Japan's ruling coalition has agreed proposals for a two-stage increase in direct healthcare treatment costs borne by the elderly. In 2004, medical costs for the elderly accounted for over 40% of national health spending. By 2009, the Japanese are set to have an average life expectancy of some 82 years, the world's highest. Hospital stays in Japan are also nearly four times the OECD average, at 41.9 days.

Whereas cost-saving plans had previously targeted wealthier senior citizens — those over age 70 earning over JPY6.21mn (US$51,440) — the plans will raise the personal contribution to 20% of cost for those earning more than JPY5.2mn (US$43,078). This approach is expected to spread the burden more evenly, with the contribution for 70-74 year olds in this group raised to 20% of total costs. Those wealthier citizens aged over 70 will also pay 30% under the plans.

The reform will be phased in between 2006 and 2008, and the plans reflect a compromise that will see parents' out-of-pocket spending on treatment for children reduced. The finance ministry had also originally suggested that personal contributions be equalised at 20% for all citizens aged between 65 and 74.

Meanwhile, observers note that despite the progress in cutting government treatment costs, Japan has yet to introduce a significant reduction in transfers to hospitals, clinics and pharmacies. As opposed to increasing out-of-pocket spending, this would have a more significant effect on pharmaceutical expenditure.