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Monday, August 22, 2005

How To Finance Rising Health Costs

Or rather, "How To Finance Rising Health Costs" Japan style. Issue bonds apparently. The advantage is that in the short term the costs don't hit government spending data, but how does this help pay the bill in an ageing society, with health costs on the up and up. Isn't the use of Special Purpose Vehicles here surprisingly reminiscent of Enronomics? Take a quick look at total health care costs:

"In 2002-03, patients contributed less than Y5,000bn to the costs of Japan's healthcare system, out of a total of Y31,000bn excluding over-the-counter drugs. The rest was paid for directly by government or through Japan's public medical insurance system itself subsidised by government. In recent years ministers have progressively increased the amount patients have to pay, but it remains a small proportion of total healthcare costs".

So patients pay about one sixth of the cost. Issuing the bonds staves off paying for some of the other five sixths, but with a declining workforce and rising unit costs plus a growing proportion of the population needing medical care, this can't go on indefinately into the future. Well, ok, it can go on just until the day it can't.

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