A Finance Ministry panel urged the government Thursday to make elderly people with higher incomes pay more for medical treatment as part of efforts to improve fiscal discipline amid Japan’s rapidly graying society.
“In pursuit of restoring fiscal health, the biggest challenge is the field of social security,” said a set of recommendations handed to Finance Minister Taro Aso by the advisory panel, calling for “equal shouldering of burdens based on their capacity.”
The panel urged the government to “swiftly” revise the system of reimbursing high medical expenses to appropriately reflect the income levels of patients, as there are currently uniform payment caps for people aged 70 or older.
As for budget compilation for the next fiscal year starting April, the panel urged the government to ensure limiting the increase in social security expenses to ¥500 billion ($4.6 billion) from the previous year, maintaining the pace achieved in recent years.
Under the budgetary request for fiscal 2017, the Ministry of Health, Labor and Welfare is asking for ¥640 billion in increased medical and other social security spending for Japan’s aging population.
The government’s economic and fiscal rehabilitation plan states it will aim to limit the rise in social security spending to ¥1.5 trillion in the three years through fiscal 2018 in order to turn the primary balance deficit into a surplus by fiscal 2020.
“To achieve fiscal health, there is no time to waste,” the panel said, adding that the government must stick with the goal.
Regarding the decision by Prime Minister Shinzo Abe to further delay the consumption tax hike to October 2019 from April 2017, the panel strongly encouraged the government to implement the tax hike as planned for 2019.
Japan’s economic health is the worst among industrialized nations with public debt at more than 200 percent of nominal gross domestic product.
A deficit in the primary balance means the government cannot finance its annual budget, excluding debt-servicing costs, without issuing new bonds.
On local government finance, the panel urged the government to overhaul tax allocations to local governments, arguing the central government has been providing more funds than their expenditure.
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