FY25 Health, Nursing Care Costs May Reach 94 Tril. Yen

The Yomiuri Shimbun

October 24, 2008

Japan

The government's social security program study panel announced Thursday that health and nursing care programs will likely require funding of 91 trillion yen to 94 trillion yen in 2025. 

The sum would be equivalent to about 12 percent of gross domestic product, up 50 percent from fiscal 2007, and therefore would require additional tax revenue, it said. 

If consumption tax is used to provide the additional funding, the rate should be raised by four percentage points from the current 5 percent, it said. 

The estimation shows that tax system reform, including a possible hike in the consumption tax rate, would prove indispensable if social security programs are to be improved. 

The estimate was announced by the National Council on Social Security, chaired by Prof. Hiroshi Yoshikawa at Tokyo University's graduate school of economics, based on the premise that various current problems will be addressed by 2025. 

Regarding the "desirable future state of health and nursing care programs" the panel said that such problems as the national shortage of doctors; patients in need of emergency care being turned away from hospitals; and the lack of nursing care providers will be largely rectified. 

In addition, acute medical care programs and home-based nursing care programs would have to be improved, in addition to a streamlining of cooperation and coordination among medical institutions, it said. 

The panel drew up social security cost calculations based on four models: 

-- Modest reform of health and nursing care services. 

-- Bold reform. 

-- Very bold reform. 

-- Current levels of health and nursing care are maintained. 

Even if the status quo is maintained, the nursing care cost will more than double from 41 trillion yen in fiscal 2007 to 85 trillion yen in fiscal 2025. This would mean the consumption tax rate would need to be raised by 3 points to secure 11 trillion yen as revenue. 

In this scenario, the number of medical and nursing care-related personnel will need to be increased from 3.85 million in fiscal 2007 to 5.51 million to 5.64 million in 2025. 

If bold reforms are undertaken and health care provision is raised to the level of advanced European nations, health care costs would reach 67 trillion yen to 69 trillion yen, while nursing care costs would jump to 24 trillion yen. 

The panel added that if moderate and very bold reforms are included, health and nursing care costs would rise to between 91 trillion yen and 94 trillion yen.

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