Efforts to Strengthen Insurer Functions and Establishment of A Medical Insurance System for the Elderly

Background to Investigation

1. Keidanren opinion paper "Rebuilding the Medical Security System to Gain the Trust of the People" (November 1996) proposes:

   1. fundamental reform of health care system for the elderly;
   2. strengthening the functions of medical insurers;
   3. introduction of the principle of competition.

2. Government postponed fundamental reform of medical insurance system
   Instead of discussing reform of the medical insurance system aimed at implementation in fiscal 2000, fundamental reform was postponed.

3. Keidanren again urges implementation of fundamental reform of the medical insurance system in fiscal 2002
   Specific proposals again made concerning strengthening of insurer functions and format of new medical insurance system for the elderly. In addition, separate proposals toward implementation of fundamental reform in fiscal 2002, should be made as necessary when national debate has reached more advanced stage.

Changing Environment Surrounding the Medical Insurance System

1. Structural changes in economy and society
   Doubts have been raised about the sustainability of the medical insurance system in the light of such factors as the shift to low growth, the rapid aging of society with fewer children, the diversification of lifestyles, and the fluidity of employment.

2. Increased medical expenditure and deterioration in financial condition of insurers
   Already many health insurance societies have fallen into the red. In particular, expenditure on the health service for the elderly is putting pressure on the financial state of health insurance societies.

3. Asymmetry of medical information
   Not much medical information is disclosed by medical institutions. So there is an absence of check functions by users on the quality and efficiency of medical services.

4. Problem awareness within the business sector

   1. The need to strengthen insurer functions
      It is necessary for insurers themselves (companies and health insurance societies) to make efforts toward the rationalization of medical insurance costs, without waiting for fundamental reform of the medical insurance system.
   2. Fundamental reform of the current health care system for the elderly
      As part of the effort to strengthen insurer functions, it is necessary to promote fundamental reform of the health care system for the elderly, which is outside the control of the insurers themselves, and decide appropriate revenue sources.
   3. Comprehensive reconsideration of the fiscal, tax, and social security systems
   4. Utilization of information technology in the medical and nursing care fields

Strengthening of insurer functions toward reform of the medical insurance system

By fulfilling the full range of insurer functions, companies and health insurance societies themselves promote fundamental reform of the medical insurance system.

1. Independent efforts by companies and health insurance societies (already underway)
   Including (a) tie-ups between the health care activities of health insurance societies and health management within corporations; (b) liaison between corporations and health insurance societies on the one hand and medical institutions on the other (strengthening prevention of disease); (c) strengthening communication between health insurance societies and employees (confirmation of medical expense notifications, health consultation via intranets, etc.); (d) collaborative projects among health insurance societies (home-visit guidance for the elderly, joint medical examinations, etc.)

2. Consolidation of infrastructure and review of regulations
   To enable companies and health insurance societies to make full efforts to rationalize medical insurance costs, it is necessary to consolidate the infrastructure and conduct a review of regulations.

   1. Establishing electronic procedures for claim investigation and payment (basic infrastructure: digitization of claim documents)
   2. Initial investigation of claims by health insurance societies, etc. (deregulation: approval of initial investigation of claims by organizations other than the Social Insurance Medical Fee Payment Fund)
   3. Strengthening of liaison between health insurance societies and outstanding medical institutions (basic infrastructure: networking and sharing of medical information; deregulation: approval of conclusion of discount contracts between health insurance societies and medical institutions)
   4. Evaluation of medical institutions and medical services by third-party organizations (deregulation: relaxation of regulations on advertising relating to medical institutions)
   5. Utilization of insurer support services (deregulation: approval of external subcontracting of the application and payment operations of health insurance societies)

3. Promotion of the reorganization and rearrangement of health insurance societies

4. Establishment of a medical and nursing care information network as part of the "Electronic Government" Project
   Realizing the qualitative improvement of medical care services and the increased cost effectiveness of medical insurance through the utilization of information technology in the medical and nursing care fields.

Establishment of a New Medical Insurance System for the Elderly

1. The medical insurance system for the elderly and its users: the need for independence, self-help, and self-responsibility

   1. Application of the same insurance principle as the working generation is difficult (high incidence of illness, high per capita medical expenses, etc.).
   2. Elderly people should not be treated uniformly as weak members of society. Contributions should be required according to ability to pay.

2. Linkage of nursing care insurance and pension system

3. Proposal for new medical insurance system for the elderly

   1. Eligibility:
      In principle, persons aged 65 years or over. For older people, aged 75 years or over, insurance charges and individual contributions should be reduced. In the case of persons with income above a certain level, contributions on a par with the working generation should be required.
   2. Operating institutions:
      Wide-area federations (koiki rengo) of cities and villages, Partial Administrative Unions and other local public entities
   3. Revenue sources:
      Insurance charges + individual contributions + public expenditure
      1. In principle, fixed rate of individual contribution ( 65 - 74 years: 20%; 75 years and over: 10%) In the case of persons with an income over a certain level, individual contributions should be on a par with that of the working generation.
      2. Insurance charges (65 - 74 years: 15%; 75 years and over: 10%)
      3. The increase in public expenditure should be covered by consumption tax revenue.
      4. Burden for health services for the elderly should be abolished promptly.
   4. Schedule of medical fees:
      Increase the element of package payment.
   5. Date of implementation:
      Fiscal 2002
   6. Sharing of information:
      Building regional medical and nursing care networks to enable the sharing of information among elderly persons, their families, and the providers of medical and nursing care services.