on UHC implies that stable development cannot be expected simply by expanding the expenditure scale due to the mechanisms related to economic conditions. As a result, policymakers must implement countermeasures based on indicators that can estimate the economic status of the UHC approach, such as its cost-effectiveness.

CEA is often applied to medical-economic evaluations, such as high-priced medicines and health programs, but can also be applied to macro issues, such as medical systems [30]. Cost-effectiveness is an instrument widely used in Western health systems. The instrument provides the information needed to reach a consensus among stakeholders in allocating medical resources and setting medical prices. As UHC progress requires country-specific efforts, as discussed in the introduction, estimating the coefficients that define each country’s UHC progress and socio-economic status is also necessary. Hence, a country-specific performance analysis (CEA: country-specific coefficient calculations) was conducted. In the present study, CEA was performed using economic level as a cost index and SCI level as an effective index.

This approach suggests that regardless of the maturity of the system or the size of the economy, the status of UHC activities in each country can be evaluated based on the displacement of economic and SCI levels achieved.


3. Concept and calculation method of medical value: cost-utility application

3.1 Background related to medical value

This section summarizes the conditions and mechanisms of the link between value and price discussion in a medical system.

In a private economy, where the market principle works, goods (and services) are demanded and supplied in the market based on people’s decision-making (free choice and action) depending on changes in price levels. If the market works well, supply and demand will be balanced, and various goods will be properly distributed. The relationship between benefits and burdens in this market is easy to explain. Meanwhile, in a public economy, where the government is the main operator, the market principle works in a limited way. Taxes that enforce the burden are a receiver of supply costs for the demand of goods.

Therefore, public needs and expenditures (including reallocation) are generally determined by the government’s judgment. However, price levels in the public economy are often formed by costs (e.g., size of spending budget), which are both inefficient and inconsistent with market utility (i.e., consumer satisfaction). Additionally, the allocation of public resources may deviate from the balance between supply and demand, and inequity among participants within a group may be promoted. Thus, issues related to Use-value, Marginal utility, and Pareto optimization become apparent in the public economy [31, 32].

Subsequently, the concept of verifying the economic appropriateness of the market function and product price (among others) arises by balancing the number of resources consumed and the results obtained (e.g., cost-effectiveness and performance) [2]. As an example of its widespread use, considering large-scale public investments (e.g., the construction of dams and bridges), the desirability of the project’s implementation is evaluated based on its cost-effectiveness. Additionally, in the private economy, where technological innovation is active, and consumers have numerous choices, the concept of cost-effectiveness is used more actively to incorporate activities and stimulate product appeal. Consequently, the basic and broad concept of cost-effectiveness has developed in social policy decision-making and resource management fields. Its know-how has been cultivated in contract society and management activities and used in social consensus-building and decision-making.

Meanwhile, the provision of medical services is characterized by information asymmetry and restrictions on opportunity costs (options) against the background of health and life. Therefore, healthcare markets differ from common markets that exhibit typical demand and supply; this market has three parties (citizens, insurance, and providers) and faces asymmetric information that creates several market problems (i.e., common equilibrium market laws do not apply), including problems in defining prices. Although this is inherently unfair (bias) in the health sector from the perspective of citizens’ financial burden, the system is based on medical needs such that the needs of the patient, regardless of the outcomes, receive the same medical care. Since such a tendency threatens the system’s sustainability, there have been attempts to improve it as much as possible by utilizing cost-effectiveness and utility theory.

By their very nature, public goods are non-competitive; therefore, the role of price tends to be smaller. Medical care has restrictions on individual choice. However, CEA (including cost-utility analysis [CUA]) is widely used to evaluate medical technology in high-income countries, and prices are determined according to this evaluation. Recently, pricing has become more common with evidence-based or value-based approaches. In this method, a consumer’s natural internal decision-making regarding consumption behavior is externally substituted by other stakeholders under certain conditions (typically advocating the maximization of group benefits) for a certain group or system based on the law of equal marginal utility and expected utility theory. These methods will be considered along with the uncertainty of outcomes and limited rationality of human beings.

The medical systems of many countries have historically operated as part of the social security system, as they gather high public interest from the necessity for all people. Further, against the background of stable supply, the pricing of medical services has often been based on costs. As described in the previous section, numerous developed countries face structural issues, such as declining birth rates, aging populations, and rising costs of medical services; thus, verification of price levels has become an urgent concern [25]. Therefore, the need to build a social consensus on the economic burden of the value of medical services has been increasing, and the verification of price levels while considering cost-effectiveness has further expanded [33]. Against this background, discussions on value evaluation and price levels in the medical field are being conducted using various approaches to consider cost-effectiveness.

3.2 Calculation method of medical value

Utility refers to the degree of subjective satisfaction or demand fulfillment that each consumer obtains when consuming a certain good or service and is considered a fundamental concept in economics [34]. When interpreted broadly, human economic activities and all human behaviors (including the selection of medical services) aim to maximize the utility to be acquired as the background. Thus, this concept can explain the background of stakeholder behavior changes (e.g., decisions and choices) in the field of health care [35]. Furthermore, a method supported by varied theories related to utility was assumed as an approach to value evaluation.

In summary, “value” is regarded as the meaning of the existence (usefulness or significance in a narrow sense) of an object regardless of whether it is “tangible or intangible.” For example, in the public sector, meaning is often organized using exchange value and use-value. A value is diverse and difficult to quantify in general; however, it should be explained to the parties concerned (Figure 7) [36] when discussing it as part of a social system. This perspective is even more important for the effective utilization (fair distribution) of public properties. Aspects related to life and health should first be discussed from the perspective of “use-value” in developing society. Furthermore, medical care is expected to be provided to everyone at a fairly low cost (public aspect).

Figure 7.

The conception of value assessment in the quasi-public healthcare system: The balance of the valuation of technical innovations and the guarantee that all patients have access. The public medical marketplace requires a system that considers both use and exchange values [2].

Therefore, several countries worldwide have more or less developed the medical field as a public system, following the lead of the 1978 Alma Ata Declaration. Specifically, Japan’s universal health insurance system is assumed to have experienced this trend (see Figure 8). However, highly specialized professionals and therapeutic materials require large investments in developing medical resources, and their supply is restricted. Therefore, to operate and develop medical care as a social system—considering the “exchange value” content that accompanies scarcity and building a system that incorporates certain market principles (economic aspect)—are crucial [2]. This perspective is also important in discussing consistency within the real economy.

Figure 8.

Significance and key characteristics of value measurement in the public economy (decision-making and resource allocation) [36].

Thus, in a quasi-public healthcare market such as Japan, it is desirable to provide mature and widespread medical care at low-cost while guaranteeing a high economic level for innovative (or effective) medical care and specialized resources. Moreover, a system that balances the use and exchange of values is necessary. As previously mentioned, assessing value in the medical field involves various restrictions. Value evaluation can be performed in several ways, which are inadequate for consistency with the real economy or developed as a theory of price setting. The approach to value evaluation that contributes to the discussion of economic activities and official prices in the healthcare system is as follows:

Generally, in microeconomics, prices converge based on supply and demand equilibrium with the background of utility theory, and efficiency is thus maximized. Incorporating herein the perspective of equity (well-being), public interest value is discussed based on the balance between patient utility value (preference, willingness to pay) and medical finance (income reallocation, finance balance) (Figure 9). The balance between increasing utility and cost per health program unit while weaving individuals and society is thus considered. As a result, if utility is maximized in a certain budget range, the higher performance increases the utility in a total of the entire population, and the stakeholders’ “value” increases. Compared to the conceptual discussion of value, it is relatively possible to discuss consistency with a real economy or a general value; hence, it is considered suitable for examining the medical price of the public sector.

Figure 9.

Concept of value evaluation of health care based on utility theory and cost-effectiveness considering welfare economics.

The value of medical services can be indirectly evaluated in the public sector by applying the marginal utility theory and scales based on preferences while considering different conditions and objectives from those in the private sector [37]. Incidentally, in the medical field, a method for measuring and analyzing patient utility values as a type of health-related quality of life has been developed. The application of this concept to CEA is CUA, which is a type of CEA. Based on the above, the medical value is calculated as “health recovery (patient outcomes such as utility)/resource consumption (direct medical cost) ⇒ medical performance = medical, economic value” [38] (Figure 10). A related concrete methodology is cost-effectiveness analysis, which considers health programs’ medical and economic position.

Figure 10.

Concept of economic performance: One of the methods used to discuss the economic value of healthcare. “Value” in social activities is determined by the balance between capital investment and its returns. If a certain amount of money is paid to use a certain service (function), its value is determined by performance, equal to the amount of service (function) divided by the cost. For the consumption of one budget item, the greater the result, the higher is the value. The amount in terms of “restoration of health” is used as an index of “function” in the medical field [2].

This explains the socio-economic significance of the medical services provided by balancing public costs and earned utility in the medical market. It is believed that the higher the performance, the greater the utility (clinical outcomes for patients) as part of the value of the budget range.

3.3 Evaluation cases of medical value

This section introduces reports that discuss the socio-economic significance of the spread of lifesaving medical devices and the research and development (R&D) of expensive pharmaceuticals (at the time of 2010).

First, a case of microeconomic valorization of end-stage renal failure is discussed [39]. With the progression of renal impairment in patients with chronic kidney disease, the dysregulation of electrolyte and water metabolism and retention of uremic toxins can significantly impact health status and even threaten life [40]. Treatment with hemodialysis (HD) should target maintaining the amount and composition of body fluids within the normal range. The study subjects were aged >20 years and had received HD for at least 6 months. HD patients were prospectively observed for 36 months, and patient utility was assessed based on the EQ-5D, from which quality-adjusted life years (QALYs) were estimated. Medical costs were calculated based on the medical service fees. Cost-effectiveness, defined as the incremental cost-utility ratio (ICUR), was analyzed socially. A total of 29 patients (mean age; 59.9 ± 13.1 years) undergoing 437 dialysis sessions were analyzed.

Utility-based EQ-5D score was 0.75 ± 0.21, and the estimated total medical cost for 1 year of maintenance HD (MHD) treatment was 45,200 ± 8800 USD. On average, the ICUR was 68,800 ± 44,700 USD/QALY (Figure 11). When comparing the ICUR based on the causes of kidney failure, the value for diabetic nephropathy was higher than that for glomerulonephritis (81,700 ± 62,800 vs. 68,200 ± 40,700). The ICUR after 36 months of observation increased mainly in patients below 65 years of age (all P < 0.05; <65, P < 0.01; ≥ 65, not significant) (Figure 12). MHD could improve the socio-economic status of older-adult patients with end-stage kidney disease; however, the ICUR for diabetic nephropathy was higher than that for glomerulonephritis (Table 2). However, the ICUR does not deteriorate in older-adult patients. Therefore, measures to prevent malnutrition and establish the optimum time per session and frequency of dialysis (i.e., optimal dialysis volume) are necessary to further improve MHD’s cost-effectiveness.

Figure 11.

Utility values (EQ-5D score) during the first 4 weeks of observation and the 36th week. Four-week interval after the classification of primary diseases for end-stage kidney disease (glomerulonephritis, diabetes mellitus, and the whole) [39]. *p < 0.05, **p < 0.01.

Figure 12.

Change in cost-effectiveness (ICUR) between the first 4 weeks of observation and the 36th four-week interval. *p < 0.05, **p < 0.01 [39].

ParameterAll SubjectsGlomerulonephritisDiabetic nephropathyOthers
Mean ± SD0.75 ± 0.210.73 ± 0.170.68 ± 0.230.83 ± 0.22
Cost (USD/year)
Mean ± SD45,200 ± 880045,300 ± 880051,100 ± 10,70041,100 ± 4100
Cost-effectiveness (USD/QALY)
Mean ± SD68,800 ± 44,70068,200 ± 40,70081,700 ± 52,80054,600 ± 27,400
Dialysis time (hour per intervention)
Mean ± SD4.35 ± 0.504.19 ± 0.394.08 ± 0.43
95%CI(two-sample population mean)0.16(
0.27(0.16, 0.37)
Mean ± SD9.93 ± 2.119.47 ± 2.3910.97 ± 3.24
95%CI(two-sample population mean)0.45(-0.78, 1.70)1.50(-0.09, 3.09)
1.04(-0.29, 2.38)
Mean ± SD67.09 ± 15.6269.43 ± 16.9272.43 ± 12.38
95%CI(two-sample population mean)2.34(-4.87, 9.56)2.99(-4.20, 10.20)
5.34(0.02, 10.65)
Mean ± SD63.59 ± 12.3063.78 ± 4.2751.78 ± 14.08
95%CI(two-sample population mean)0.18(-1.88, 2.26)12.00(9.19, 14.81)
11.81(8.63, 14.99)

Table 2.

Cost-effectiveness by utility and cost in patients on maintenance hemodialysis (MHD).

*p<0.05. **p<0.01. The data source for this analysis was the mean value over 4 weeks in 2011. BUN. blood urea nitrogen: CI. Confidence interval: Cr. creatinine: SD. Standard deviation: QALYs. Quality-adjusted life years. These values were analyzed by distinguishing between the primary disease of end-stage kidney disease (ESKD), glomerulonephritis, diabetic nephropathy, and others during the first 4 weeks of observation [39].

The present findings may contribute to the reexamination of the socio-economic value of MHD therapy, which is a lifesaving medical treatment.

Subsequently, a case of socio-economic valuation of a (then) new drug for the refractory nephrotic syndrome was discussed [41]. Nephrotic syndrome is the generic name for the pathological conditions associated with proteinuria (≥3.5 g/day), hypoproteinemia, and generalized edema. The disorder is further classified as a primary nephrotic syndrome (caused by primary glomerular disease) or secondary nephrotic syndrome (caused by systemic disorders). The syndrome rapidly improves with steroid (e.g., prednisolone) and immunosuppressant (e.g., cyclosporine) treatment. Refractory cases (frequent relapse type, steroid dependence, or steroid resistance) may also occur, requiring steroid therapy for prolonged periods, for which side effects become a major issue. Therefore, there is a need for novel medical strategies to suppress relapse while reducing reliance on steroids. The regimen has not been clinically verified regarding the use of rituximab in patients with steroid-dependent nephrotic syndrome and frequently relapsing nephrotic syndrome. Still, there is a lack of evidence in health economics [42].

Therefore, we conducted a prospective clinical study of 30 patients before (with steroids and immunosuppressants) and after introducing rituximab therapy (Figure A3). Relapse rates and total medical expenses were selected as the primary endpoints for treatment effectiveness and treatment costs, respectively. As a secondary endpoint, cost-effectiveness was compared before and after rituximab administration in relation to previous pharmacotherapy. The observation period was 24 months before and after rituximab initiation. The authors demonstrated a statistically significant improvement in the relapse rate, from a mean of 4.30 events before administration to a mean of 0.27 events after administration. Furthermore, a significantly better prognosis emerged in the cumulative avoidance of relapse rate by Kaplan–Meier analysis (p < 0.01) (Figure 13). Finally, the total medical costs decreased from 2923 USD to 1280 USD per month, and pre-post cost-effectiveness was confirmed to be dominant (Figure 14). Thus, treatment with rituximab may be superior to previous pharmacological treatments from a health economics perspective (Table 3). Although this study did not directly observe patient utility, the excellent results in recurrence rates suggest an improvement in HRQOL.

Figure 13.

Kaplan–Meier curves of the cumulative avoidance rate of the first relapse [41].

Figure 14.

Mutual relationship between urinary protein levels and total medical cost (before and after rituximab therapy) [41].

A. Exclusion of rituximab coats
ItemsPre-administrationPost-administrationDifference (after-before)
Medical cost difference (points/24 months)725,403317,707-407,696
(USD/24 months)(70,155)(30,726)(-39,429)
Relapse difference (times/24 months)4.300.27-4.03
Pre-post CEA (points/24 months/times)101,082
(USD/24 months/times)(9776)
Reference: pre-post CEA with a case in
which the analysis was restricted to 17
months (points/17 months/times)
(USD/17 months/times)(4931)
B. Addition of costs for rituximab
ItemsPre-administrationPost-administrationDifference (after-before)
Medical cost difference (points/24 months)725,403401,539-323,864
(USD/24 months)(70,155)(38,833)(-31,321)
Number of relapses (times/24 months)4.300.27-4.03
Pre-post CEA (points/24 months/times)80,297
(USD/24 months/times)(7766)
Reference: pre-post CEA with a case in
which the analysis was restricted to 17
months (points/17 months /times)
(USD/17 months/times)(2848)

Table 3.

Medical economics analysis (pre-post-CEA) accounting for the medical costs of rituximab.

The analysis has been corrected for the number of months. Pre-post CEA was calculated as [medical cost (post-pre)/medical effectiveness (post-pre)] (suppression amount for medical costs accumulated over 24 months per one-time reduction[avoid] in relapses). Expressed as points per 24 months per time. Analyzing the cost-effectiveness (the ratio of total medical costs and a number of relapses, after correction for the number of months) before and after rituximab therapy revealed that cost-effectiveness improved in medical, economic terms. This was 317,707 points (30,726 USD) per 24 months (0.27 times) after rituximab therapy compared with 725,403 points (70,155 USD) per 24 months (4.30 times) before therapy [41].

As this study indicates the superior cost-effectiveness of rituximab against refractory nephrotic syndrome, health economics is expected to be actively applied to the valuation of technical innovations such as drug discovery.


4. Concept of price formation in the healthcare field

4.1 How to discuss price levels in the medical field

The discussion of value covers the whole range of activities related to the health and welfare field, such as examinations and diagnoses provided by medical facilities, surgery, and hospitalization, as well as medication, therapeutic materials, and care provided by caregivers. Prices (i.e., official prices in Japan) are attached to several services. Professionals who typically work in clinical or long-term care sites may not be very aware of these prices. However, the financial resources for the operation of medical and long-term care facilities are based on the price of services provided to patients/family members and long-term care recipients, who are the so-called beneficiaries. The medical institution charges to insurer for various services provided to the assured patient, which become the source of salary payments and reinvestment for the parties concerned. Therefore, if the price, value to be generated, and amount of resources consumed are not well balanced, the motivation for the employment of professionals and profitability assumedly decreases, thus making sustainable facility management difficult.

Consequently, the supply of medical and long-term care will decline, which is a significant problem for residents, including patients and their families [43, 44, 45]. Therefore, the price levels at which service recipients and providers are mutually satisfied (or convinced) should be discussed. However, determining the characteristics and effects of the target market is necessary to discuss the appropriateness of the price, considering the theory related to human choice and behavior (outlined in the previous section). In particular, as the field of health and welfare has service characteristics that are different from those in other fields, it is necessary to consider and interpret the mechanism of the market. Against this background, this section explains the basic price and its calculation methods.

The behavior and motivation of market economic agents and the pricing mechanism for goods and services, including resource allocation and income distribution, should be considered for price optimization. Overall, the general economic approach is limited because of various uncertainties related to highly specialized technologies in medical science. Thus, examining price settings in the medical field is generally difficult because of the complex involvement of various factors. A price-setting approach in medical treatment can be divided into two major categories: “market-based” and “input-based” [46]. The “market-based” approach determines the price level by considering the actual market price of medical treatment, while the “input-based” approach is based on the consumption of goods and services. Generally, prices are presumed to have been formed in the public medical market using these approaches in countries with a mature medical system.

Approaches to explain the public price of individual medical technologies (services) have also been discussed. For example, from the standpoint of a medical provider (supply approach), “technical difficulty” and “medical cost” are often selected from the viewpoint of quality evaluation and business management. Furthermore, for the payer (or beneficiary), the methods of “patient outcome,” “economic performance,” and “willingness to pay” are often selected from the perspective of market and value evaluation (Figure 15) [48, 49, 50]. Additionally, cases exist in which certain preconditions are set to use these indicators. For example, in Japan’s universal health insurance system, most prices charged to public insurers by medical institutions are centered on direct medical costs, based on the consumption of medical resources—considering their clinical usefulness and hospital operability. Technical fees (e.g., surgery fees), influenced by doctors’ specialties, are considered technical difficulties. Furthermore, overseas (developed countries) market prices are referred to when determining the public prices for pharmaceutical resources and medical devices.

Figure 15.

Theory of the price-setting approach (in general and within the range of this examination) [47].

As the socio-economic environment surrounding the medical system becomes more severe, even public prices that follow the theory of the public economy are expected to play a role in improving the system’s performance and increasing its sustainability. In other words, verifying the structure of price formation and the appropriateness of its level has become a major concern for medical stakeholders. Based on this, an analysis of factors that affect prices is also expected. However, when developing official price research in the medical field, the following must be noted: There are not enough research reports to study the analytical model required for factor analysis. This condition is especially true in Japan. In addition, the formation of official prices involves various subsidy programs (politics), and thus, the analytical approach becomes too complicated. Therefore, in this chapter, as an initial study on medical prices, we introduce a survey on price differences between Japan and overseas and price factors in the private market.

This study examines the mechanism of market price reference and the influence of the real economy (citizens’ economic burden) on the public price, contributing to the arrangement of public price discussions in the future.

4.2 Research example of medical pricing for foreigners visiting Japan

This section presents a method for setting the price level based on the analysis of medical expenses of Japanese medical institutions for foreign visitors (FVs). Furthermore, international comparisons of price levels for Japanese tourists (patients) in foreign countries have been conducted previously [47]. This section elucidates the “market-based” and “input-based” approaches discussed in 4.1, and discusses the “foreign price reference system,” which is part of the setting of public prices in Japan. In recent years, the supply of medical services centered on pharmaceutical products has been based on global R&D, manufacturing, and sales systems. In addition, some patient groups also exhibit cross-border consultation behaviors. In other words, it is inferred that discussions with a view to the globalization of medical care are indispensable for the progress of UHC, even if they are indirect.

The costs were analyzed based on socio-economic ranges in this calculation, considering clinical characteristics and economic activities. The costs related to general medical care and public investment in hospital management and healthcare infrastructure through the insurance system and various taxation systems that support Japan’s medical system are also considered. For example, social insurance burdens (e.g., insurance contributions and subsidies, such as operational grants to medical institutions) and additional expenses for FVs (e.g., interpretation, coordinator, equipment, and risk management costs) were used as calculation items.

Three medical institutions with more than 400 beds were chosen as target facilities, and their locations (urban or rural) were considered. Additional factors (such as the occupancy and profit rate of each facility) were considered in the calculation. Data collection involved medical practice and medical institution management surveys. The medical practice survey used time study (i.e., occupation time of medical staff and institutional equipment) and medical records (i.e., electronic and management ledgers): Some were self-reported alternatives based on their professional experience. The medical institution management survey collected financial statements (profit and loss balance sheets), number of patients and medical treatments, number of staff and equipment, unit purchase price, and the area of each department.

The medical expenses for FVs were broadly divided into “additional expenses of foreign medical treatment” and “increased expenses of regular medical treatment.” The following definitions for additional and increased expenses were applied: additional expenses for new and additional services (e.g., interpretation and transportation) for non-locally insured patients. The increased expenses for medical services were similarly offered to the locally-insured patients. However, for non-locally-insured patients, the unit price and quantity increased (e.g., consultation hours and staff). Profit was included in this calculation as a necessary resource for reinvestment by medical institutions to realize sustainable management while appropriately responding to the medical needs of FVs. However, when determining profit margins, the historical average of each institution was adopted to avoid the distortion of price levels and the expensive economic burden on FVs owing to excessive profits. The profits gained from FVs were essentially the same as those from Japanese patients.

Compared with the medical expenses (point system) of Japanese patients, those for FVs were 1.31 times (1 point 0.12 dollars) higher for pharyngitis, 1.56 times (1 point 0.14 dollars) higher for urticaria with allergies, 2.21 times (1 point 0.20 dollars) higher for hemorrhagic cystitis, 3.66 times (1 point 0.34 dollars) higher for in patients with severe pneumonia, 1.22 times (1 point 0.11 dollars) higher for general appendicitis, and 2.92 times (1 point 0.27 dollars) higher for endoscopic cholangitis treatment (Figure 16). Moreover, the operating expense for trochanteric fractures of the femur was 3.59 times (1 point 0.33 dollars) higher. Figure 17 shows the amount billed when providing medical treatment to Japanese overseas travelers (overseas FVs) in each country. The survey indicated that although the total number of patients was 18 (one in each country, except for the USA, Australia, Italy, and China), the actual medical payment was approximately USD 20.32–158.75/bill (medical expenditures for medical examination and drug cost) in 12 countries. The highest price was in the USA, at USD 158.75/bill (medical fees may be partially unknown), followed by Austria with USD 79.38 (purchasing power parity 86.28)/bill and Belgium with USD 73.93 (purchasing power parity 73.93)/bill. In summary, including additional research, the medical expenses for FV patients were 1.22–3.66 times higher than those for Japanese patients, 1.31–2.21 times higher for outpatients (pharyngitis, urticaria, and cystitis), and 1.22–3.66 times higher for inpatients (e.g., with severe pneumonia, appendicitis, cholangitis, and femoral fractures).

Figure 16.

Calculation of price levels for foreign visitors (seven diseases) [47].

Figure 17.

International comparison of medical expenses (pharyngitis and outpatients) [47].

4.3 Examples of studies related to factors that form the parturition price

The concept of factors that form the parturition price operated by the private medical care system (out-of-pocket) and the actual situation of the difference in price level due to regional characteristics [51] is introduced. This approach spans both “market-based” and “input-based” approaches, as discussed in Section 4.1. For the sustainable operation of the medical system, it is important to consider the stability of hospital management and the financial burden on citizens. In other words, it is presumed that discussions that consider the relationship between economic factors and medical treatment behavior are indispensable for the progress of UHC. This study has the advantage of developing purely causal inferences on that subject, considering the bias of other social support (subsidies). It is useful to indirectly re-recognize how the ratio of out-of-pocket expenses to the official price of public medical insurance affects the choice of consultation.

In Japan, parturition (normal childbirth), which differs from injury and illness, is not covered by the medical insurance system. This service is self-financed medical care. However, as financial support for childbirth expenditures, the Health Insurance Act provides a lump-sum childbirth and childcare allowance of JPY 420,000 per child (2021). As this system aims to reduce the financial burden of childbirth, it is also important from the perspective of measures against declining birth rates. However, the average price of childbirth is rising, and the actual cost of childbirth often exceeds JPY 420,000. Therefore, while an increase in the amount of lump-sum childbirth and childcare payments has been requested, the out-of-pocket price structure of childbirth is unclear; that is, actual costs have not been understood. Therefore, the government considers the appropriate amount of lump-sum childbirth and childcare payments to realistically grasp the situation of childbirth expenditures with services and prices.

Against the background of these trends, Japan’s regional levels of parturition prices and the factors that helped inform them were analyzed. First, a hypothesis that market principles would have a greater effect on the level formation was proposed; then, the factors that affect childbirth expenditures were structured. Consequently, price formation was considered to involve delivery costs, outcomes, supply/demand, solvency, and official (public) prices. From the provider’s perspective, “guarantee of provision cost (from a stable management viewpoint),” “overall market level and internal harmony (operation of facility),” “guarantee of quality (characteristics of the medical field),” and “competitiveness of regions (balance between supply and demand)” were selected. From the perspective of pregnant women, the elements of “interest in security (from the outcome perspective),” “interest in added value (from the amenity perspective),” “interest in the brand (from the perspective of other added values),” “restrictions on solvency (from an economic perspective),” and “access conditions (from the various types of burden)” were selected. Generally, childbirth expenditure is affected by various factors, including different factors related to facility type (e.g., general hospital, clinic, and maternity home), delivery method (e.g., natural childbirth, cesarean section, and painless delivery), timing (weekdays/daytime, night/holidays, year-end/new year), region (prefectures, cities/regions), and others (e.g., optional services such as attending a birth with family).

Consequently, the average parturition price by region in Japan was investigated. First, when the actual situation of childbirth expenditure by prefecture was analyzed using national birth-related statistical data (around 2016) [52, 53], the national average was 505,759 ± 41,906 JPY/case. A difference of approximately 1.5 times was confirmed between the highest (Tokyo City: No.1 in Figure 18) and lowest (Tottori Prefecture: No.48 in Figure 18) areas. Subsequently, multivariate analysis (multiple regression analysis) was performed to analyze the factors that differed depending on regional characteristics. Based on the factor structure described above, the objective variable was the parturition price. The explanatory variables were citizen income (solvency), “public medical expense (hospitalization unit price),” “pregnant woman’s age (risk factor),” “birth population (childbirth demand),” and “obstetric facility (supply capacity),” and “specialized equipment (maternal-fetal intensive care unit). The statistical software SPSS (IBM) was used for analysis, and the significance level was set at 5%. The results indicate that prefectural income, age at parturition, number of births, and density of equipment (facilities) affect parturition prices (Table 4). In particular, the citizen income (standard partial regression coefficient: 0.561, p < 0.001) tended to be highly related to parturition prices. The standard partial regression coefficient of birth population was negative (−0.628, p = 0.014), but the simple regression coefficient was positive (0.721, p < 0.01).

Figure 18.

Distribution of parturition prices by region (prefecture). Note: The data source was “mean and median of childbirth costs by prefecture” (All-Japan Federation of National Health Insurance Organizations, announced in 2017).

Childbirth expenditures (normal childbirth, yen / case, FY2016)Standardized partial regression coefficientF-valuep-valueVIF
Annual income per citizen of the prefecture (yen / year)0.56117.5880.000**2.68
1-day hospitalization unit public price for all beds (overall: yen / day)0.2814.1060.0542.88
Pregnant woman age (years)0.3314.3840.047*3.74
Total number of births (cases)−0.6287.0110.014*8.42
Average number of births per hospital facility (number of deliveries: cases)0.3123.2720.0834.46
Maternal and fetal intensive care unit per birth population (MFICU: number of beds)−0.2575.1620.032*1.91
Decentralized analysis of the model: p < 0.001
*: p < 0.05, **: p < 0.01

Table 4.

Socio-economic factors are affecting parturition price levels (multiple regression analysis).

Note: MFICU, maternal-fetal intensive care unit.


5. Conclusion

This chapter discussed the macroscopic mechanisms of the relationship between UHC progress and socio-economic factors to promote the sustainable development of health insurance systems. Against that background, the clinical economic considerations were presented to discuss the relationship between value and price from a micro perspective (e.g., health technology assessment).

Examining the effects of socio-economic factors of GDP and governmental health expenditures on the development of UHC showed a statistically significant positive correlation between these factors and UHC service coverage index. Furthermore, it was understood that the declining birth rate, aging population, and maturing healthcare system impacted the progress of UHC. Unemployment and poverty, distant causes of catastrophic healthcare costs, reduced the service coverage index level because of the mechanisms related to vital statistics and economic conditions. Thus, policymakers must implement countermeasures based on indicators that can estimate the economic status of the UHC approach, such as its cost-effectiveness. The sufficiency of public healthcare resources was considered important in addressing this issue. Furthermore, it was inferred that sharing healthcare values among stakeholders would be meaningful for this purpose.

Assuming that it contributes to the discussion of the real economy and official prices related to the medical field, the medical value should be evaluated by applying the marginal utility theory and cost-utility analysis. Despite some limitations, the benefits and burdens based on the value of medical care should be discussed when designing a system related to the operation of medical insurance. In this chapter, valuation research cases related to the significance of lifesaving and drug discovery were introduced, considering the possibility of allocating public resources. Furthermore, present chapter presented the price formation mechanism in the clinical field based on medical value. The price level was organized with reference to the case (childbirth) of private medical care in Japan. Factors such as the age at parturition, income level, and facility utilization rate have a price impact.

Promoting harmonization with socio-economic trends and improving explanatory power for those who bear the economic burden are key points for the future development of medical insurance systems. Long-term research using a broader range of socio-economic indicators is needed for a more accurate interpretation and deeper analysis of the obtained findings.



This study was funded by the Government of Japan Health and Labor Sciences Research Grant (grant no. JP19DA1004).


Conflict of interest

The author declares no conflicts of interest associated with this manuscript.


Figure A1.

Trends in the country-specific economic level (GDP) and SCI components (service capacity and access). Note: UHC, universal health coverage; SCI, service coverage index [21].

Figure A2.

The UHC service coverage index (SCI): Summary of tracer indicators and computation [4].

Figure A3.

Overview of the regimen used (images). In this study, rituximab was administered four times every 6 months. For the first 6 months after the first dose of rituximab, the dosage of prednisolone and cyclosporine was reduced each month and stopped [41].


Notes/Thanks/Other declarations

The authors gratefully acknowledge Ms. Naoko Tsukamoto and Ms. Noriko Yoshida for their contributions to the chart adjustment.


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Written By

Tomoyuki Takura

Submitted: February 21st, 2022Reviewed: April 4th, 2022Published: May 13th, 2022