The ruling Liberal Democratic Party and its two non-Cabinet allies on April 7 agreed to implement by 2000 a new medical payment system that will cap the total amount that medical institutions can charge per illness.

The move is part of an effort to slow the widening deficit in the medical insurance system by discouraging overtreatment of patients. However, the three parties postponed working out detailed measures to realize the introduction of the new system, due to their policy differences.

Medical payments are currently made for each medical service rendered. The more medical examinations a patient has, the more fees hospitals charge. But the new plan will attempt to cap this open-ended system. The agreement was reached after three months of intensive discussions among the LDP, the Social Democratic Party and New Party Sakigake.

Although the SDP and Sakigake have been demanding a change to the new system to prevent the misuse of public funds, the LDP, strongly lobbied by the Japan Medical Association, has been reluctant to do so.

As a compromise, the ruling bloc agreed that the new system will be used together with the current system, and that “the best mixture of the two systems should be sought,” according to the agreement.

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