Japan's healthcare system faces mounting pressures as nursing school closures accelerate, medical fee reforms advance, and debates intensify over insurance coverage for over-the-counter drug equivalents. These developments carry significant implications for foreign residents who rely on Japan's national health insurance system. According to NHK reporting published December 4, 2025, nearly 10% of nursing education programs nationwide have either stopped accepting new students or plan to do so in the near future. The investigation revealed that declining applicant numbers are driving these closures, creating a cascading effect on healthcare facilities. Some medical institutions already report nursing staff shortages severe enough to impact hospital ward operations. For expats, this could translate into longer wait times, reduced availability of certain medical services, and potential strain on healthcare quality as facilities struggle with understaffing. The nursing shortage comes at a particularly challenging time, as medical institutions face financial pressures from inflation and rising operational costs. A Liberal Democratic Party (LDP) caucus focused on healthcare issues submitted a formal request to Prime Minister Sanae Takaichi on December 4, calling for substantial increases in medical fees for the upcoming fiscal year revision. The lawmakers cited severe financial difficulties at medical facilities due to rising prices, arguing that significant upward adjustments to診療報酬 (shinryō hōshū, medical service fees) are necessary to sustain healthcare operations. The government's Social Security Council approved basic guidelines for next year's medical fee revision on December 4, with specific rate adjustments to be finalized through ongoing negotiations. The approved framework emphasizes wage increases and operational efficiency improvements to enhance working conditions for healthcare professionals. While higher medical fees could help address staffing challenges and facility financial health, they may also lead to increased out-of-pocket costs for patients, including foreign residents enrolled in Japan's national health insurance. Simultaneously, a contentious debate over insurance coverage for OTC-equivalent drugs (OTC類似薬) has emerged. These medications, which contain similar ingredients and therapeutic effects to over-the-counter pharmacy products, currently receive insurance coverage when prescribed by doctors. However, policymakers are reconsidering this arrangement as part of broader healthcare cost containment efforts. On December 4, patient advocacy groups and individuals with chronic illnesses submitted petitions containing 200,000 signatures collected online, urging authorities to maintain insurance coverage for OTC-equivalent medications. Many patients with ongoing conditions rely on prescribed versions of these drugs as part of long-term treatment regimens, and removing insurance coverage could significantly increase their medical expenses. Meanwhile, working-level negotiators from the LDP and Nippon Ishin no Kai (Japan Innovation Party) are coordinating on a compromise approach. According to NHK reporting from December 4, if insurance coverage continues for OTC-equivalent drugs, the parties are considering adding surcharges to patients' out-of-pocket costs based on a percentage of the medication price. This would maintain access while encouraging patients to consider purchasing over-the-counter alternatives when appropriate. For foreign residents, these developments warrant attention. If OTC-equivalent drug surcharges are implemented, expats should review their regular prescriptions to identify affected medications and compare costs between prescribed and pharmacy-purchased versions. Understanding which drugs fall into this category could lead to significant savings. The convergence of nursing shortages, medical fee reforms, and insurance coverage debates reflects broader sustainability challenges facing Japan's aging society and its healthcare infrastructure. Expats should monitor these policy changes closely, as they may affect healthcare accessibility, costs, and service quality in the coming year. Staying informed about insurance coverage modifications and understanding alternative options for routine medications will become increasingly important for managing healthcare expenses in Japan.