It is essential to convert the current social security system into one in which each generation supports the other in response to the advancement in the population decrease and super-aging of society. Whether a resolute road map can be drawn to achieve that goal is called into question this year.
With the dawn of an era of 100-year life spans, it is vital to support the lives of a wide range of generations, including the working generation who are raising small children, while facilitating an environment in which anyone works as long as possible to give a helping hand to the system. Prime Minister Shinzo Abe has announced a plan to carry out reforms over a three-year period aimed at transforming social security services to serve all generations.
It is important to show a concrete picture of a system that is sustainable, thereby dispelling people's anxiety about their future. Doing so is also indispensable to gaining popular understanding for an increase in the consumption tax rate in October, aimed at securing a source of revenue for social security services.
Quick debates needed
The number of babies born in 2018 stood at an estimated 920,000. The figure has sharply dropped since falling below 1 million two years prior to that period. If this goes on, the nation's total population is expected to drop from the present 127 million to 88 million in 2065. The percentage of elderly people in the population will likely increase from more than 28 percent to close to 40 percent.
The integrated social security and tax reform package is designed to make preparations for 2025, when the baby boom generation reaches age 75 or older. However, a sharp change in the demographic structure will come after that.
In 2040, the elderly population is expected to reach its peak, while the reduction in the number of people in the working generation will likely accelerate. The percentage of social security benefit payments in relation to the gross domestic product (GDP) is expected to rise from the current 21.5 percent to 24 percent. How should necessary funding be covered? Or should such benefits be curtailed?
Based on a close look at 2040, it is necessary to hurriedly promote discussions about what lies ahead of the consumption tax rate increase to 10 percent.
For the time being, the government has cited as important policy measures for the elderly the expansion of employment, disease prevention and health promotion. There is no objection to the necessity of these steps, but if an increase in people's burdens and cuts in benefit payments are postponed, the stability of the system cannot be expected.
Medical, nursing reforms
The greatest task is a response to the rapidly growing needs of medical and nursing-care services.
Measures include limiting the number of beds to support surgeries and emergency services at a high cost for patients in an acute stage and increasing that of beds used to assist patients in their recovery so they can be discharged from the hospital. Another step is to improve the quality of home medical care and reinforce cooperative arrangements for such treatment and nursing-care services, thereby enabling elderly people to live in their homes at ease.
It is vital to achieve both a curb in swelling costs and the securing of high-quality services by building an efficient system suited to the needs of an aged society.
In line with this direction, prefectural governments have drawn up their local health care plans taking into account the future demand for medical services and are moving ahead with preparations for relevant systems. Through consultation with medical institutions and so forth, prefectural governments aim at converting the use of hospital beds as well as reducing them.
What is worrisome is the laggard pace of the plans materializing. Only some prefectural governments have been able to reach an accord with medical institutions over the reorganization of the use of hospital beds. Measures that would allow the plans to be more effective, such as giving more authority to prefectural governments, should be considered.
Holding in check those medical services accessible to outpatients is also a challenge. There are merits in what is called free access in which patients can choose, at will, where they will seek medical services, but this has brought about developments such as patients converging at large hospitals. Another factor that has been pushing up medical expenses is the fee-for-service system through which the more medical examinations or checkups administered by medical institutions, the greater the revenues they gain.
For the pension system, the once-every-five-years examination of the system's finances will be conducted this year, with discussions on system reforms slated for 2020 to make headway. Those matters that were left undone during the previous reforms should be resolved.
First, the strengthening of the macroeconomic slide mechanism in which pension benefit levels are lowered in line with the advance in the declining birth rate and aging population. As there is a rule that restricts the implementation of this mechanism in times of deflation, there has been little headway made in lowering the benefits, leaving them hovering at high plateaus.
Under the current system, the benefits are disbursed within the range of revenue sources in the long run, while the premium levels are fixed. As the lowering of benefits lags behind, financial resources earmarked as payouts for future generations would be distributed to today's elderly, further lowering benefit levels in the future. Eliminating this restriction is an urgent task.
In order to lessen worries about aging among non-regular workers and the like, expanding coverage of employees' pension programs should also be advanced further.
From the perspective of promoting the employment of the elderly, the government intends to extend the range of choices up to age 75 for people to start receiving pension benefits. The later they start receiving their benefits, the greater their pension benefits become. This can be an effective tool to supplement the decline in benefit levels. Extending the period of paying premiums for the basic pension could also be worth considering.
Prioritize balance
As part of shifting the social security system into one benefiting all generations, free preschool education and childcare programs will be implemented in October. Eligible will be children aged 3 to 5 and low-income families' infants under 3.
As childcare service fees and the like have already been reduced or waived in accordance with the income of households, the adoption of free services would provide benefits unevenly for high-income families. As measures to lessen the financial burden of child-rearing households, these new programs lack balance. Setting income limits is called for.
A more earnest wish among the child-rearing generation is the eliminating of those on the waiting lists at daycare centers and the qualitative improvement of childcare services. With financial resources to be taken away for free preschool education and childcare, efforts to tackle these issues must not be neglected.
The implementation of work style reform is only halfway through. Amid the declining working-age population, it is vital to create workplaces where a diverse range of manpower can play active roles.
The revised Labor Standards Law, whose central pillar lies in the establishment of the upper limit on overtime, will come into force in April. It is important for the revision to lead to rectifying the long working hours that make it difficult for people to balance work and family life.
(From The Yomiuri Shimbun, Jan. 7, 2019)
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