Sitemap

2009.10.07

Criteria to evaluate the health insurance reform must be provided

The birth of an administration led by the Democratic Party of Japan (DPJ) has spurred expectations in the medical community that the government will remove excessive restrictions on health care expenses that have continued since the days of the Koizumi administration and spend more tax money on health care. The DPJ pledged that it would secure funds for its health care reforms first by eliminating wasteful expenditures of the central government and not by quickly resorting to increasing the consumption tax. I agree on this policy of the DPJ. I believe that the efforts to slim down the central government hitherto have been insufficient and that substantial amounts of financial resources can be raised by drastically reducing the excessive functions of ministries.

However, this is not enough to build a public consensus on the health insurance reform. Because the financial resources secured by eliminating wasteful spending are actually the taxpayer's money, spending more taxes on health care would mean a heavier burden on the mainstream taxpayers or the current working generation. If the majority of the public does not endorse the manner in which the DPJ's reforms changes the division of health care cost burdens between the generations, the new system will not be sustainable.

As Figure 1 shows, the reserve fund of the National Health Insurance and the Japan Health Insurance Association, Japan's major public health insurers, is already running dry. Health Insurance Societies also suffer large deficits, which are biting into their reserves. For this reason, it is inevitable for these insurers to raise the premium rate in 2009 and thereafter. The primary cause of these financial difficulties lies in the mandatory contribution of covering elderly health care costs, as is commonly known.

Figure 1. Financial condition of the Japanese health insurance (in ¥ billions)

National Health Insurance,FY07 projections Japan Health Insurance Association,FY08 results Health Insurance Societies,FY08 results
Revenue 13,116 7,136 6,372
(1) Expenditure 13,073 7,365 6,678
Balance 43 ▲229 ▲306
(2) Term-end reserves 332 154 4,936
(2)/(1) 2.5% 2.1% 73.9%

(Source) Compiled by the author on the basis of "FY 2007 Financial Condition of the National Health Insurance (municipal insurers)," Ministry of Health, Labor and Welfare; "FY 2008 Financial Results for the Former Government-Managed Health Insurance and the Japan Health Insurance Association," August 25, 2009 issue of Kenpo News; and "The Outline of the FY 2008 Projected Financial Results for Health Insurance Societies," National Federation of Health Insurance

From this perspective, I propose that the DPJ provides easy-to-use criteria for the public to evaluate the health insurance reforms that it intends to implement. For example, these can show how the planned reform will change the per capita burden of health care costs in each age bracket. By definition, there are only three sources of finance for health care: tax revenue, insurance premiums, and out-of-pocket expenses paid by patients. Whatever health care system a country has, it is financed by a varied mix of nothing but these three sources. All health care costs are borne by some members of the public, and this even holds true for the tax-funded health care. It is expected that if the DPJ clearly indicates the per capita burden of the health care costs in each age bracket, people will be able to assess the validity of the manner in which the health care burdens are split between generations under the post-reform system.

Yukihiro MATSUYAMA , Other Columns & Papers

see more

Macroeconomics, Other Columns & Papers

back to Columns & Papers TOP