Topics Issues on the nature of public medical insurance benefits

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Ryuiku Masuda, Senior Researcher, Pharmaceutical and Industrial Policy Research Institute (PIIPRI)

Introduction

On January 20, 2020, then Prime Minister Abe delivered his policy speech at the 201st session of the Diet, in which he called for the realization of a "100 million-person active society" and stated that reform of the social security system should be implemented with the aim of creating an all-generation social security system. He used the expression, "As the so-called baby boomers reach the age of 75 or older in 2022, it is imperative to halt the rising burden on the working-age population." He referred to the 20% over-the-counter copayment for those over 75 years of age with a certain income and the flat-rate copayment for major hospital visits. On January 18, 2021, Prime Minister Kan delivered his policy speech at the 204th session of the Diet with the keywords "security" and "hope. The key words of his speech were "security" and "hope. The prime minister spoke of "the long-standing issue of supporting each other, the young and the elderly, and reducing the rising burden on the younger generation, and now the time has come to do so. The new administration will reduce the national burden by 430 billion yen in medical expenses and 100 billion yen in national expenditures.

In the "Report of the National Council for Social Security System Reform," issued to the public in 2013 under the Democratic Party of Japan (DPJ) administration, ¹⁾ the phrase "no need to wait" can already be read. The report states, "Reform of the system should be implemented in the short, medium, and long term, based on a vision of the society that should exist in the future. In other words, first, the reforms should be implemented intensively within the period when the consumption tax revenue will increase in stages due to the current comprehensive reform, in order to promptly return the burden of the consumption tax hike to the people in the form of social security system reforms. The medium- to long-term reforms are those that should be implemented in stages, with the year 2025 (Heisei 37), when all baby boomers will be 75 years of age or older, in mind. It is necessary to steadily advance and implement reforms toward these goals, while obtaining the consent of the public along this timeline. In the first place, given the current situation in Japan, where the birthrate is declining and the population is rapidly aging, the implementation of social security system reform is an issue that cannot be postponed and cannot wait. We must proceed with this reform with full recognition of this fact."

As the decade of waiting passes, drug prices are being reduced as if they were the source of funds for revising medical fees. In recent years, drug costs have moved almost in parallel with changes in GDP growth, partly due to the effects of repeated NHI price revisions (Figure).

In his first policy speech to the Diet, Prime Minister Kan called for a secure social security system and stated, "At the same time, we will correct inefficiencies and inequities in each system. We will work to achieve annual NHI price revisions. What do you mean by inefficiency and unfairness in NHI drug prices? I do not believe that it is a short-sighted perception that a gap between NHI prices and prevailing market prices is immediately inefficient or unfair, but it is necessary to correct inefficiencies and inequities in the system, regardless of whether they are related to drug costs or not.

In Japan, in the course of the much-needed reform of the social security system, especially the reform of the medical insurance system, the keywords of how the burden of public insurance should be borne and how benefits should be provided cannot be avoided in discussions. Based on my personal view that the pharmaceutical industry needs to take into account the trends in this debate, this paper looks at the trends in the debate over the nature of benefits in Japan as of the year 2020. Of course, it is essential to understand the overall picture when looking at policy trends, but in this paper, only those parts of the social security system that are directly related to public insurance benefits for medical care are extracted and described.

1. Prime Minister's Office

In November 2014, Prime Minister Abe announced that the consumption tax hike to 10% would not take place in October 2015 as legally mandated, but would be postponed for 18 months. Subsequently, in the "Basic Policies for Economic and Fiscal Management and Reform 2015," approved by the Cabinet in June 2015, the "Economic and Fiscal Revitalization Plan" was established, which aims to revitalize both the economy and public finances in an integrated manner. The plan lists 44 major reform items (80 items in total) in the social security field. The items that are considered to be directly related to the provision of publicly insured medical care are listed ^below2).

In June 2016, it was announced that the consumption tax hike would be postponed again to be implemented in October 2019. The "Economic and Fiscal Revitalization Plan" positioned the three-year period from FY 2016, the first half of which runs through FY 2020, as a period of intensive reform. After an interim evaluation, the "New Economic and Fiscal Revitalization Plan" was formulated in the "Basic Policies for Economic and Fiscal Management and Reform 2018". The "Basic Policies for Economic and Fiscal Management and Reform" (hereafter referred to as "Kotto no Kakaku") for each fiscal year during this period contains specific descriptions of how public health insurance benefits should be provided, as shown in the table below.

In addition to the 44 items related to social security mentioned above, the "New Economic and Fiscal Revitalization Plan Reform Process Chart 2020" includes, with regard to the burden, a study of "ability-based" burdens in the medical and long-term care systems for the elderly, in which not only income but also asset ownership is evaluated, and a study of the window burden for the elderly in later stages of life. With regard to benefits, the report states that "the relevant councils will consider raising co-payments for drugs from a broad perspective and take necessary measures based on the results," "the introduction of a fixed fee for outpatient visits," and "economic evaluation of the cost-effectiveness and financial impact of new drugs and medical technologies when they are included in insurance coverage and the use of uninsured combined medical care. The "Consideration of the introduction of a flat-rate copayment for outpatient consultations, etc." and "Consideration of the economic evaluation of cost-effectiveness and financial impact and the use of uninsured combined care when new drugs and medical technologies are included in insurance coverage.

2. Ministry of Finance

The Ministry of Finance's basic recognition of Japan's current social security system is that there is an imbalance between benefits and ^burdens3), and that reform of both benefits and burdens is necessary to correct this imbalance. In July 2020, the Fiscal System Council issued a report entitled "Future Fiscal Management ^. The Council stated that the government should not take the continuation of low interest rates for granted and that it is necessary to make constant efforts to improve both expenditures and revenues. With regard to social security, it is necessary to steadily promote systemic reforms without any backsliding.

The "Proposal Concerning the 2021 Budget" states that, with regard to medical benefits provided by public insurance, "It is inevitable to review the scope of insurance benefits and to provide even necessary insurance benefits efficiently as a perspective of system reform to ensure the sustainability of the system while maintaining universal health insurance coverage. As in previous years, the report clearly states that it is necessary to review not only efficient benefits, but also the way benefits should be provided. The "Review of the Scope of Insurance Benefits" is broadly divided into "Review of the Scope of Insurance Benefits for Patients (Patient Coverage)" and "Review of the Scope of Insurance Benefits for Medical Technology, Drugs, etc." The former includes such measures as raising the patient contribution ratio for the elderly in the later stage of life and expanding the flat-sum payment for visits to major hospitals without a letter of referral. The former includes raising the patient contribution ratio for the elderly in the latter stage of life and expanding the flat-sum payment for visits to major hospitals without a letter of referral. The latter is also described as "optimization of drug costs, " ⁵⁾ and includes "normalization of budgetary control over drug costs" (including determining whether new drugs should be covered by insurance in consideration of their fiscal impact and, when new drugs are covered by insurance, conducting a fiscal-neutral review of insurance coverage and the coverage of existing drugs), the As for the positioning of the FY2021 budget proposal, the specifics of benefits are mainly limited to drug benefits.

3. All-Generational Social Security

The phrase "all-generation social security" first appeared in the 2017 Kotta Policy. Since then, the key phrase "all-generation social security" has been heavily used, and in 2018, a minister in charge of all-generation social security reform was established in the ^Cabinet6). Initially, discussions on an all-generation social security were held mainly within the Future Investment Council, but in September 2019, a new "All-Generation Social Security Study Council" (hereinafter referred to as the "Study Council") was convened with the Prime Minister as chair. The Study Council will meet 12 times through December 2020, issuing an interim ^report7) in December 2019. Since then, one can imagine that the discussions of the Study Council had to be managed in a difficult way as the country experienced a pandemic with the declaration of a state of emergency after the first new coronavirus-positive case was confirmed in Japan on January 15, 2020. The study council compiled the "Draft Policy for Reforming the Social Security System for All Generations" (hereinafter referred to as the "Policy") on December 14, ²⁰²⁰⁸⁾. Neither the interim report nor the policy directly mentions "how benefits should be provided. The items in the policy that are considered to be related to the nature of benefits are "insurance coverage for infertility treatment," "co-payment ratio for the elderly in the later stages of life, " ⁹⁾ and "flat-rate copayments for outpatient visits.

3. Ministry of Health, Labor and Welfare

At the Ministry of Health, Labor, and Welfare, the "Headquarters for Reform of Social Security and Work Styles with a View to 2040" was established in 2018 and a summary was issued in May ^{201910) ,} while taking into account the abovementioned skeleton description and the progress of the Study Council on Social Security for All Generations. In addition, the Medical Insurance Subcommittee of the Council on Social Security has been holding many discussions on healthcare system reform. In particular, since December 2019, when the Council on Social Security for All Generations issued an interim report, the meeting has been held vigorously despite the pandemic. Among the items under discussion that are considered to be directly related to the nature of benefits are a review of the window burden for the elderly in the later stages of life, consideration of insurance coverage of infertility treatment, raising drug co-payments, the use of cost-effectiveness assessment for future pharmaceuticals, and a fixed fee for visits to major hospitals. Regarding the increase in drug co-payments, the report discusses "how insurance benefits should be provided for over-the-counter similar drugs" and measures to optimize drug benefits (e.g., promotion of self-medication) through measures other than increasing co-payments.

4. Arguments by the payer

The Federation of Health Insurance Associations (FHIA) published in 2018 the "Report on Research and Study on the Ideal System of Benefits and Burdens for Optimizing Medical Expenses " ¹¹⁾ (hereafter, the Report), which presents possible issues and the direction of review regarding the ideal system of benefits and burdens for public medical insurance, focusing on the matters described in the "Kotta Policy 2015". In the report, the Federation of Health Insurance Associations (FHIA) stated that, regarding the nature of benefits and burdens, "Essentially, the basic principle of insurance is to ensure that premium income is commensurate with expenditures. On the other hand, premiums are closely tied to the economy, and there is a limit to the ability to increase premiums in line with increases in medical expenditures. With such limits on the ability to bear the burden, it is necessary to discuss to what extent benefits should be covered, or to what extent they should be excluded." The report goes on to say. Specifically, the report discusses the following issues: (1) "review of room charges for inpatients" to ensure fairness with home care, (2) introduction of a flat-rate copayment and insurance deductible system for medical examinations, (3) prescription of drugs for lifestyle-related diseases, including costs, (4) review of insurance benefits for drugs similar to those sold over the counter, and (5) review of insurance benefits for long-term listed drugs. (5) Review of insurance benefits for long-term listed drugs. To give an excerpt of the direction of the review, the report states that for (3), formularies and prescribing guidelines that introduce a cost-effectiveness evaluation mechanism should be developed and implemented. Regarding (4), the report states that the scope of insurance benefits should be reviewed, over-the-counter-like drugs that have become established as OTC drugs should be excluded from benefits, certain conditions and upper limits should be set for benefits, and the shift to OTC should be promoted further from the perspective of promoting self-medication.

In May 2019, the Federation of Health Insurance Associations and the National Health Insurance Association jointly issued an "Opinion Toward Review of Insurance Benefit Coverage " ¹²⁾ in response to the insurance coverage of the leukemia drug Kymriah, stating that it is an urgent issue to review the scope of public medical insurance benefits, including exclusions. Specifically, the report states that it is an urgent issue to review the coverage of public medical insurance benefits, including exclusions. Specifically, it calls for ensuring insurance coverage of serious illnesses, while promoting switch-OTC for drugs for minor illnesses, and setting reimbursement rates in stages according to the importance of the drug.

In addition, the "Policy Recommendations for the Next Revision of Medical Reimbursement (FY2020)" were issued in August 2019. In this proposal, regarding the way benefits should be provided, it is recommended that the exclusion of OTC-like drugs for hay fever treatment in general from insurance coverage and an increase in the co-payment rate should be promoted.

5. Others

Meanwhile, the Japan Medical Association mentioned in its regular press conference the government's actions, including the compilation of the final report of the Study Council on Social Security for All Generations. In this context, the JMA requested that "discussions should be held from the perspective of how to protect the health of the people, rather than from the perspective of narrowing insurance benefits from a financial standpoint. The JMA also expressed the view that "the JMA believes that drastic cuts in social security benefits and spending cuts are unacceptable because they threaten the lives of the people. " ¹³⁾

6. Summary

The above is an overview of the recent debate, focusing on the keyword "public insurance benefits for medical care. Japan has created a "welfare state in which social security benefits are provided first, while issuing deficit-covering government bonds. In the process, it has been pointed ^out13) that Japan has been preempting not only benefits but also the economy. Although the state of fiscal policy, including the need for a primary balance surplus, is completely beyond the scope of this paper, we believe that there is general agreement on the need to build a social security system that is sustainable into the future. Regarding how to think about the relationship between medical benefits and public insurance, the basic idea has been that necessary medical care should be provided by insurance. How to deal with this concept in the future is not only a matter of finance, but also a matter of national debate on the essentials, including the concept of hygiene, health, and even the concept of life and death. Continuing to use drug costs as an adjustment factor for social security finances would not be a sustainable response. In addition, when discussing how drug benefits should be provided, it will be necessary to discuss how the benefits of medical care itself should be provided, given that drug benefits are a part of medical care benefits. We look forward to constant discussion by those involved.

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