Shun-ichiro Bessho

Public Debt and Economic Growth in an Aging Japan

This paper examines the effects of the demographic change and the government debt policy in Japan on economic growth and economic welfare, particularly by taking into account the existing public pension scheme as well as national medical expenditure through the existing public health insurance, where a computable overlapping generations model is used within a general equilibrium context. One of the main results of this paper is that the tax burden (GDP) ratio will increase up to about 36%, and the social security burden (GDP) ratio will increase up to 23.3% in 2050, even though the government tries to have a positive primary balance by 2010. The ratio of public health insurance benefits to GDP is expected to increase at 1% every 10 years, and the ratio will be around 9.6% in 2050. The 2004 public pension reform will successfully result in a 13 point decrease in the contribution rate from 36.44% to 23.53%, and reduce the social security burden (GDP) ratio by about 8 points from 23.27% to 15.02% in 2050, compared with the benchmark case.

Estimating the Social Marginal Cost of Public Funds A Microdata Approach

In this study, we recast the formula of the social marginal cost of public funds (SMCF) and highlight the role of what we call individual marginal costs of public funds (IMCF). After elaborating on aspects of distributional weights, we estimate the wage elasticity of labor supply and the IMCFs on a household basis. This allows us to explore not only the distributions of the elasticity and the IMCFs but also their relations to household income, which helps us assess the assumptions made in previous studies. Further, we use the SMCF estimates to evaluate the system of personal income taxes in Japan.

Copayment Exemption Policy and Healthcare Utilization after the Great East Japan Earthquake

Healthcare utilization after natural disasters remains understudied. In general, people in Japan pay 10%-30% of total amount of costs, according to their health insurance plan. A policy exempting survivors from copayments was introduced after the Great East Japan Earthquake in March 2011, which had a magnitude of 9.0 on the Richter scale and followed by devastating tsunamis. Among the disaster-affected areas, Miyagi prefecture experienced the largest number of deaths and the greatest extent of damage. However, the exemption was suspended in Miyagi prefecture from April, 2013, because of the huge governmental financial burden due to the immensity of damage from the disaster. Subsequently, in April 2014, the exemption was re-introduced, with smaller coverage. We, therefore, evaluated the influence of this policy change on monthly healthcare utilization in Miyagi prefecture between April 2008 and June 2015. We also evaluated the association between the proportion of people exempted from copayment in each municipality and the difference in healthcare utilization before and after the suspension using multivariable linear regression. Healthcare utilization in Miyagi increased immediately after the institution of the exemption policy and it peaked after one year. In March 2013, just before the suspension, a rapid increment in healthcare utilization was observed, suggesting that the copayment may be a barrier for people in the disaster-affected area to access to healthcare. The exemption policy did help the survivors to use healthcare utilization in Miyagi. After devastating natural disasters, policymakers should guarantee that all survivors can utilize healthcare services on demand.

Political cycles in physician employment: A case of Japanese local public hospitals

A shortage of physicians in local public hospitals is often a heated political issue. When local politicians have the authority to intervene in the management of a public hospital, they may increase the employment of physicians during election years in order to alleviate the shortage. We test this hypothesis empirically using a census of city hospitals in Japan from 2002 to 2011 (N = 4583). Our results support the hypothesis that the number of physicians increases in election years. This effect is stronger in cities with a greater population of elderly residents. We also find that physicians tend to come from university hospitals in the same region. Overall, this paper provides direct evidence of political intervention on physician employment.

Do benefits in kind or refunds affect health service utilization and health outcomes? A natural experiment from Japan

Although the payment systems of public health insurance vary greatly across countries, we still have limited knowledge of their effects. To quantify the changes from a benefits in kind system to a refund system, we exploit the largest physician strike in Japan since the Second World War. During the strike in 1971 led by the Japan Medical Association (JMA), JMA physicians resigned as health insurance doctors, but continued to provide medical care and even health insurance treatment in some areas. This study uses the regional differences in resignation rates as a natural experiment to examine the effect of the payment method of health insurance on medical service utilization and health outcomes. In the main analysis, aggregated monthly prefectural data are used (N=46). Our estimation results indicate that if the participation rate of the strike had increased by 1% point and proxy claims were refused completely, the number of cases of insurance benefits and the total amount of insurance benefits would have decreased by 0.78% and 0.58%, respectively compared with the same month in the previous year. Moreover, the average amount of insurance benefits per claim increased since patients with relatively less serious diseases might have sought health care less often. Finally, our results suggest that the mass of resignations did not affect death rates.

Case Study of Central and Local Government Finance in Japan

This paper aims to provide an overview of the basics of Japan’s local public administration and finance system and to analyze how Japan’s municipalities restore their fiscal balance after a fiscal shock. In Japan, local governments play a major role in redistribution. Combined with regional disparities in tax capacities and an inflexible local tax system, there is a large vertical fiscal gap in Japan between the central and local governments — a gap that necessitates the transfer of funds from central to local governments. Under this system, the fiscal adjustments in Japan’s municipalities occur mainly via changes in government investment, and they account for 63%–95% of adjustments in permanent unit innovations in grants and own-source revenue. In contrast to the role of expenditure, the municipalities’ own-source revenue plays a limited role in balancing the local budget. The results of this study also reveal that 40% of the increase in own-source revenue is offset by a reduction in grants. Furthermore, municipalities can induce grants by expanding government current expenditure. Finally, this study offers and discusses some policy implications.

Out-of-pocket payments and community-wide health outcomes: an examination of influenza vaccination subsidies in Japan

While studies have shown that reductions in out-of-pocket payments for vaccination generally encourages vaccination uptake, research on the impact on health outcomes has rarely been examined. Thus, the present study, using municipal-level survey data on a subsidy programme for influenza vaccination in Japan that covers the entire country, examines how reductions in out-of-pocket payments for vaccination among non-elderly individuals through a subsidy programme affected regional-level influenza activity. We find that payment reductions are negatively correlated with the number of weeks with a high influenza alert in that region, although the correlation varied across years. At the same time, we find no significant correlation between payment reductions and the total duration of influenza outbreaks (i.e. periods with a moderate or high alert). Given that a greater number of weeks with a high alert indicates a severer epidemic, our findings suggest that reductions in out-of-pocket payments for influenza vaccination among the non-elderly had a positive impact on community-wide health outcomes, indicating that reduced out-of-pocket payments contributes to the effective control of severe influenza epidemics. This suggests that payment reductions could benefit not only individuals by providing them with better access to preventive care, as has been shown previously, but also communities as a whole by shortening the duration of epidemics.