Health insurance reform and economic growth: Simulation analysis in Japan

Toshihiro Ihori, Ryuta Ray Kato, Masumi Kawade, Shun ichiro Bessho

Research output: Contribution to journalArticle

14 Citations (Scopus)

Abstract

This paper evaluates the drastic reforms of Japanese public health insurance initiated in 2006. We employ a computable general equilibrium framework to numerically examine the reforms for an aging Japan in the dynamic context of overlapping generations. Our simulation produced the following results: first, an increase in the co-payment rate, a prominent feature of the 2006 reform, would promote economic growth and welfare by encouraging private saving. Second, the ex-post moral hazard behavior following the increase in co-payment rates, however, reduces economic growth. Third, Japan's trend of increasing the future public health insurance benefits can mainly be explained by its aging population, and increasing the co-payment rate does little to reduce future payments of public health insurance benefits. Fourth, the effect on future economic burdens of reducing medical costs through efficiencies in public health insurance, emphasis on preventive medical care, or technological progress in the medical field is small. Finally, a policy of maintaining public health insurance at a fixed percentage of GDP will require reducing public health insurance benefits, perhaps up to 45% by 2050. Such a policy also reduces economic growth until approximately 2035. Our simulation indicates that the reform does not significantly reduce future public health insurance benefits, but it can enhance economic growth and welfare by encouraging private saving.

Original languageEnglish
Pages (from-to)227-239
Number of pages13
JournalJapan and the World Economy
Volume23
Issue number4
DOIs
Publication statusPublished - 2011 Dec
Externally publishedYes

Fingerprint

health insurance
economic growth
insurance benefit
public health
Japan
reform
simulation
welfare
technological progress
Health insurance
Public health
Simulation analysis
Economic growth
medical care
efficiency
trend
costs
economics
Copayments

Keywords

  • Aging population
  • Dynamic CGE model
  • Economic growth
  • Japan
  • National medical expenditure
  • Public health insurance

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance
  • Political Science and International Relations

Cite this

Health insurance reform and economic growth : Simulation analysis in Japan. / Ihori, Toshihiro; Kato, Ryuta Ray; Kawade, Masumi; Bessho, Shun ichiro.

In: Japan and the World Economy, Vol. 23, No. 4, 12.2011, p. 227-239.

Research output: Contribution to journalArticle

Ihori, Toshihiro ; Kato, Ryuta Ray ; Kawade, Masumi ; Bessho, Shun ichiro. / Health insurance reform and economic growth : Simulation analysis in Japan. In: Japan and the World Economy. 2011 ; Vol. 23, No. 4. pp. 227-239.
@article{37866540775a4eac98bdc561b6635402,
title = "Health insurance reform and economic growth: Simulation analysis in Japan",
abstract = "This paper evaluates the drastic reforms of Japanese public health insurance initiated in 2006. We employ a computable general equilibrium framework to numerically examine the reforms for an aging Japan in the dynamic context of overlapping generations. Our simulation produced the following results: first, an increase in the co-payment rate, a prominent feature of the 2006 reform, would promote economic growth and welfare by encouraging private saving. Second, the ex-post moral hazard behavior following the increase in co-payment rates, however, reduces economic growth. Third, Japan's trend of increasing the future public health insurance benefits can mainly be explained by its aging population, and increasing the co-payment rate does little to reduce future payments of public health insurance benefits. Fourth, the effect on future economic burdens of reducing medical costs through efficiencies in public health insurance, emphasis on preventive medical care, or technological progress in the medical field is small. Finally, a policy of maintaining public health insurance at a fixed percentage of GDP will require reducing public health insurance benefits, perhaps up to 45{\%} by 2050. Such a policy also reduces economic growth until approximately 2035. Our simulation indicates that the reform does not significantly reduce future public health insurance benefits, but it can enhance economic growth and welfare by encouraging private saving.",
keywords = "Aging population, Dynamic CGE model, Economic growth, Japan, National medical expenditure, Public health insurance",
author = "Toshihiro Ihori and Kato, {Ryuta Ray} and Masumi Kawade and Bessho, {Shun ichiro}",
year = "2011",
month = "12",
doi = "10.1016/j.japwor.2011.07.003",
language = "English",
volume = "23",
pages = "227--239",
journal = "Japan and the World Economy",
issn = "0922-1425",
publisher = "Elsevier",
number = "4",

}

TY - JOUR

T1 - Health insurance reform and economic growth

T2 - Simulation analysis in Japan

AU - Ihori, Toshihiro

AU - Kato, Ryuta Ray

AU - Kawade, Masumi

AU - Bessho, Shun ichiro

PY - 2011/12

Y1 - 2011/12

N2 - This paper evaluates the drastic reforms of Japanese public health insurance initiated in 2006. We employ a computable general equilibrium framework to numerically examine the reforms for an aging Japan in the dynamic context of overlapping generations. Our simulation produced the following results: first, an increase in the co-payment rate, a prominent feature of the 2006 reform, would promote economic growth and welfare by encouraging private saving. Second, the ex-post moral hazard behavior following the increase in co-payment rates, however, reduces economic growth. Third, Japan's trend of increasing the future public health insurance benefits can mainly be explained by its aging population, and increasing the co-payment rate does little to reduce future payments of public health insurance benefits. Fourth, the effect on future economic burdens of reducing medical costs through efficiencies in public health insurance, emphasis on preventive medical care, or technological progress in the medical field is small. Finally, a policy of maintaining public health insurance at a fixed percentage of GDP will require reducing public health insurance benefits, perhaps up to 45% by 2050. Such a policy also reduces economic growth until approximately 2035. Our simulation indicates that the reform does not significantly reduce future public health insurance benefits, but it can enhance economic growth and welfare by encouraging private saving.

AB - This paper evaluates the drastic reforms of Japanese public health insurance initiated in 2006. We employ a computable general equilibrium framework to numerically examine the reforms for an aging Japan in the dynamic context of overlapping generations. Our simulation produced the following results: first, an increase in the co-payment rate, a prominent feature of the 2006 reform, would promote economic growth and welfare by encouraging private saving. Second, the ex-post moral hazard behavior following the increase in co-payment rates, however, reduces economic growth. Third, Japan's trend of increasing the future public health insurance benefits can mainly be explained by its aging population, and increasing the co-payment rate does little to reduce future payments of public health insurance benefits. Fourth, the effect on future economic burdens of reducing medical costs through efficiencies in public health insurance, emphasis on preventive medical care, or technological progress in the medical field is small. Finally, a policy of maintaining public health insurance at a fixed percentage of GDP will require reducing public health insurance benefits, perhaps up to 45% by 2050. Such a policy also reduces economic growth until approximately 2035. Our simulation indicates that the reform does not significantly reduce future public health insurance benefits, but it can enhance economic growth and welfare by encouraging private saving.

KW - Aging population

KW - Dynamic CGE model

KW - Economic growth

KW - Japan

KW - National medical expenditure

KW - Public health insurance

UR - http://www.scopus.com/inward/record.url?scp=82955220437&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=82955220437&partnerID=8YFLogxK

U2 - 10.1016/j.japwor.2011.07.003

DO - 10.1016/j.japwor.2011.07.003

M3 - Article

AN - SCOPUS:82955220437

VL - 23

SP - 227

EP - 239

JO - Japan and the World Economy

JF - Japan and the World Economy

SN - 0922-1425

IS - 4

ER -