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News Release

The National Health Insurance Burden on Those in Income Brackets Close to the Poverty Line
- Estimates and Proposals -

January 8, 2010

Overview

1. The Debate is Shifting Towards the Discussion of a "National Minimum"

Since the Democratic Party of Japan came to power, the movement for a more consistent discussion of taxes and social security premiums that explicitly considers the assurance of a "national minimum" disposable income has been gathering momentum. In October 2009, for example, the Ministry of Health, Labour and Welfare, on the instructions of the Minister for Health Labour and Welfare, published an estimate of Japan's relative poverty rate and in December held the first meeting of a National Minimum Study Group.
The Fiscal 2010 Outline of Tax Reform Proposals states that tax reform and social security reform will be approached and pursued as an integrated process.

2. Two Major Issues

There are two major points of contention:
(1) How a national minimum level should be set (a point on which a consensus has yet to be reached)
(2) How taxes and social security premiums should be designed in order to maintain the national minimum (as the relative poverty rate also deals with disposable income)

3. Points to be Considered in Relation to the "Relative Poverty Rate" (P3-5)

This report begins by setting out the points to be considered in relation to the "relative poverty rate". Not only has a consensus yet to be reached in regard to point (1) of section 2 above, but there are also many issues surrounding the proposal that the poverty line (recently the focus of attention in discussions of relative poverty rates) should be set, "as is", as the national minimum.

4. Calculating National Health Insurance Premiums

(1) National Health Insurance premiums hold the key to integrated design of taxes and social security premiums

Regardless of the actual level at which the national minimum may eventually be set, an integrated approach to the design of taxes and social security premiums is essential if that minimum is to be maintained, and the key to this integrated design is National Health Insurance premiums. This is because the levels of social security premiums and the methods used to calculate them vary considerably from one municipality to the next and, although it has been pointed out that the perceived burden of social security premiums on those in lower income brackets is a heavy one, the information available on the actual burden is insufficient. If the debate on a national minimum is to be taken further, it is vital that the matter be elucidated.

(2) Specific method of estimation

This report makes the provisional assumption that the poverty line of ¥1.14 million used by the Ministry of Health, Labour and Welfare in its estimate of the relative poverty rate is adopted as the national minimum (although this would raise many issues), estimates the National Health Insurance premiums of those in the income bracket closet to the poverty line (4 household types: 1-4 persons) for a total of 1,804 different municipalities and proposes reforms on the basis of the figures obtained.

For more information on the content of this report, please contact Kazuhiko Nishizawa, the Japan Research Institute, Limited.

Tel: 03-3288-5052

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