All generations must bear costs to maintain social security system
How can a sustainable social security system be built? Part of a prescription has been presented to achieve this objective, but there is still much to be done.
The government’s National Council on Social Security System Reform compiled a final report and submitted it to Prime Minister Shinzo Abe on Tuesday. The government plans to submit a bill that sets forth a road map for the reform to the Diet during an extraordinary session this autumn.
The council discussed the direction of reform to the nation’s pension, medical care and nursing care systems in time for the planned consumption tax increase.
A notable feature of the report is that it calls on higher-earning elderly people to shoulder a greater burden of medical costs and taxes. The report called for a change of the current system in which costs are shouldered based on age to one in which costs will be borne based on financial ability.
Support from elderly needed
Due to the nation’s low birthrate and rapidly aging population, pension, medical care and nursing care benefits have increased, causing government debt to balloon. It is clear that the principle of the current social security system--according to which the working generation bears the financial burden of supporting the elderly--is no longer feasible.
The council naturally recommended that the nation’s social security system be changed to one in which such expenses are shouldered by all generations, including elderly people who can afford it.
It is a point of concern, however, whether the government can steadily carry out the reform.
One problem the government must work on is medical expenses that people aged 70 to 74 pay at hospitals. Medical expenses to be paid by people in this age bracket were set at 20 percent of hospital treatment fees under the Health Insurance Law and other laws revised in 2008. However, the then coalition government of the Liberal Democratic Party and New Komeito kept this figure at 10 percent as a special measure, which is still in effect. As much as 200 billion yen in taxpayer money is spent every year to cover these costs.
It is only natural that the council called for raising this figure to 20 percent as stipulated by law by abolishing the special measure--a prime example of unfairness among generations.
The council also called on higher-income earners to shoulder a greater portion of nursing care expenses, which is currently set at a uniform rate of 10 percent. We think the proposed measure is realistic. The government should quickly review this rate of self-contribution.
The council proposed transferring the management of the national health insurance program, which is mainly used by self-employed people, from municipal to prefectural governments. It also called for raising contributions by health insurance unions of large companies and mutual aid associations for public servants, so they can be used as a resource to rehabilitate the finances of the national health insurance program.
However, many corporate health insurance unions have already fallen into the red due to such contributions. It would defeat the purpose if a sharp increase in their burden resulted in the collapse of these unions. It is necessary to design a national health insurance system that will not cause confusion.
Benefits must be curbed
To put this nation’s limited resources to effective use, an increase in social security benefits must be curbed.
The ballooning of medical expenses is partly attributable to bills incurred by people who suffer a variety of diseases due to their advanced age and visit more than one medical institution for examinations and treatment, according to observers.
To prevent this, the council proposed increasing the number of doctors known as general physicians who can diagnose a wide range of illnesses. However, the panel fell short of addressing a key question begged by its proposal--namely, how to train such doctors.
Among the issues covered by the council’s report is the starting age for benefit payments under the state-run pension system. However, the report only described the issue as a medium- and long-term task that should be discussed together with what mode of employment could be adopted by elderly people.
It is necessary to push back the starting age for receiving pension payments from the current age of 65, given the higher average life expectancy of Japanese and the deteriorating financial condition of the pension program. The United States and major European countries have already decided to push back their respective pensionable ages to 67 or 68. Japan is aging the fastest among advanced nations in the world. With this in mind, the government should begin considering implementing a similar reform as early as possible.
The national council also emphasized the need to transform the current social security system into one under which people of all generations would be entitled to benefit. For example, the panel insisted on proactively financing child-rearing support plans and other projects to address various problems arising from the chronically low birthrate.
Specific measures proposed by the panel include increasing the number of day care centers and improving the quality of their services. The council also suggested setting up centers that offer consultations to pregnant and nursing women.
This proposal is aimed at extending continuous assistance to such women, not only during their pregnancy but also during child-raising. In promoting this idea, the panel noted the fact that such women begin to worry about how to raise their children and provide other forms of parental care even while pregnant. An important task in this regard is to work out how to ensure such child care support centers help them realize their purposes.
Discussions at the national council coincided with a round of debates among three major parties--the LDP, Komeito and the Democratic Party of Japan--over social security system reform.
However, the DPJ has decided to pull out of the talks.
The leading opposition party took this step because of the LDP-Komeito ruling coalition’s refusal to discuss such matters as a DPJ proposal to adopt a minimum guaranteed pension plan. The DPJ also cited the fact that its pension proposal had not been incorporated into the panel’s report.
All parties should help out
However, it would not be enough to raise the consumption tax rate to 10 percent if the DPJ-proposed minimum guaranteed pension program was translated into reality. The DPJ plan also requires a large tax increase besides the consumption tax hike.
The main opposition party has also insisted on scrapping the health care program for persons aged 75 and over, known as people in the latter stage of advanced age. However, there is little need to abolish the system, given that it has already taken root.
The pension reform plan trumpeted by the DPJ is unrealistic. The party has defended its decision to quit talks with the LDP and Komeito, citing the ruling parties’ refusal to discuss its pension proposal. The DPJ’s stance must be criticized as too self-righteous.
It should be noted that the national council was launched when DPJ senior leader Yoshihiko Noda held the reins of government as prime minister. The opposition party should not shirk its responsibilities.
The ruling and opposition parties should join hands in reforming the social security system--a linchpin of national welfare. Such reform is imperative to ensure that the system is not shaken from its foundations even in the event of a change in government.
(From The Yomiuri Shimbun, Aug. 7, 2013)