Should older people pay a larger share of their health care costs?

Earlier this month, the Cabinet approved a proposal that would require people over 74 to pay 20% of health care costs out of pocket, thus doubling the portion they currently pay. The plan would apply to single person households with yearly incomes of ¥2 million or more. For a two-person household where both residents are over 74, the threshold is ¥3.2 million.

Residents enrolled in the national health insurance system currently pay 30% out of pocket, and then 10% once they reach 75. Many older people live on fixed incomes and tend to use health care services more than younger people do, so the government believes that, due to the growing elderly population, younger people — the “working generation,” as the government calls them — are being unfairly stuck with the bill for their parents’ and grandparents’ health care.

The media has found nothing strange about the plan: What’s wrong with asking older people of means to pay a larger share of their health care costs? But that justification springs from a basic understanding that the health insurance system as it stands is fair, when, in fact, it isn’t.

Or so says Dr. Hiroshi Honda, who some years ago gave up his medical practice to work full time on exposing what he calls the “corruption” of Japan’s health care system. During a recent interview on the TBS Radio show “Ogiue Chiki Session,” Honda talked about the new proposal, which he believes will discourage many older people from seeking necessary treatment.

The problem is the payment structure. In Europe, medical care for older residents is either free or very inexpensive, and there are no out-of-pocket costs. Aside from the United States, it is “abnormal” in industrialized countries to charge elderly people 20% of medical fees covered by national insurance, Honda says. In Japan, half of all medical costs are paid for by the various national insurance plans funded by premiums, and 38% by other taxes. Honda says this 38% is fixed, so if health care costs go up, the government has to find funds elsewhere, and since costs invariably go up as the elderly portion of the population increases, older beneficiaries should foot the bill.

Honda thinks that premiums for national health care are already unnaturally high while, at the same time, benefits are being cut: People over 74 will be asked to pay twice as much for their medical care while the government is reducing pension benefits. Moreover, the burden is disproportionate. Once your monthly income reaches ¥1.39 million, premiums stay the same, no matter how high it goes. A person who makes ¥1.39 million a month spends 5.8% of their income on national insurance premiums, while someone making ¥10 million a month pays only 0.8%. Granted, ¥1.39 million a month is a lot of money, but older residents who make only ¥2 million a year will be asked to pay the same amount for medical care.

To government bureaucrats, making the system self-sufficient is more important than the actual purpose of the system, which is to keep people healthy. As in most countries with universal health care, the government in Japan controls fees and costs. Honda estimates that the fees the government pays to clinics and hospitals for testing and surgery are about half what they are in other countries, while prices for equipment and drugs, also set by the government, are too high. The result is that many hospitals, even publicly run ones, are constantly in the red and cannot afford to hire the personnel they need. The whole system suffers, especially during a pandemic.

According to the health ministry, the proposed increase will “reduce the medical cost burden for the working generation” by ¥88 billion a year, which is an odd way to frame it. The proposal shifts that burden on to older people, many of whom have less means to afford it — ¥2 million a year is difficult to live on without substantial savings and a home that’s already paid for. Rather than assume the burden itself, the government is setting old against young.

However, this attitude toward the older generation is not surprising given the failure of the kaigo insurance system, which started 20 years ago. The kaigo program mandates that everyone, starting from the age of 40, contribute to a fund that pays for any care they need after turning 65. The system is almost completely self-supporting, and premiums have doubled over time while benefits have become harder to attain.

In a lecture Honda gave in Kobe in 2018 he related his own experience in trying to find a care facility for his ailing father. Having paid into the kaigo program, his father was eligible for admission to a nursing home designated by the program but would have to wait at least a year because there was a very long waiting list. The only alternative was private nursing care, which Honda couldn’t afford. The kaigo plan was essentially useless, and yet Honda’s father was still paying into it. Honda says the media has ignored this aspect of the kaigo system, though an Oct. 11 Asahi Shimbun article explained that, over time, the qualification for certain types of care offered by the kaigo plan have been elevated so as to make it more difficult to access that care. Meanwhile, middle-aged people have to quit their jobs to care for older parents full time, thus jeopardizing their own old-age security.

A separate Asahi Shimbun article reports that 19,221 people who were using kaigo benefits had assets seized in 2018 because they were delinquent with payments. Premiums are automatically subtracted from pension benefits, but seniors whose income is less than ¥180,000 a year pay manually, and sometimes they can’t pay the premiums, which averaged almost ¥6,000 a month in 2018 and is expected to increase to ¥7,200 a month by 2025. As a penalty, their out-of-pocket cost increases from 10% to 30%, thus making any attendant care prohibitively expensive for lower income seniors.

In his lecture, Honda quoted Shuzo Tsutsumi, the bureaucrat who came up with the kaigo system. Later, Tsutsumi disowned it, saying it had become nothing more than a “national swindle,” since it forced people to pay for services they may never receive. As with national health insurance, kaigo insurance is premised on the idea that the government will only support it up to a point. After that everyone is on their own.