Contradiction in Struggle over Medical Service Fee

Fumio Kishida administration decided to raise the payment for medical service suppliers by 0.88% in FY 2024. While the administration is enthusiastic in raising wage of workers, the reform of national spendings to keep budgetary resource for key policies will be left behind. Kishida took the middle between those issues conflicting each other.

The total amount of annual spendings for medical care is ¥45 trillion (in 2021), which is equivalent to the total of medical service fee. About 50 % of it is paid by health insurance, 40% is covered by national spendings and 10% is direct payment by the patients. The medical service fee consists of “main body,” which is spent for wage of the workers in medical institutions, and medicine prices.

 

Main body of the medical service fee is reviewed once in two years and medicine prices are changed every year through negotiation between Ministry of Health, Labor and Welfare and Ministry of Finance. In the review for FY 2022, the main body rose by 0.43% and medicine prices dropped by 1.37%.

 

In the negotiation for FY 2024, MHLW requested 1% of increase in the main body to implement Kishida’s policy for comprehensive wage hike. Japan Medical Association has been asking MHLW to outstandingly raise the reward for medical workers, in consideration of their difficulty in keeping staffs in hospital after major damages from pandemic of COVID-19. Some medical workers are in a deteriorated situation below the average of all workers in Japan. MHLW requested upsurge of the medical service fee beyond inflation in commodity prices.

 

MOF countered to MHLW by offering minimum rise of the fee by around 0.2%. The ministry drew statistics on the ordinary profit of clinics, which greatly exceeded the average of all small and mid-size companies.

 

Kishida has announced that he would find the resource for his “different-dimensioned” measures to address low birthrate with reforms in national spendings. He also promised the people that he would not demand additional payment for the low birthrate policy. That became a cause for MOF to uphold cutting in the medical service fee.

 

Caught between 1% of MHLW and 0.2% of MOF, Kishida chose 0.88% of increase in the main body. Instead, the price of medicines will drop by 0.96%. Total of the medical service fee will decline with the balance of the main body and medicine price.

 

The struggle between MHLW and MOF represented the situation of Kishida administration walking on a tight rope of policies. Wage hike and cutting national spendings contradicts each other in the realm of public service such as medical care. Although Kishida insists on paying back the surplus in tax revenue to the people, he should not forget that he succeeded a huge amount of fiscal deficit from previous administration. He should remind at least that he cannot afford to introduce some populist policies such as baseless tax cut to rebuild his ailing administration.