Scrutinize health insurance reform

A package of bills to reform the nation’s public health insurance system has been tabled in the Diet. The system — backed by health insurance schemes covering corporate employees and public servants, and the national health insurance program mainly for the self-employed, pensioners and the unemployed — ensures that anybody can get treated at any medical institution if a health insurance certificate is presented. Japan’s system of universal health care is rare in the world and government officials from other countries come here to study it.

But the sustainability of the system has been thrown in doubt because the graying of Japan’s population has sharply pushed up the nation’s total medical costs, which reached ¥39.2 trillion as of fiscal 2012, a 1.6 percent increase from the previous year and the equivalent of 8.3 percent of Japan’s gross domestic product.

In this sense, the first major overhaul of the system since 2006 is unavoidable. But the national government needs to provide sufficient support to prefectural governments, which will be tasked to play a larger role in maintaining the program, to make sure that the system does not collapse.

The main point of the legislation is to transfer the responsibility for managing the national health insurance program for local residents from municipalities to prefectural governments starting in fiscal 2018. The program run by the municipalities has served as the foundations for Japan’s public health insurance system, but it has been confronted with a structural problem of the large number of elderly subscribers — who use medical services more frequently — and low-income residents, which has resulted in annual deficits of more than ¥300 billion in recent years. The transfer of the program’s management to prefectural governments — which are generally more financially stable — is intended to protect the program from the risk of financial instability. The national government also plans to inject some ¥340 billion in public funds annually to stabilize the program.

Under the proposed reform, the burden of prefectural governments will increase because they will be responsible not only for the finance of the national health insurance program but also for making sure that local residents will receive sufficient medical services. If the prefectures are forced into increasing the financial health of the national health insurance program in excessive ways to sustain the scheme, that might lead to an increase in the costs that patients must shoulder and cuts in the number of hospital beds, possibly denying some people access to the medical services they need. The national government needs to provide enough support for both prefectures and municipalities so that the burden would not be shouldered by the prefectural governments alone.

Even when management of the national health insurance program has been transferred to prefectural governments, municipalities will continue to decide the rate of premiums and implement projects designed to improve the general health of their residents. There is criticism that the division of labor between prefectures and municipalities is unclear. The national government needs to clarify the rules to prevent confusion.

Also under the reform, the cost of a hospital meal, which must be paid out of the patients’ own pockets, will be raised from the current ¥260 to ¥360 in fiscal 2016 and to ¥460 in fiscal 2018 so as to help equalize the burden for in-patients and home-care patients, although the increase will not apply to low-income patients and people suffering from diseases that are difficult to cure.

Patients who go to large hospitals without letters of introduction written by their doctors will be charged ¥5,000 to ¥10,000 extra starting in fiscal 2016. This system is intended to prevent patients from receiving advanced treatment that they don’t need at the large institutions — a factor that also contributes to the nation’s bulging medical expenses. But the government should note that this change might inconvenience people who live in areas that do not have enough community hospitals or clinics.

The proposed reform will also introduce a new system in which patients can receive treatment using drugs not yet approved by the government and the use of these drugs will be partially covered by public health insurance. Patients who want such treatment must apply to designated medical institutions. It has been pushed by the Abe administration as part of its deregulation of medical services to help accelerate economic growth.

Details of this system have not yet been worked out, however, including how to cope with possible side effects of the unauthorized drugs and medical accidents caused by their use. At the very least it needs to be decided who will be responsible for compensation in the event of such cases. Patients’ groups also point out that the proposed system may only benefit wealthier people who can afford the extra cost of such drugs.

Although it is deemed a certainty that the bills will be enacted given the ruling coalition’s control of the Diet, the government needs to clearly explain the significance of the reforms and lawmakers need to carefully discuss if the proposed changes adequately address structural problems and other flaws in the public health insurance system.