The Economics of Social Security in Japan
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The Economics of Social Security in Japan

Edited by Toshiaki Tachibanaki

This book provides a comprehensive appraisal of social security in Japan, where traditionally the burden of welfare provision has been the main responsibility of the family and employers, rather than the state. However, an ageing population, changes in family structure and continued recession has led to an urgent reappraisal of this situation.
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Chapter 8: Issues in Japanese health policy and medical expenditure

Yasushi Iwamoto


* Yasushi Iwamoto 1. INTRODUCTION Japanese citizens are worried about the rising burden of medical costs. Frequent reports of medical malpractice and accidents indicate, however, that the quality of medical services does not match the rising bill. This chapter discusses how Japanese policy makers could control the cost and quality of medical services. To this end, the chapter first examines the past behavior of the national medical-care expenditure and its future path. Possible reforms to slash medical costs and improve the quality of medical care are then proposed. Per capita real medical expenditure is driven by two factors; a change in the population structure and the so-called ‘natural increase’ (a change in input due to technological change). Section 2 shows that about 30 percent of the past growth was due to population ageing and the remaining 70 percent to technological change. The section also surveys the effect of population ageing on future medical-care expenditure and finds that medical expenditure will increase by around 20 percent in 20 years due to population ageing. Section 3 focuses on a reform of health insurance for the elderly and presents some policy recommendations. Once the government started working on a fundamental reform of public health insurance, it was a very long time until such a plan for the elderly was formulated. After twice failing to meet a deadline, the government and ruling parties finally reached an agreement on health-care reform in November 2001. The agreed plan, however, has not resolved some fundamental problems. One...

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