Japan's health indices such as life expectancy at birth are among the best in the world. However, at 8·5% the proportion of gross domestic product spent on health is 20th among Organisation for Economic Co-operation and Development countries in 2008 and half as much as that in the USA. Costs have been contained by the nationally uniform fee schedule, in which the global revision rate is set first and item-by-item revisions are then made. Although the structural and process dimensions of quality seem to be poor, the characteristics of the health-care system are primarily attributable to how physicians and hospitals have developed in the country, and not to the cost-containment policy. However, outcomes such as postsurgical mortality rates are as good as those reported for other developed countries. Japan's basic policy has been a combination of tight control of the conditions of payment, but a laissez-faire approach to how services are delivered; this combination has led to a scarcity of professional governance and accountability. In view of the structural problems facing the health-care system, the balance should be shifted towards increased freedom of payment conditions by simplification of reimbursement rules, but tightened control of service delivery by strengthening of regional health planning, both of which should be supported through public monitoring of providers' performance. Japan's experience of good health and low cost suggests that the priority in health policy should initially be improvement of access and prevention of impoverishment from health care, after which efficiency and quality of services should then be pursued.
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