Sophia Magazine vol.2 / WINTER 2015

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Choosing d, l in Subjective Equilibrium SettingIf the demand hospitals face is y(B)signed, both the entry of a for-profit enterprise and the lifting of the ban on treatments partially covered by insurance can lead to a better balance. Though it is not easy to design an effective system without external pressure, I believe that the Japanese government should move deregulation forward,” he said.Debate over the TPP made us realize again that health care is an explicit economic activity, regardless of whether it is right or wrong. “When you view medical services as an object of economics, however, there are peculiarities that cannot be overlooked,” Professor Aoki noted. With people’s lives and health, the essential subjects of health care, there are no other values that are equal, valuable, and irreplaceable to all people. Moreover, there is no predict-ing when demand, that is, a disease or injury, occurs. “On top of these, there is an extreme information asym-metry in which only doctors have the necessary professional knowledge, and it is difficult for patients to determine whether the medical care provided is appropriate or even whether it is necessary or not.” For instance, everyone learns at school the most basic of economic truisms, that as supply exceeds demand, the price falls. But in the healthcare arena, conversely, you see a phe-nomenon where as the number of doctors rises in a certain region, medical costs per resident increase. “As a conceivable reason for that, in order for doctors to en-sure revenue given a large number of competitors nearby, it is believed that there is a ‘physician-induced demand’ in which by taking advantage of information asymmetry, they provide The parties concerned finally agreed, largely, to the Trans-Pacific Strategic Economic Partnership Agreement (TPP), aimed at building a comprehensive economic alliance and liberalizing trade multilaterally, in October last year. There were those in Japan who were strongly opposed to the TPP, and one of the main areas of opposition lay in the area of health care.“Eliminating regulations on the entry of a for-profit enter-prise (stock corporation) into hospital operations and lifting the ban on treatments partially covered by insurance (the use of treatments both covered by insurance and at one’s own expense). The United States, which boasts highly advanced medical technologies and seeks other markets, had made these demands of Japan. It was thus feared that Japan would be forced to accept them altogether on the back of the TPP,” Professor Aoki explained. “As it turned out, however, items directly associated with health care were not incorporated into the agreement and it is unlikely that these issues will be dealt with in a big way within the TPP framework down the road,” he predicted. “Because health care services have particular features mak-ing them different from other goods, they do not fit into free competition based on market mechanisms that the TPP aims at in the first place. Thus, countries are trying to devise ways to deal with a wide variety of systems, including self-regula-tion. It is safe to say that the U.S.’s liberal domestic system is probably an exception and it is unreasonable that the U.S. calls on other countries to open markets, as is the case with general trade barriers,” Professor Aoki added. On the other hand, in Japan, excessive regulation in part undermines patients’ interests. “It is theoretically evident that if deregulation is well de-Why Japan’s Health Care Industry Feared the TPPThe Peculiarities of Health Care Services from an Economic StandpointEmpirical Research on Hospital Behavior under theNew Hospital Payment System, Diagnosis Procedure Combination/Per-Diem Payment System (DPC/PDPS)* Recently Prof. Aoki has been working to make a model of hos-pital behavior under the new payment system, DPC/PDPS. The introduction of DPC/PDPS brought great changes in the hospital market, however, few models have been built to explain them. The rst slide shows how hopsitals act in his model. The second slide demonstrates hospital choice in the reference model. Since the two models have different comparative statics results, as in the third slide, an appropriate model can be selected empirically.◆ B(d, l ) is common to all hospitals.◆ The shape (disregard the level) of the iso-prot line is inuenced by R(l) , c, and y(B); the analysis below assumes that c is equal across all hospitals.◆ y(B), z determines where lc stands.1) to the right of E1 => E12) in between E1 and E2 => @lc 3) to the left of E2 => E2Optimal solutions vary according to where lc stands.14Research