EDITORIAL: Social security reform

The government's council for intensive discussions of tax and social security reforms began its work on Feb. 5. The outcome of the debate will be reflected in reform plans that will be worked out by the government and ruling parties in June.

At a news conference after the panel's first meeting, Kaoru Yosano, minister in charge of economic and fiscal policy, said pension and health-care reforms will be the two "main themes" of the council's discussions. In the first stage, various experts will be invited to offer their opinions.

If the government sets out to develop comprehensive plans for the future of the nation's tax and social security systems, however, it will have to tackle a vast range of issues. Laying down such a vision in detail by June is a tall order. In addition, social security reform will be a lengthy process, since the system needs to be adjusted as the nation's population ages with a shrinking number of children.

Here's a more realistic approach. The government should start by drawing up a reform outline and setting task priorities. Then it should work out the details of the plans to carry out high-priority tasks. As it does so, the government can also try to lay the groundwork for talks with the opposition parties over reforms.

The nation's universal programs for public pension and health care were established 50 years ago. Fixing the parts that have become frayed over the years due to social change and securing stable revenue sources to finance the programs is the No. 1 priority to ensure their long-term sustainability.

For the pension program, this means securing a revenue source to maintain tax funding for half the basic benefits.

Debate on health-care reform should focus on the national health insurance program, which covers about 36 million self-employed and other people, excluding regular company workers.

When it was established, farmers, forestry workers, fishermen and self-employed workers accounted for nearly 70 percent of the heads of the households covered by the program. Today, their share has declined to around 20 percent.

Instead, jobless people and nonregular workers constitute 70 percent of those insured. The growing ranks of elderly people who have retired from their companies and workers who have failed to find full-time positions have also been joining the program.

As a result, the number of people who cannot afford to pay their premiums has surged.

According to Feb. 4 report on the program's financial condition in fiscal 2009, the ratio of actually-collected premiums against premiums due stood at a record low of 88 percent.

About 20 percent of the households are delinquent in their payments, and 300,000 households are effectively living without health insurance coverage at all.

To cover the shortfall in revenue, the premiums for high-income earners have been pushed up sharply. There is now little room left for a further hike in their financial burden.

The situation is forcing municipal governments, which operate the program, to pony up a combined 360 billion yen ($4.4 billion) annually to cover the deficits. The system will become unsustainable if nothing is done.

The financial plight of the national health insurance program symbolizes the nation's faltering society, which faces growing problems such as aging of the population and job instability. The situation is similar to the dire one facing the national pension program: 40 percent of its premiums due are going unpaid.

Getting these programs back on firm financial footing will be a long, arduous task. At the current level of consumption tax revenue, the government will need an additional 10 trillion yen to cover the state's contributions to the health-care, nursing-care and pension programs for the elderly.

At present, the spotlight is on pension woes amid the partisan warfare being waged in the ruling and opposition camps. But as we have mentioned, there are many other urgent issues that must be addressed.

We hope the council for intensive discussion can confront these grim realities and tackle these issues while assessing the priorities carefully.

--The Asahi Shimbun, Feb. 6