The ruling Liberal Democratic Party and its two non-Cabinet allies — the Social Democratic Party and New Party Sakigake — agreed in principle August 22 to create a new health insurance system solely for people 70 or older.

The scheme will place a heavier financial burden on the elderly, who are currently protected from the full cost of medical costs and are required to pay much less for their treatment than younger patients. Of the nation’s annual medical bill of 27 trillion yen, about one-third is spent on medical treatment for people in the 70-plus age bracket. However, about 70 percent of the cost of medical treatment for that age group is paid by younger generations.

The ruling bloc’s panel on health insurance system reform also broadly agreed to scrap the current government-mandated pricing system for prescription drugs. Mandated prices for prescription drugs have long been criticized for encouraging hospitals to prescribe excessive amounts of medicine because medical institutions usually buy drugs from pharmaceutical companies below mandated prices and profit from the difference. Such profits are estimated at 1.3 trillion yen a year for hospitals.

The LDP and Sakigake have suggested replacing the system with a new one designed to have patients pay any additional cost for drugs beyond a set sum. However, the SDP is calling for the introduction of an open bidding system for hospitals to purchase medicine.

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