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Economy

Chronic deficits plague Japan's health insurance program

Older base, costly drugs contributed to $2.5bn shortfall last fiscal year

Japan's national health insurance program is struggling to make ends meet in an aging society.

TOKYO -- Japan's national health insurance system logged a deficit of 284.3 billion yen ($2.53 billion) in fiscal 2015 as an injection of public funds failed to compensate for rising costs stemming from an aging subscriber pool and pricey new treatments.

The deficit narrowed by 24.3 billion yen from the previous year, the health ministry said Tuesday. The system, which covers the self-employed, retired seniors and temp workers, are run by municipalities using tax revenue to cover annual shortfalls.

The main culprit is a continued rise in benefit payments, which grew 2.1% to 9.55 trillion yen. The graying population played a role, as did the debuts of high-priced hepatitis C drugs Sovaldi and Harvoni.

Premium payments slid 3.5% to 2.95 trillion yen, largely because the number of beneficiaries dropped by 1.2 million to 31.82 million. Though the payment rate for premiums improved for a sixth straight year to 91.45%, the overall trend of rising costs and falling revenue remains unchanged.

The system's financial woes owe partly to a base that skews older than in other insurance programs. The average age of national health insurance beneficiaries was 51.5 in fiscal 2014, with people aged 65-74 accounting for nearly 40% of the pool. As a result, medical costs averaged 333,000 yen per person -- more than double the figure for big companies' health insurance societies.

The relatively low incomes of those covered by government insurance make it difficult to raise premiums. Some municipalities even keep premiums low intentionally and make up the difference with tax revenue.

The central government began using public funds to shore up the program's finances last fiscal year, contributing 170 billion yen. It also plans to transfer management from the local level to the prefectures in fiscal 2018. Broader coverage areas would permit standardization of widely varying premiums, putting the system on firmer fiscal footing, some argue. But others worry this will lead to higher nonpayment rates in municipalities where premiums rise.

(Nikkei)

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