Social welfare reforms

A government panel on social welfare reform submitted its report to Prime Minister Shinzo Abe on Tuesday. In general, the report calls for increasing the financial burden on elderly people to make Japan’s social welfare system sustainable. Given that such a development would coincide with an increase in the consumption tax, people will not willingly accept the increase unless the government shows how it would help to stabilize the social welfare system. The government must also ensure that low-income people do not suffer as a result. At present, people age 70 to 74 pay 10 percent of their medical cost out of their pocket when they receive treatment at medical institutions. The report calls for the rate to be gradually increased to 20 percent.

It also calls on prefectural governments to first work out a medical service plan by taking into account local conditions and then to reorganize hospitals in communities. Greater emphasis will be placed on the use of local clinics so people with minor illnesses do not have to go to large hospitals. The administration of the national health insurance system for the unemployed, self-employed and retirees will be moved from municipalities to prefectures. But because prefectural governments do not have much experience in handling administrative matters related to medical services, they must make strenuous efforts to enable residents to receive adequate medical and nursing care services in their communities.

Under the current nursing care insurance system, elderly people who receive services from the system pay 10 percent of the costs out of pocket. The report proposes that more affluent senior citizens should pay 20 percent instead.

The plan’s call for cutting costs by shifting elderly people who do not need intensive nursing care from care services provided under the nursing care insurance system to care services provided by municipalities is problematic. Because many municipalities are suffering from shortages of funds and human resources, there is the danger that the quality of the services will worsen. Elderly people who live alone may face great difficulties.

The report also calls for strengthening taxation on high-income pensioners. This may help a bit in increasing the pension funds for young generations. But the report fails to delve into the problem of many young people failing to pay pension premiums.

The government plans to use the additional revenue generated by a higher consumption tax to fund the social welfare system. But because sales taxes are regressive in nature, the government’s approach is far from the ideal of redistribution of income.

The government panel’s proposal on social welfare reform includes many issues that must be resolved. The government should listen to opinions from people of various groups with an open mind and work out reasonable social welfare reforms that are acceptable to both senior citizens and younger people.