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40% of Japan’s health insurance societies seen posting losses in 2017; some may disband

Over 40 percent of the 1,394 health insurance societies set up for employees of large companies and their families are expected to report losses for fiscal 2017 ended March, sources said.

In the previous year, the ratio was lower at 38.7 percent.

As a whole, the societies would normally be expected to be in the black, but their net profit in fiscal 2017 is estimated have dropped by some ¥100 billion from a year ago to just over ¥130 billion, the sources said Saturday.

The loss expansion and profit shrinkage reflected the substantial increase in contributions each society made to the medical care system for elderly people 65 or older.

The National Federation of Health Insurance Societies, or Kenporen, will release its fiscal 2017 financial statement on Sept. 25.

According to the sources, the average premium rate is projected to rise from the previous year to just under 9.2 percent, a record high.

If the rate at each society for major firm employees tops 10 percent, which is the average of prefecture-by-prefecture rates used by the state-subsidized Japan Health Insurance Association (Kyokai Kenpo) for workers at small businesses, there will be no reason to exist as independent societies that offer preferential rates for their members.

According to an estimate by Kenporen, contributions to the medical system for the elderly will exceed insurance payments to society members in fiscal 2025.

With premiums for the working generation on the rise in line with growing medical expenditures for the elderly, an increasing number of health insurance societies have been disbanded or started moving toward dissolution since the beginning of this year.

By the end of this month, for instance, the Health Insurance Society for Temporary Workers in Japan, or Haken Kenpo, is expected to discuss whether to dissolve itself this fiscal year. With about 510,000 members, Haken Kenpo is one of the largest health insurance societies in the country. If it disbands, its members would join Kyokai Kenpo.

In May, Kenporen and Kyokai Kenpo urged the government to require that people 75 or older pay 20 percent of their medical costs out of pocket in principle, up from the current 10 percent. The proposal was backed by major business organizations including the influential Japan Business Federation, or Keidanren.

But the government is reluctant to do so ahead of the House of Councilors and other elections in 2019.