November 29, 2017 / 9:49 AM / in a year

Japan panel seeks cuts in medical fees in FY2018/19 budget proposal

TOKYO, Nov 29 (Reuters) - An advisory panel to Japanese Finance Minister Taro Aso on Wednesday proposed cuts in reimbursements paid to hospitals and clinics under the national health insurance scheme, in a bid to curb rising social welfare spending in the ageing society.

The proposal, made in recommendations by the Fiscal System Council, provides the basis for debates on next fiscal year’s budget to be drafted by the finance ministry by end-December.

The council is headed by Sadayuki Sakakibara, the head of Keidanren, Japan’s biggest business lobby.

Curbing medical subsidies, which are called “medical treatment fees” in Japan, is the crucial point in compiling the annual budget. The government aims to cap the increase in social security spending, boosted by the ageing population and advanced medical care, at 500 billion yen ($4.48 billion).

The health ministry has requested a record 31.4 trillion yen for social security spending, including an increase of 630 billion yen. The overall requests from ministries and government agencies is for about 101 trillion yen.

The finance ministry scrutinises the requests and trims them when it drafts the budget plan. This year’s annual budget totals 97.45 trillion yen, the biggest to date.

Prime Minister Shinzo Abe, who has utilised the central bank’s monetary easing to prioritise growth over austerity, faces pressure to spend more on public works and agriculture, forestry and fisheries as well as defence to cope with North Korea’s threats.

“To restrain the public burden and sustain the (health insurance) system, cuts of more than 2.5 percent will be needed” in medical treatment fees, the council said in the proposals. It also called for “drastic revision” to prescription fees.

The government is set to review reimbursements for medical treatment and nursing care services in the fiscal year from April 2018, with the eye on curbing payments to doctors.

But the plan has met stiff resistance from medical institutions, who argue that cuts in medical fees would squeeze their profits and worsen quality of services.

The fiscal council called for drawing up “effective” fiscal reform plans to balance the budget quickly, given that baby-boomers will start to join the elderly medical and nursing care scheme from 2022 as they turn 75, adding to the state’s burden.

$1 = 111.58 yen Reporting by Tetsushi Kajimoto; Editing by Richard Borsuk

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