Health expenditure growth in Japan and the United States.

This paper compares the effects of governmental policy changes on health care expenditures in Japan with similar effects in the United States. Our results indicate that Japanese economic expansion and inflation before 1982 generated higher health expenditure growth rates than those in the United States. But after a policy change in 1982, Japanese health expenditure growth dropped from 15 to 5.5 percent annually while expenditure growth in the United States remained high despite Medicare's Prospective Payment System (PPS).