Seniors Drain Health Insurance Societies

The growing burden of medical expenses for the elderly is straining the financial health of corporate health insurance societies.
In one instance, the president of a medical equipment leasing company in Tokyo has begun asking his managers, whose dependents include parents aged 70 and up, to cooperate in reducing medical expenses. In addition to being president of the company, he is also chairman of a health insurance society, which has 1,400 members, including his employees.

In addition to raising the upper limit of health insurance premium rates to 9.5% from 8.8% of employees’ monthly salary in April, he sharply elevated the level at which patients can begin receiving refunds for medical payments.
The main cause of the deteriorating financial health of such societies is payments to the health insurance system for the elderly. The existing system requires a total of 5,200 health insurance societies, government health insurance plans, mutual benefit societies of civil servants and other public health insurance organizations to equally share medical costs for senior citizens aged 70 or older.

In fiscal 2001, the elderly racked up 11 trillion yen ($90 billion) in medical expenses, 7.1 trillion yen of which was shouldered by these organizations. The rest came from government subsidies and the patients themselves.
The medical equipment firm’s health insurance society contributed 83 million yen in fiscal 2001, compared with actual medical expenses of 26 million yen for senior citizen dependents shouldered by the insurance society.
Under the medical insurance system for the elderly, health insurance societies with a below-average ratio of elderly members are required to pay more than the medical costs these members actually incur. The ratio of elderly members to total members of corporate health insurance societies averages 2.7%, while the ratio of the national health insurance plan stands at 26.2%.

The society of the Hitachi Ltd. group, which has 490,000 members, contributed 30 billion yen – one-third of which was actually used for medical expenses for the senior citizens. The insurance group had to close 10 of its 21 hotel facilities last August to cut costs, and sold two others.
The health insurance system for the elderly began during Japan’s high economic growth era. In 1969, Tokyo and Akita prefectural governments began providing free medical services, and local governments across the country immediately followed suit. In 1973, the central government also began its own free service plan.
Medical costs for senior citizens began rising sharply in the 1970s. Spending in fiscal 1974 jumped 55.1% from a year earlier and 30.3% the following year. The current health insurance system for the elderly was introduced in 1983 to prevent the national health insurance plan from going bankrupt.

Takeshi Shimomura, vice chairman of the National Federation of Health Insurance Societies, requested at a Sept. 5 board meeting that a task force be set up to study the matters related to the legal basis for member societies that are required to contribute funds to the health insurance system for the elderly. His request was accepted.
“The legal rationale for these contributions is unclear,” Shimomura said. “We may file a lawsuit if our team finds the payments to be illegal.”
The federation has 1,700 corporate health insurance societies nationwide. About 80% suffer from deficits primarily due to contributions to the health insurance system for the elderly and other factors, and their frustration is rising.

The Health, Labor and Welfare Ministry is considering creating a new health insurance system for the elderly. The ministry is studying whether to have societies with higher premium income and younger members extend financial help to those with lower incomes and older members.
But the fundamental problem remains unsolved: Wealthier societies are required to continue helping the cash-strapped national health insurance plan.
Members of the ruling Liberal Democratic Party and others are insisting that the government use more tax revenues to finance the health insurance system. This idea may be accepted by corporate health insurance societies, but will likely be opposed by taxpayers.

Health insurance systems have only three sources of funds – tax revenue, premium income and patient spending.
“There will be no way to spread the health insurance burden fairly unless taxes and premiums, including pension premiums, are discussed together as an integrated whole,” said Professor Shuzo Nishimura of Kyoto University.