On Geographic Inequality in Japanese Regional Health Insurance

In Japan, economic stagnation due to the lack of aggregate demand has hit the regional health insurance system and this affects most retired pensioners. The fiscal state of insurers in rural areas deteriorated. This paper aims to investigate whether the regional disparities in medical levies per household make a contribution to income-related geographic inequalities in health care financing. Data of the central two regions of the Japanese National Health Insurance in 2005 were extracted. Their share of population was about 41.5 percent. Retired employees and self-employed individuals are covered by this insurance system. We conducted the geographic decomposition using the concentration index. The within-area inequality in medical levies mainly accounted for geographic inequality in medical levies per household. The hypothesis that there was no between-area inequality in medical levies was not rejected. We revealed the differences in the within-area inequality in medical levies in the central Kanto. This means such proportionality was not built into the NHI system through near constant contribution rates across the distribution of living standards. It can be considered that the differences in the within-area inequality were caused by the inequality in income per household and the multiplier of income levies. We found that income per household, the standard land price of residential districts and the size of an insurer are major determinants of the multiplier of income levies. The higher land price tends to greater the multiplier of income levies. The expansion of insurer's size increases the multiplier of income levies in most of districts. The inequality in the multiplier of income levies will reduce if local governments raise per-household levy in proportion to the size of an insurer and lower the multiplier of income levy.