When the government's draft budget is compiled at the end of every year, attention focuses on the scale of social security expenditures, which now account for a major part of the government's annual spending. The social security system can't sustain itself without the government chipping in. As the aging of Japan's population has accelerated since the 1990s, social security spending has increased rapidly.
In 2016, social security expenditures including public pensions, medical insurance and other benefits reached ¥116.9 trillion — almost double the amount in 1993 just after the collapse of the bubble boom. The so-called 2025 problem is often cited with widespread concern — in 2025, all of the postwar baby boomer generation will have turned 75 or older, further pushing up the cost of social security benefits. 2025, however, will just be a starting point; social security expenditures are estimated to hit around ¥190 trillion in 2040 — more than 1.6 times the cost in 2016, according to the Cabinet Office. The population of people 65 or older is forecast to peak in 2042 at 39.35 million — a 16 percent increase over 2015.
Social insurance programs such as the public pension, health insurance and nursing care insurance for the elderly are financed not only by insurance premiums but also through government expenditures. As the cost of social security benefits expand rapidly, revenue from insurance premiums cannot cover the entire cost. Year by year, public expenditures on social security continue to increase, squeezing the government's general expenditure.