Social Security of Asia
<2>

Edited by Masanobu Masuda and Jung-Nim Kim

Public Interest Incorporated Foundation

Oriental Life Insurance Cultural Development CenterTokyo, Japan

Table of contents
Chapter 4: Taiwan .............................................................................................. 1
1. Overview of Taiwan ................................................................................... 1
2. Current state of social welfare .................................................................... 7
3. Current state of medical insurance ............................................................ 17
4. Current state of pension insurance ............................................................ 21
5. Future issues concerning social-security schemes .................................... 27
Chapter 5: Thailand ......................................................................................... 31
1. Overview of Thailand ............................................................................... 31
2. Rapid economic development and advancements in the development ofsocial security schemes ............................................................................. 33
3. Current state of social welfare .................................................................. 36
4. Current state of medical security .............................................................. 42
5. Current state of pension security .............................................................. 48
6. Potential issues concerning the future of social security schemes ............ 52
Chapter 6: Japan............................................................................................... 55
1. Overview of Japan .................................................................................... 55
2. Current state of social welfare .................................................................. 71
3. Current state of medical insurance............................................................ 79
4. Current state of pension security .............................................................. 82
5. Issues concerning the future of the social security system ....................... 84

Table of contents i

ii

Chapter 4: Taiwan
Katsuhisa Kojima
1. Overview of Taiwan
Location
Taiwan lies off the southeast coast of the Chinese mainland to the west of
Yonaguni-jima Island (Japan), comprises the island of Taiwan as well as thePenghu Islands and other neighboring islands, and covers an area ofapproximately 36,000 square kilometers. While the Tropic of Cancer passes
through the center of the main island, Taiwan is home to numerous mountains
with peaks over 3,000 meters. Thus, the natural environment of Taiwan ischaracterized by considerable diversity, consisting of forests, coastal plains,coral reefs, and more.
Population
Taiwan is home to about 23 million people. In 1960, Taiwan’s populationstood at about 10.85 million people. This figure increased to about 20.40
million people in 1990 and to about 23.16 million people in 2010. Let us
examine some demographic indicators. First, the total fertility rate, an indicatorof fertility, significantly exceeded 4 in 1960 and 1970 but thereafter dropped
rapidly and dipped as low as 0.90 in 2010 (and stood at 1.27 in 2012). The
average lifespan, which was around 60-something years back in 1960, has risen
considerably, such that the average lifespan was 82.55 years for women and76.13 years for men in 2010. Thus, the gap between Taiwan and Japan in termsof average lifespan has been almost completely closed. As these numberssuggest, fertility is declining and people are living longer in Taiwan.
Such changes in fertility and lifespan have an impact on the age structure of
the population. In looking at the age structure of the population of Taiwan, we
see that persons under the age of fifteen years accounted for over thirty percentof the population up until 1980. By 2010, this figure declined to 15.7 percent.
In contrast, persons aged sixty-five years or older (aging rate) accounted for2.5 percent of the population in 1960, 6.2 percent of the population in 1990,
and 10.7 percent of the population in 2010. This trend of an aging population
combined with a declining birthrate is expected to continue. In particular,
Taiwan is set to age at a faster rate than Japan, such that its aging rate is
projected to grow to 27.3 percent in 2035 and 39.4 percent in 2060. In otherwords, Taiwan’s aging rate at present is at about half that of Japan but will
likely rise to that of Japan in 40 to 50 years (Table 4-1).

Chapter 4: Taiwan 1

Table 4-1. Population and economy of Taiwan
1960

1970

1980

1990

2000

2010

2035

2060

10,851
14,754
17,866
20,401
22,277
23,162
23,26918,918Population (thousands of persons)
45.4%
39.7%
32.1%
27.1%
21.1%
15.7%
11.7%
9.8%
Under 15 years of age (%)
Age
52.1%
57.4%
63.6%
66.7%
70.3%
73.6%
61.0%
50.7%
structu 15–64 years of age (%)
re
2.5%
2.9%
4.3%
6.2%
8.6%
10.7%
27.3%
39.4%
65 years of age or older (%)
5.75
4.00
2.52
1.81
1.68
0.90
Total fertility rate
62.31
66.66
69.57
71.33
73.83
76.13
Average Male
lifespan Female
66.40
71.56
74.55
76.75
79.56
82.55
638
2,294
15,199 44,301 101,874 135,521
GDP (hundred millions of TWD)
National
1,753
5,735
42,221 164,747 326,205 428,186(millions of USD)
accounti
5,977
15,73085,851 218,456 459,212 585,633
GDP per capita (TWD)
ng
164
393
2,385
8,124
14,70418,503(USD)
Note: Population figures for 2035 and beyond are future projections (medium-range projections).
Source: Population figures are based on Population Projections for ROC (Taiwan): 2012-2060, Council for Economic
Planning and Development (presently known as the National Development Council); GDP and per capita
GDP figures are based on materials provided by the Directorate General of Budget, Accounting, andStatistics.

As other examples of population characteristics associated with Taiwan, wenote that the population is concentrated in urban areas, the number offoreigners in Taiwan is increasing, and there are Taiwanese indigenous peoples
that have resided in mountainous areas since ancient times 1 . Data for 2010
reveals that the combined populations of Taiwan’s two biggest cities—Taipei
and Kaohsiung—total 5.43 million people, such that one out of every four tofive people in Taiwan can be found living in one of these two cities. There areapproximately 562,000 foreign nationals (including those of mainland China,
Hong Kong, and Macau) (accounting for 2.4 percent of the overall population)living in Taiwan, an increase of approximately 40 percent over the span of adecade. Taiwanese indigenous people number about 510,000 people(Population and Housing Census, Directorate General of Budget, Accounting,and Statistics, 2010).
State of the economy
Taiwan is known as a region in East Asia that has been strongly associatedwith exceptional levels of economic growth. Expressways, a high-speed rail
network (Taiwan High Speed Rail), international airports, trade ports, andother infrastructural elements have been developed, and companies known
even in Japan for producing computers, mobile phone terminals, and more arebased in Taiwan. The GDP of Taiwan totaled approximately 13.6 trillion new
Taiwanese dollars (TWD) (approximately 428.2 billion USD or 45.26 trillion
JPY) in 2010 for per capita GDP of about 586 thousand TWD (18,503 USD or
approximately 1.96 million JPY) in 2010 2 . Compared to OECD member
countries, Taiwan is about on par with Norway in terms of total GDP and at asimilar level to that of the Czech Republic and South Korea in terms of percapita GDP (Table 4-1). In examining the industrial structure of Taiwan from2the standpoint of the distribution of workers, we see that workers in suchprimary industries as agriculture, forestry, and fisheries account for 5 percent
of all workers, workers in such secondary industries as manufacturing accountfor 36.2 percent of all workers, and workers in the service industry account for58.8 percent of all workers (2012 average figures, Labor Force Survey,
Directorate General of Budget, Accounting and Statistics).
At the same time, the unemployment rate is rising and there is growing
income disparity in Taiwan. The unemployment rate stayed at a low level fromthe 1980s until the 1990s (averaging approximately 2.1 percent from 1980 to1999). In recent years, the unemployment rate has been both fluctuating andrising, such that unemployment averaged 4.46 percent between 2000 and 2012and stood at 4.24 percent in 2012 (Labor Force Survey, Directorate General of
Budget, Accounting and Statistics). There is growing income disparity, suchthat the Gini coefficient as determined according to OECD standards(disposable income base) rose from 0.261 in 1981 to 0.276 in 2012 (Survey of
Family Income and Expenditure, Directorate General of Budget, Accounting
and Statistics). The relative poverty rate in Taiwan rose from 5.14 percent in
1981 to 7.72 percent in 2012 (Gross National Happiness Index, Directorate
General of Budget, Accounting and Statistics).
Politics and administrative affairs
Formerly known as Formosa (“beautiful island”), Taiwan was ruled by the
Dutch and later by Zheng Chenggong (soldier and politician during the Ming
era in China) in the seventeenth century before being governed by the Qing
dynasty beginning at the end of the seventeenth century. The First SinoJapanese War ended with Taiwan being ceded to Japan in 1895 under theTreaty of Shimonoseki. Japanese rule continued until the Second World War
ended in 1945. With the end of the Second World War, the Republic of China(the government of China that was established in mainland China in 1912) took
control of Taiwan as part of China. Subsequently, the Chinese Civil War took
place and the People’s Republic of China was founded in 1949. The (central
government of the) Republic of China as controlled by the Kuomintang(Chinese Nationalist Party) was reestablished in Taiwan. Martial law wasinstituted and the activities of parties other than the Kuomintang were notpermitted.
Martial law was lifted in July 1987, at which time other parties were finallyallowed to engage in activities. The president and members of the Legislative
Yuan (legislature) can now be selected through democratic elections. For
example, Ma Ying-jeou (Kuomintang) was elected president in generalelections held in 2008 and 2012 but his predecessor, Chen Shui-bian, waselected president in elections held in 2000 and 2004 as a member of the
Democratic Progressive Party. To prevail in a general election, it is important
Chapter 4: Taiwan 3

for all parties to focus on solving issues that concern social welfare and that areotherwise close to home for citizens.
The Legislative Yuan is the unicameral legislature of Taiwan and isequivalent to the Japanese Diet. As for administrative institutions, ministries
and bureaus operate under the purview of the Executive Yuan (cabinet).
(However, certain ministries and bureaus belonging to the Control Yuan andExamination Yuan (branches of government) manage the public servant system,
oversee public servants, and audit government accounting and operate at arms’length from the Executive Yuan.) Ministries and bureaus in charge of social
security include the Ministry of Health and Welfare (in charge of theadministration of social welfare and healthcare), the Ministry of Labor (incharge of the administration of labor), and the Ministry of National Defense(insurance for members of the armed forces). Ministries and bureaus haveundergone reorganization in recent years, such that the Ministry of Health andWelfare was established through a merger of the Department of Health withthe agencies in the Ministry of the Interior responsible for social welfare in
July 2013. Originally set up as the Council of Labor Affairs, the Ministry ofLabor too resulted from a reorganization that occurred in February 2014.
The system of local governments in Taiwan conforms to an organization
corresponding to the system of prefectures and government ordinancedesignated cities in Japan, such that Taiwan consists of special municipalities,
such as Taipei and Kaohsiung cities; counties, such as Taoyuan and Kinmen
counties; and provincial municipalities that are on the same level as counties,
such as Keelung city (hereinafter referred to as “directly-controlled cities” and“provincial city governments”).
History and the current framework of social-security schemes in Taiwan
Social security schemes in Taiwan began to be developed as comprehensive
insurance for different occupations (comparable to the seamen’s insurance thatused to be offered in Japan) in the 1950s3. Examples include labor insurance
and military personnel insurance, which were introduced in 1950, andgovernment employees’ insurance 4 , which was introduced in 1958. Persons
covered by these schemes were limited to persons employed by companies
meeting certain minimum size criteria, military personnel, and government
employees (including public school teachers). It is conceivable that theselimitations were designed to prioritize the welfare of persons in a position to
directly support the government and the workers of companies contributing toexports. This was apparently so true that this characteristic of social security in
Taiwan was coined “welfare for military personnel, government employees,
and teachers” (social welfare prioritizing military personnel and government
employees).

4

Table 4-2. History and current framework of social security plans in Taiwan

Current framework

History

1. From the end of the Second World War to the 1960s○Establishment of general insurance by occupation
1950: labor insurance, military personnel insurance
1958: government employees’ insurance, and more

Scope of covered persons limited; generous benefits
provided to covered persons“Welfare for military personnel, government
employees, and teachers”

2. From the 1970s to the 1980s○Expanded scope of persons covered by labor insurance○Establishment of healthcare insurance for enrolment by persons not covered by general insurance(e.g.: farmers’ health insurance)
Schemes are becoming more
○Development of a legal system for social welfare (examples below):complicated1973: Child Welfare Act;
1980: Social Assistance Act (Livelihood Protection Act), Senior Citizens Welfare Act,
Physically and Mentally Disabled Citizens Protection Act;
1989: Youth Welfare Act
3. From the 1990s to the present○Centralization and universal application of the healthcare insurance system:
National Health Insurance adopted in 1995 (labor insurance, military personnel insurance, and other formsof general insurance limited to pensions, workers’ compensation, and other such types of benefits)○Independence of (un)employment insurance(2003: employment insurance made independent of labor insurance)
Universal social○Development of a pension system:
insurance schemes by
2008: national pension scheme adopted (universal pension system complementing
area establishedlabor insurance, military personnel insurance, and others)
Measures to counter
declining birth rate
○Development of nursing-care plan:
and aging society(2008: the National Ten-Year Long-term Care Plan (ten-year nursing care plan),study of nursing-care insurance)

Socialinsurance○Medical insurance: National Health Insurance○Pension insurance: labor insurance (employees of private-sector companies),
military personnel insurance (military personnel),government employees’ insurance (government employees, schoolteachers),
national pension (self-employed persons and others)○Employment insurance: employment insurance○Occupational accidents: labor insurance and others* Farmers’ health insurance: disability and childbirth benefits

Social welfare(including
mode ofwork)○Public assistance: Public Assistance Act○Welfare for senior citizens: Senior Citizens Welfare Act * National Ten-Year Long-term
Care Plan (+ nursing-care insurance is being studied)○Welfare for children: Protection of the Welfare and Rights of Children and Youth Act(economic support, children’s welfare services)
Early Childhood Education and Care Act(preschool education and childcare provided at preschool institutions)(Parental employment patterns) Gender Equality in Employment Act(childcare leaves and more)○Welfare for the disabled: Act to Guarantee the Interests of Physically and Mentally
Disabled Persons (partially addressed through *)○Welfare for households that especially require support(such as households in which a spouse has died)○Welfare for Taiwanese indigenous peoples

Source: Produced by the authors based on materials provided by the Ministry of Health and Welfare, National
Health Insurance Administration, Bureau of Labor Insurance, and others.

From the 1970s to the 1980s, the scope of persons covered by labor
insurance expanded and social insurance schemes targeting private-school
Chapter 4: Taiwan 5teachers, farmers, and others were introduced. Social welfare laws concerning
the provision of welfare for children, welfare for the elderly, and the protectionof livelihoods were also enacted. As social insurance schemes increased in
number, however, issues of greater complexity and disparities in terms ofbenefits emerged. With the arrival of the 1990s, healthcare insurance schemes,
which had by then become a jumbled mess, were sorted out, with the result that
National Health Insurance was adopted in 1995 as a centralized healthcare
insurance system. This system was implemented to provide coverage to all
citizens as a means of providing universal health insurance. The pension
system was one in which benefits were paid out of labor insurance, military
personnel insurance, and other such schemes. Discussions on establishing apension scheme for self-employed persons and others who were not covered bysuch a pension system were held beginning in the 1990s, which in turn led tothe establishment of a national pension system in 2008. Despite the existenceof multiple schemes, a universal pension system was finally realized.
Employment insurance was adopted (independently of labor insurance) in 2003
and nursing-care insurance is being studied. As a measure for supportingchildrearing, nurseries and kindergartens were integrated (as preschools) in2012.
Having undergone this history, Taiwan’s current social security schemes
include social insurance schemes and schemes based on social welfare (fundedby taxes) that are similar to those that have been implemented in Japan.
Examples of the former consist of medical insurance (National Health
Insurance), pension insurance (labor insurance, government employees’
insurance, military personnel insurance, and national pension), industrial
accident compensation insurance (such as through labor insurance), and(un)employment insurance (employment insurance). For the latter, welfare
services have been implemented according to applicable statutes in such areas
as welfare for senior citizens, welfare for children and youth, and welfare forthe physically disabled. A scheme based on the Social Assistance Act is run asa public assistance scheme (Table 4-2).
Spending by social security schemes in Taiwan (social spending) amounted
to 1,316 billion TWD (approximately 4,400 billion JPY), or 10.5 percent ofGDP, in fiscal year 2009. In terms of the form by which benefits are provided(benefits in kind or cash), benefits in kind account for 46.8 percent of benefits
provided. In terms of the system by which benefits are provided (whether
through social insurance or not), disbursements from social insurance schemes
account for 52.5 percent of all benefits provided. In breaking down spending
by function, spending on the elderly accounts for 42.7 percent and spending on
healthcare and medicine accounts for 36.8 percent of all spending (Social
Spending, Directorate General of Budget, Accounting, and Statistics).

6

2. Current state of social welfare
Public assistance
Taiwan’s public assistance system is referred to as social assistance5. The
purpose of social assistance is to provide necessary support to persons living in
low-income households and others and thereby promote independence.
Covered persons (low-income households) consist of persons whose income isless than that needed to pay for minimum living expenses and whose assets areless than a certain amount (standards applicable to minimum living expenses
and assets differ by region). In addition, there are also cases in which persons
living in low-to-medium-income households subject to slightly relaxedversions of these standards are also covered. Persons wishing to receive
support in the form of social assistance need to apply to the government of a
special municipality or county-controlled city and undergo an examination.
Social assistance benefits include living assistance, medical assistance,
housing assistance, emergency assistance, and disaster assistance. Living
assistance consists of cash benefits to cover living expenses and other costs andis provided through the payment of fixed amounts by income level. Job
training is extended. Emergency assistance constitutes support for persons who
suddenly find themselves living in destitute conditions due to an unexpected
accident, illness, job loss, or other such circumstances. Disaster assistanceconsists of support for disaster victims (such as through the provision of foodand the opening of temporary evacuation centers). These schemes also include
the provision of support for the homeless. Costs are accounted for in thebudgets of the central government and the governments of special
municipalities and county-controlled cities (funded by taxes) (Table 4-3).
Low-income households receiving support through social assistanceschemes numbered 145,613 in 2012 and received 11,574 million TWD(approximately 38.7 billion JPY) in benefits. An upwards trend can be seen interms of both the number of households receiving support and the amount ofbenefits being provided. (In 2000, 66,467 households received 4,998 million
TWD (approximately 16.7 billion JPY) in benefits.)

Chapter 4: Taiwan 7

Table 4-3. Outline of social assistance (public assistance)●Purpose: To provide necessary support to and promote the independence of persons living
in low-income households and low-to-medium-income households.
1. Covered persons[Low-income households]• Persons whose per-person household income isless than that needed to pay for minimum living
expenses and whose assets are less than a certain
amount[Low-to-medium-income households]• Persons whose per-person household income isless than that needed to pay for 1.5 times
minimum living expenses and whose assets areless than a certain amount* Whether benefits shall be paid is determinedthrough an examination conducted by thegovernment of a special municipality or countycontrolled city

Minimum living expenses(examples: monthly amount for FY 2013)
Taipei: 14,794 TWD (approximately 50,000 JPY)
Kaohsiung: 11,890 TWD (approximately 40,000 JPY)
Other than special municipalities (on main island of
Taiwan): 10,244 TWD (approximately 34,000 JPY)
Asset standards(examples for low-income households for FY 2013)
Taipei: moveable property (deposits):
150,000 TWD (approximately 500,000 JPY)
Real estate:
6,550,000 TWD (approximately 22,000,000 JPY)
* Standards for minimum living expenses are set to 60
percent of disposable income for the most recent year.
Standards for assets differ by region.

2. Benefits(1) Living assistance• Assistance to cover living expenses, assistance to householdswith children, assistance to cover education expenses andchildbirth, assistance to cover funeral expenses, and more
• Job training, job referrals, and other support forindependence• Assistance to cover education costs for secondary andhigher levels of education• (Only low-to-middle-income households) short-term living
support(Assistance when significant changes affect the Taiwanese
economy)(2) Medical assistance• Subsidization of medical insurance premiums• Subsidization of out-of-pocket costs and othermedical costs(4) Emergency assistance• Support where the livelihood of a person who
financially supports a household suffers suddenly
due to an illness or other such circumstances

Examples of levels of living assistance(monthly amounts per person)(On main island outside of special
municipalities)
Type I: 10,244 TWD (same as minimum living
expenses, approximately 34,000 JPY)
Type II: 5,900 TWD (approximately 20,000 JPY)
Type III: 0 TWD(a different benefit payable where
there is a child in the household is paid)(3) Housing assistance• Rent assistance, assistance to cover the costs of housing
repairs, and more
(5) Disaster assistance• Provision of food, home repairs, opening of temporary
evacuation centers, and more
(6) Support for the homeless• Support to return home, protection in facilities, and more

Funding: budgets of the central and local governments (governments of special municipalities
and county-controlled cities) (funded by taxes)
Notes: (1) Underlined benefits derived from social assistance plans can also be obtained by low-to-mediumincome households.
(2) Definitionsof the types used for examples of living assistance are as follows: type I - household in which all family
member have no employability, so no income/asset, type II - household in which members not morethan 1/3 of all members have employability and household income per person is not more than 2/3 ofminimum living expense, type III - household in which household income per person exceeds 2/3 ofminimum living expense but is not more than minimum living expense.
Source: Produced by the authors based on materials provided by the Ministry of Health and Welfare.

8

Welfare for senior citizens (including a nursing-care scheme)
Taiwan’s welfare schemes for senior citizens comprise an array of features
based on the Senior Citizens Welfare Act. A broad outline of these schemes ispresented below.
(1) Economic support
A low-to-medium-income living allowance for senior citizens is provided
as a welfare allowance for the provision of economic support to low-income
senior citizens. Senior citizens living at home with a low income and few
assets are paid 7,200 TWD (approximately 24,000 JPY) or 3,600 TWD(approximately 12,000 JPY) monthly (amount varies according to income andother factors). In addition, a welfare allowance for elderly farmers (for lowincome elderly former farmers) and compensation for retired military
personnel (with physical or mental disabilities) are also paid (Table 4-4).
Although public pensions are also regarded as an economic support measure
under the Senior Citizens Welfare Act, they will be discussed in a subsequent
section because they constitute a type of scheme by which social insurance isprovided.
Table 4-4. Welfare for elderly persons in Taiwan (economic support; key plans)
Plan
Low-tomedium-income
living allowance
for seniorcitizens
Welfareallowance for
elderly farmers
Compensation
for retired
military
personnel

Primary contents
Allowance for low-income senior citizens; depending
on income, the amount paid is either (1) 7,200 TWD amonth (low-income persons; approximately 24,000
JPY) or (2) 3,600 TWD a month (low-to-mediumincome persons; approximately 12,000 JPY)
Allowance for elderly persons who had been enrolled
in the farmers’ health insurance plan (such as farmers)
and who satisfy low-income and other conditions;amount paid is 7,000 TWD a month (approximately
23,000 JPY)
For retired military personnel who have a physical ormental disability and satisfy certain other conditions(176,460 TWD (approximately 590,000 JPY) is paid
annually)

Status of benefits (2012)
Number of recipients:
120,968 persons
Total amount paid:
9.24 billion TWD(approximately 30.9 billion JPY)
Number of recipients:
644,870 persons
Total amount paid:
56.36 billion TWD(approximately 179.2 billion JPY)
Number of recipients:
59,953 persons(persons admitted to publiclyfunded facilities)

Source: Produced by the authors based on materials provided by the Ministry of the Interior, Ministry of Health andWelfare, Council of Labor Affairs (predecessor of the Ministry of Labor Affairs), Veteran Affairs Council, andothers.

(2) Nursing-care scheme
Taiwan’s nursing-care scheme is a scheme operated with tax funding
according to a National Ten-Year Long-term Care Plan (ten-year nursing careplan). Covered persons include not just the elderly who require nursing care
but also Taiwanese indigenous people fifty-five years of age and older andpersons with disabilities between the ages of fifty and sixty-four years (withplans to expand the scope of coverage to all persons with disabilities). Persons
wishing to avail themselves of nursing-care services under this scheme should
Chapter 4: Taiwan 9

submit an application for a certification of nursing-care need to a special
municipality or county-controlled city. A person granted certification ofnursing-care need could utilize publicly funded nursing-care services within
limits prescribed according to the degree of nursing-care need (light, medium,or heavy).
Figure 4-1. Nursing-care plans in Taiwan● Flow of the use of nursing-care services provided through the National
Ten-Year Long-term Care Plan (currently in the middle of the second period)

Coveredpersons

Government of special
municipality/countycontrolled city

Use of nursing-care services○Home care (visiting nursing care and more)○Community (day) care
Certificati(day care, short-stay care, and more)
on of○Facility carenursingcare need ○Welfare equipment, housing repairs,
food-delivery service, respite care (home and facility)○Persons aged 65
Applicat ○Certification ofion
years or older
nursing-care need
○Taiwanese(light, medium, heavy)
indigenous people(determined based onaged 55 to 64
degree of deprivation
years
in terms of ADLs)○Disabled persons○Nursing-careaged 50 to 64
management centers:
years*
provision of nursing*Slated to becare service
loweredinformation and more

Usage limits(by degree of nursingcare need; home andcommunity care)Light
25 hours/monthMedium 50 hours/monthHeavy
90 hours/month○Special care allowance for low-to-medium-income
senior citizens (family nursing care)
5,000 TWD monthly (approximately 17,000 JPY;
conditions: A low-income senior citizen with heavy
nursing-care needs is being taken care of by acohabiting family member who is not employed andwho satisfies other conditions.)

Self-payment rates
Unit
subsidyamount(home andcommunitycare)
180 TWDper hour(*)(approxima
tely 600
JPY)

Conditions

IncomepatternLowincomeLow-tomedium
incomeGeneralState ofusage
(2012)

Scale of executed budget: 1,854 million TWD(approximately 6.2 billion JPY, 2011)

Partial self-payment rates
WelfareHouseholdConsumption Home/
Foodequipment,
income per spending per community
deliveryhomepersonpersoncare
servicerepairs
Less than 1.5
Up to 1.5
times min.
times Taiwan
0%0%0%living expenses
average
Between 1.5
Up to 1.5
and less thantimes Taiwan
10%
10%
10%
2.5 times min.
averageliving expenses
Other
30%
30%
--

Home care, community care
• 149 locations• 7,118 employees• Number of users:
Home care: 37,994(approximately 273 hours per person)
Day care: 1,780(approximately 1,251 hours per person)○Facility care(self-payment
rate)
Heavy degreeof nursing-careneed and low
income(standard
based onhouseholdincome only) 0 percent

Facility care
• 1,045 locations• 21,056 employees• Capacity: 57,876 persons• Number of admitted persons: 42,947
Special care allowance for low-to-medium-income seniorcitizens (monthly average figures)• Number of recipients: 9,042
Total amount received: 45.29 million TWD(approximately 1.5 trillion JPY)

* The idea of raising the unit subsidy rate per hour of home and community care by 200 TWD is slated to be studied.
Source: Produced by the authors based on materials provided by the Ministry of Health and Welfare, Department
of Social Welfare (Taipei City), and Federation for the Welfare of the Elderly.

There are three different types of nursing-care services: home care,
community (visiting) care, and facility care. Home care refers to home-visiting
10

nursing care while community (day) care refers to day care or short-stay careobtained by visiting the location where nursing care is provided. Facilities thatcome within the scope of facility care consist of (1) long-term nursing-careorganizations (such as medical nursing-care facilities and nursing-carefacilities for dementia-afflicted elderly persons), (2) care-providingorganizations (facilities for elderly persons without family members), and (3)other facilities. Transportation, food delivery, respite care, and other suchservices can also be used.
In Taiwan, a special care allowance for low-to-medium-income seniorcitizens is provided as a family nursing-care allowance. Under this scheme,
5,000 TWD (approximately 17,000 JPY) are paid monthly to a low-income
household in which a senior citizen requiring nursing care to a heavy degree iscared for by a cohabitating family member (who is unemployed and who
otherwise satisfies certain conditions).
A subsidy of 180 TWD (approximately 600 JPY) per hour of home care orcommunity care for the use of these nursing-care services is paid subject tousage limits. This subsidy, however, is only offered to low-income persons.
Other recipients assume a self-payment amount according to income level. The
self-payment rate is ten percent for persons whose economic status is a step up
from that of low-income persons and thirty percent for all other recipients.
Facility care is free for low-income persons requiring nursing care to a heavy
degree. Subsidies of up to 100,000 TWD (approximately 340,000 JPY) in
home repairs and welfare equipment, up to fifty TWD (approximately 170
JPY) once a day per person for a food-delivery service, and up to 1,000 TWD(approximately 3,300 JPY) per session for respite care are granted (Figure 4-1).
It is said that the use of public nursing-care services increased because of
the implementation of this National Ten-Year Long-Term Care Plan. At thesame time, the provision of nursing care for senior citizens is assumed to aconsiderable extent by family members and foreign care workers.6 There arealso numerous issues at play, such as those that exist with respect to the qualityof public nursing-care services, regional discrepancies in terms of the systemthrough which services are provided, and the securing of funding to cover theincreasing costs of providing nursing care. Against this backdrop, the LongTerm Care Service Network Plan (nursing-care service network plan) was put
into effect in 2012 in order to reduce such regional discrepancies in terms ofthe nursing-care service provision system. 7 A new nursing-care scheme isbeing studied. The primary statutes to underpin this scheme —the Long-TermCare Act (Nursing-Care Service Act: a law to develop a scheme for providing
nursing-care services) and the Long-Term Care Insurance Act (Nursing-Care
Insurance Act)—are under review. A target of 2016 has been set for theenactment of the latter statute, the Long-Term Care Insurance Act.

Chapter 4: Taiwan 11

(3) Other welfare services for senior citizens
Other welfare services for senior citizens include the establishment ofgeneral channels of communications for fielding inquiries on concerns
affecting the elderly (governments of special municipalities and countycontrolled cities), the running of Evergreen Academies and other such facilities
for lifelong learning and recreational activities, and the implementation ofcommunity watch programs, programs of health consultations provided
through local visits, and other initiatives. In addition, there are also hotlines toassist in the search for elderly persons who go missing while roaming about
their neighborhoods.
Welfare for children (including work modes)
With Taiwan also facing its own declining birth rate, measures to support
child-rearing efforts have also become important. In this section, we will
examine not just welfare for children but also modes of work.
(1) Preschool education (childcare)
As is the case in Japan, places attended by children in Taiwan prior toentering the proper school system consisted of daycare centers (which used to
be under the jurisdiction of the Ministry of the Interior) and kindergartens(under the jurisdiction of the Ministry of Education). Daycare centers wereused by children two years of age or older while children under two years ofage attended infant-care centers (which used to be under the jurisdiction of the
Ministry of the Interior). Home-type services were offered by home childcare
operators. Kindergartens and daycare centers were subject to integration in
Taiwan in 2012, with the result that daycare centers and kindergartens wereconsolidated into preschools. Preschools are preschool educational andchildcare facilities for children aged two or older and operate under thepurview of the Ministry of Education. Children under the age of two years willcontinue to use infant-care centers (jurisdiction changed from the Ministry of
the Interior to the Ministry of Health and Welfare). Home-type services cameto be classed as home-based childcare (jurisdiction changed from the Ministryof the Interior to the Ministry of Health and Welfare) and persons providing
these services are subject to administration by a community nursemaid support
system operated by local governments. In 2012, there were 6,611 preschools
attended by approximately 460,000 children and 402 infant-care centersattended by approximately 7,000 children. These institutions were thus
collectively used by approximately thirty-nine percent of the total populationof people aged 0 to 5 years of age in Taiwan (approximately 1.2 million
people). There are 62 community nursemaid support systems in operation. A
total of 23,066 home childcare operators are registered and their services areused by 33,270 children (Table 4-5).

12

Table 4-5. Outline of policies concerning the welfare of children in Taiwan
TypeContent○Integration of kindergartens and daycares as preschools; facility-based and home-based services
0 years old
Facilitybased
Homebased

2 years old

Infant-care
center

6 years old
Preschool

National
primary school

Home-based childcare

After-school
childcare￥ChildcareEducation/childcare facility(educational and childcare
structure)
Educational and childcare
structure provided by local
residents in mountainous areas
and on remote islands○Jurisdiction○Workers and operators (qualifications)(Central) Childcare centers and homeEarly-childhood instructors, childcare workers, assistantbased childcare: Ministry of Health andchildcare workers, nursemaid workers, and others
Welfare; others: Ministry of Education
Home-based childcare employees are subject to(Local) Governments of special
management by a “community nursemaid support
municipalities and county-controlled
system” as run by the government of a special
citiesmunicipality or county-controlled city.

Econo
mic
support(Work
modes)○Subsidy to cover childcare expenses(income and other restrictions apply)
Subsidy to cover costs of childcare assumed by
employed family members(for families with children under the age of two years)
Allowance to cover costs of childcare assumed byfamilies with an unemployed parent○Subsidy to cover medical expenses:(for families in which at least one parent is not
subsidy to cover medical expenses of
employed)vulnerable children and youth (subsidy
Education plan to provide tuition waivers for five-year-old
to cover medical insurance premiums ofchildren: subsidy to cover costs of preschool for five-yearchildren in low-income households)
old children; supplemented for low-income persons○Allowance for low-income households:
living allowance for vulnerable children
and youth(1,900 TWD (approximately 6,300 JPY)
monthly)○Childbirth leave: Eight weeks total before and after childbirth(paid)○Childcare leave: can take two years off until child turns three
years of age (unpaid); allowance from employment insurance;
continuation of social insurance; prohibition against unfair
treatment; resumption of duties guaranteed○Paternity leave (three days; paid)○Family nursing-care leave;
shortening of working hours;
provision of childcare services by
the place of employment

Source: Produced by the authors based on materials provided by the Ministry of Health and Welfare, Executive
Yuan, Council of Labor Affairs (predecessor of the Ministry of Labor Affairs), and Department of Social
Welfare (Taipei City).

(2) Economic support
In Taiwan, no scheme equivalent to the children’s allowance that isprovided in Japan is operated. However, an allowance for children in lowincome households is paid by a local government (living allowance forvulnerable children and youth) under the Protection of Children and YouthWelfare and Rights Act (1,900 TWD (approximately 6,300 JPY) monthly). In
addition, a subsidy to help pay for daycare costs for low-income households
and a subsidy to help pay for medical insurance premiums and charges subject
to self-payment are also provided. The costs of preschool are also subsidized
for all five-year-old children. The subsidy amount differs according to the
Chapter 4: Taiwan 13

proprietor of the preschool (whether publicly or privately run) and may even be
supplemented depending on the financial conditions of the household. In
looking at the state of payments of the living allowance for vulnerable children
and youth (2012), we see that approximately 2.88 billion TWD (approximately
9.62 billion JPY) was paid to a total of about 1,467 thousand people (Table 45).
(3) Modes of work
In Taiwan, childbirth leaves and childcare leaves have become
institutionalized, such that eight weeks and two years in the first three years ofa child’s life, respectively, can be taken. Wages during a childbirth leave arepaid pursuant to the relevant statute. While wages are not paid during achildcare leave, an allowance is paid from employment insurance(unemployment insurance). Persons taking such leaves will remain enrolled insocial insurance plans and are protected by bans against unfair treatment.
Paternity leaves that are taken when a spouse gives birth (three days; paid)
have also become institutionalized.8 Places of business with a workforce of 250
employees or more are required to establish a daycare center or provide
equivalent childcare services (Table 4-5).
If we examine the state of the utilization of these schemes through theSurvey on Gender Equality in Employment and Management (2012) as
conducted by the Council of Labor Affairs, Executive Yuan (currently the
Ministry of Labor), places of business where employees took a childbirth leaveaccounted for 96.8 percent of all places of business (average of 7.5 weeks ofleave taken) while persons taking a childcare leave were found in 40.8 percent
of all places of business. Persons taking a childcare leave for one or more years
and less than two years accounted for 43.8 percent of all persons taking achildcare leave, more than for any other group of childcare leave takers. Placesof business where employees took a paternity leave accounted for 57.7 percent
of all places of business (average of 3.0 days of leave taken). 77.3 percent of
all places of business with a workforce of 250 employees or more provide
childcare services (of which 73.1 percent utilize an outside childcare service).
Welfare for persons with physical disabilities (including welfare for
persons with mental disabilities)
Approximately 1.12 million people in Taiwan have been certified as having
a physical or mental disability (2012; according to the Ministry of Interior
Affairs). Economic support and nursing-care services for persons withdisabilities are provided, adaptive devices are disseminated, and other welfare
measures for persons with disabilities have been or are being implemented
under the People with Disabilities Rights Protection Act for such people.

14

Table 4-6. Outline (of the key elements) of Taiwan’s welfare for disabled persons

Economic
support○Living allowance (monthly amount as a subsidy to cover the living expenses of physically andmentally disabled persons)Low-income households:
8,200 TWD (approximately 27,000 JPY; heavy or medium)4,700 TWD (approximately 16,000 JPY; light)
Other households:
4,700 TWD (approximately 16,000 JPY; heavy or medium)3,500 TWD (approximately 12,000 JPY; light)* Amount paid: 20,165 million TWD (approximately 67.4 billion JPY; average number of recipientsmonthly: 348,656 in 2012)○Subsidies for wheelchairs and other assistive devices* Amount paid: 729 million TWD (approximately 2,430 million JPY; average number of recipientsmonthly: 6,452 in 2012)○Subsidy for national pension and other social insurance premiums, subsidy to cover the costs ofrehabilitative medicine

Nursingcare
services fordisabled
persons○Nursing-care services for disabled persons
Home care (including physical care by visiting practitioners); total 2,529,788 users (2011)
Community (day) care, facility care
Number of facilities: 271 locations (capacity of 23,759 persons)
Number of users: 19,092 persons(of which there are 6,093 partial-time users of day-care and other services)* Costs are subsidized by the government (between 25 and 100 percent subsidized)
Visiting nurses: 1,300 TWD per visit (approximately 4,300 JPY; up to twice a month)Home care: 180 TWD per hour (approximately 600 JPY)
(Limits on service usage according to degree of disability) 25 hours for light,
50 hours for medium, 90 hours for heavy
Food-delivery service: 50 TWD (approximately 170 JPY; up to once a day)
Visiting rehabilitation service: 1,000 TWD per visit(approximately 3,340 JPY; up to once a week and 6 times a year)
Rate of subsidy is 100 percent for low-income persons, 90 percent for
low-to-medium-income persons, and 70 percent for others

Other○Job support (job training, employment support, and more)○School support (payment of scholarship and more)○Public transit discount, support through the tax system, and more

Note: Low-income and low-to-medium-income standards correspond to standards for social assistance.
Source: Produced by the authors based on materials provided by the Ministry of Health and Welfare and Ministryof the Interior.

An allowance for non-institutionalized persons with disabilities is paid as ameans of providing economic support (subject to income restrictions and otherconditions). The amount paid depends on the degree of disability and the levelof household income, such that between 3,500 and 8,200 TWD per month(between approx. 12,000 and 27,000 JPY) is paid. The costs of purchasing
wheelchairs and other assistive devices are also subsidized. The subsidy
contents and persons eligible to receive this subsidy are prescribed in detail bytype of assistive device. In addition, premiums for national pension and othersocial insurance plans are also subsidized (the extent to which varies according
to degree of disability).
Next, nursing-care services are provided in homes, in the community (daycare basis), and at facilities as nursing-care services for the disabled. As well as
physical nursing care and living-support services, visiting services (whereby
Chapter 4: Taiwan 15

users can undergo rehabilitation or engage in conversation) and food-delivery
services are also offered. In particular, services to support the independence ofusers through training to adapt to society are delivered through day-care andfacility-care programs. In addition, various support programs (such as advice
services and respite care programs) for caretakers are carried out. While thecosts of these services were subsidized by the government, they may be only
partially subsidized depending on income level. Costs are subsidized at a rateof 90 or 70 percent for home care and at between 25 and 100 percent forcommunity (day-care) and facility care. Persons with disabilities aged 50 years
or older are entitled to use nursing-care services under the aforementioned
National Ten-Year Long-term Care Plan. (There are plans to lower the age of
eligibility as well as plans to allow persons with disabilities of all ages to use
such services through the nursing-care scheme currently under study.)
Furthermore, job-support and school support programs are also operated.
Other matters
In Taiwan, there is “social welfare for people especially in need of support”
due to the loss of a spouse or other such circumstances. Approximately 20,000
households across Taiwan are entitled to receive this welfare (2012; according
to materials provided by the Ministry of the Interior). Most of these households
are headed by a woman. The heads of many of these households are in theirthirties or forties and are either divorced or bereaved of their former spouses.
These households are supported through the payment of an allowance forchildren being raised, emergency living assistance, and other such items that
totaled approximately 450 million TWD (approximately 1.5 billion JPY) paidout to approximately 157,000 people in 2012. In addition, women’s welfare
centers, women’s halfway houses and shelters, and welfare centers for foreign
spouses have also been set up and are being operated. As of 2012, fifty-one,
forty, and thirty-five locations, respectively, had been established.
The provision of welfare to Taiwanese indigenous people who havetraditionally resided in mountainous areas and other remote locations is an
important concern. This is because of the existence of disparities in terms ofhealth and employment between them and other residents. Policies concerning
Taiwanese indigenous peoples generally fall under the purview of the Councilof Indigenous Peoples under the Executive Yuan. Measures in the area of
health and welfare promulgated by this council include the provision of a
subsidy to cover National Health Insurance (medical insurance) premiums, asubsidy to cover the costs incurred to visit applicable institutions, a subsidy for
welfare facilities used extensively by Taiwanese indigenous people, and apension for Taiwanese indigenous people (as provided through the national
pension scheme to be discussed later).

16

3. Current state of medical insurance
Outline of National Health Insurance
The medical insurance scheme in place in Taiwan provides coverage toresidents in Taiwan under the National Health Insurance program (which went
into effect in 1995). The insurer is an organ within the Ministry of Health andWelfare known as the National Health Insurance Bureau. In contrast to thesystem that has been adopted in Japan, the scheme in Taiwan operates througha single insurer.
Insured persons consist of persons residing in Taiwan (including foreign
nationals with a valid status of residency). Prisoners are also covered. In
principle, persons who return to Taiwan and persons who obtain a status ofresidency become insured persons 6 months (183 days) later. Insured persons
are classified into six different categories according to occupation and othervariables: from category 1 to category 6 insured persons. These categories are
the basis for the calculation of insurance premiums and the percentage of
insurance premiums to be assumed by the government and employers. For
example, company employees constitute category 1 insured persons, a categorythat also includes the self-employed (in the case where there is an employedperson) and professionals (such as attorneys and accountants). Persons in jobs
in the agricultural, forestry, or fisheries industry are category 3 insured persons
while unemployed elderly persons and others are category 6 insured persons.
Low-income persons entitled to receive social assistance (livelihood
protection) are category 5 insured persons.
With certain exceptions, insured persons assume the cost of insurance
premiums. Insurance premiums for a category 1 through category 3 insured
person equal the standard remuneration (such as wages) multiplied by the
insurance premium rate (4.91 percent) multiplied by the percentage ofpremiums assumed as set forth in Figure 4-2. The amount of premiums that has
been calculated accordingly and that corresponds to the insured person and to
the number of other members of the family (up to 3 persons) shall be assumed.
For a category 6 insured person (community residents), 60 percent of the fixed
premium amount, which is referred to as the average insurance premium (1,249
TWD (approx. 4,200 JPY), shall be paid for himself or herself and othermembers of his or her family (average of 0.7 insured persons). Employers(including professional organizations) and the central government shall assume
insurance premiums at rates set forth in Figure 4-2. The central government
shall pay at least 36 percent of revenues net of certain statutory revenues (suchas lottery proceeds and health and welfare tax proceeds). While insurance
premiums to be assumed thusly constitute the primary sources of funding for
the National Health Insurance plan, other sources of funding include
supplementary insurance premiums (from insured persons, 2 percent of thesum of bonus amounts above a certain threshold as well as interest andChapter 4: Taiwan 17

dividend payments received; from employers, 2 percent of the difference
between the total amount of salary paid and the total amount of standard
remuneration payable), the proceeds from the sale of public lottery tickets, andhealth and welfare tax proceeds9 (type of cigarette tax).
Figure 4-2. Outline of National Health Insurance
Covered persons (insured persons)
Enroll andpay insurance
premiums○Residents residing in Taiwan (including foreign nationals with a valid status of residency)○6 categories of insured persons (covers virtually all residents)
Category 1: Government employees, professional military personnel, employees of private-sector
companies
Category 2: Members of professional bodies (self-employed persons without employees)
Category 3: Farmers, fishermen
Category 4: Soldiers and persons engaged in alternative forms of service, prisoners
Category 5: Persons entitled to receive social assistanceCategory 6: Retired military personnel and family members, other residents

Applicationfor
remunerati
on formedicalservices

Undergo medical examination

Self-payment

Insurance-designated medical institutions

Insurer(competentauthority)
National
HealthInsurance
Bureau(Ministry of
Health andWelfare)Assumption of
Employer/insurance
profession
premiums
al body

Government

Insurance
premium
subsidy andother funding
sources

Designation of health insurance physician
Payment of remuneration for medical
services

Hospital/ medical clinic, dental clinic, dispensing pharmacy, and others

Funding sources(i) Insurance premiums(Categories 1 through 3)
Standard remuneration x insurance premium rate (4.91 percent) corresponding to insured
person and number of other family members (up to three persons) to be assumed (partly
subsidized by government and employer)(Categories 4 through 5)
Average insurance premium (1,376 TWD (approximately 4,600 JPY)) fully assumed by thegovernment(Category 6)
Average insurance premium (1,249 TWD (approximately 4,200 JPY)) corresponding to insured
person and number of other family members (up to three persons) to be assumed (partly
subsidized by government)

Percentage of premiums assumed

Government employees,
public-school teachers,
professional military
personnelCat. 1
Private-school teachers
Employed persons
Self-employed persons(with employees)
Cat. 2
Cat. 3(ii) Supplementary insurance premiums (applicable to income and proceeds other than wages)
Cat. 4
Insured person (excluding category 5 insured person): 2% x non-wage income(*)* Bonus (portion exceeding 4 months’ equivalent), interest, dividends
Cat. 5(iii) Portion of lottery proceeds
Veterans(iv) Portion of health and welfare tax(retired military personnel)Cat. 6
Tax levied on cigarettes other than cigarette tax
Family members of veterans(Example) 1,000 TWD (approximately 3,340 JPY) per 1,000 paper-rolled cigarettes
Others (local residents)

Employer/Insur
professional Govt.
ed
organization
30

70

0

30
30

35
60

35
10

100

0

0

60
30
0
0

0
0
0
0

40
70
100
100

0

0

100

30
60

0
0

70
40

Benefits(Insurance benefits forthe following)(i) General medical
service;(ii) Dental treatment;(iii) Medical treatment
based on traditional
Chinese medicine;(iv) Care provided byvisiting nurse (up to
twice a month)(v) Childbirth, and more
(Excluded from coverage)(i) Where medical costs
are paid by a different
scheme;(ii) Cosmetic plastic
surgery, and more

(Self-payment rates and examples)(Outpatient)Type of medical
General medical service
institution
360 TWD
Medical center(approximately 1,200 JPY)
240 TWD
Area hospital(approximately 800 JPY)
Neighborhood 80 TWD
hospital(approximately 270 JPY)
50 TWD
Medical clinic(approximately 170 JPY)

(Admitted)
Emergency
ward

Chronicward
Up to 30-days
31 to 90
Up to 30 days
days
91 to 180
31 to 60 days
days
61 days or
181 days or
more
more

Self-payment
rate
5%
10%
20%
30%

Dental/traditional Chinese medicine: 50 TWD (approximately 170 JPY)
Pharmaceuticals: nothing for items costing 100 TWD (approximately 330 JPY) or less;
20 TWD (approximately 67 JPY) for each item costing between 101
and 200 TWD (approximately 340 and 670 JPY)
Care provided by visiting nurse: 5 percent
Self-payment waived in the following examples: serious illness, medical service rendered ina mountainous area or on a remote island, childbirth, where the patient is 3 years of age or
younger

Note: Based in part on materials provided by the National Health Insurance Bureau.
Source: Produced by the authors based on a table prepared by Katsuhisa Kojima (2011).

18(Remuneration for medical
service)
Balance after self-payment portion
paid is covered by insurance;
insurance payments depend on
the total amount budgeted.
* Total amount budgeted:
A system for determining the total
amount of medical costs to be
incurred in the following fiscal
year upon determining the rate at
which medical costs will growbased on population changes,
advancements in medical
technology, and other variables.
The medical costs to be actually
paid to medical institutions are
determined based on applications
for medical service remuneration
as submitted by medical
institutions.

Insurance benefits include medical services provided by medical doctors,
dentists, and practitioners of traditional Chinese medicine, pharmaceuticalproducts, and natural childbirth. Care provided by visiting nurses is subject tobenefit payments (up to twice a month). Self-payment amounts also apply, arefixed for outpatient services (fixed statutory rates), and are prescribedaccording to classification (such as medical or dental) and type of medical
institution. For inpatient services, self-payment amounts are subject to fixed
rates and are prescribed according to whether the insured person is admitted toan emergency or chronic ward and to the duration of admission. The amount tobe self-paid for care provided by a visiting nurse is subject to a fixed rate (5percent).
The medical costs to be paid by insurance are paid out of an aggregate
budget. This entails a determination of the total amount of medical costs to be
incurred in the following fiscal year by the government and a subsequent
determination of the distribution of medical costs by type of medical care,region, and other variables in advance10. In the following fiscal year, medical
costs to be paid out from insurance based on applications for medical service
remuneration as submitted by medical institutions authorized to treat patientswith health insurance coverage and on the results of examinations conductedaccordingly shall be determined on a points-scoring basis. Since a unit amountper point is determined by comparing these scored points with the total amountof medical costs incurred, each medical institution receives medical service
remuneration as calculated accordingly (Figure 4-2).
Actual state of the National Health Insurance plan
The National Health Insurance scheme is a single scheme providing
coverage to the residents of Taiwan. There were approximately 19.12 million
insured persons—equivalent to about 90 percent of the total population—in
1995 (the year in which this scheme came into effect). This percentage
subsequently increased such that 99.9 percent of all residents came to becovered by 2011. 11 The implementation of the National Health Insurance
scheme has facilitated the use of medical services primarily among the elderly.
For example, the average number of examinations performed (on an outpatientbasis) was 10.6 in 1995. This figure gradually rose thereafter to reach 16.2 in2011. The average number of days of admission increased slightly from 9.4 in
1995 to 10.2 in 2011. In looking at the financial administration of thisinsurance scheme, we see that revenues rose from approximately 194.5 billion
TWD (approximately 650 billion JPY) in 1995 to about 496.8 billion TWD(approximately 1,660 billion JPY) in 2011. On the other hand, disbursements
increased from approximately 157.4 billion TWD (approximately 530 billion
JPY) in 1995 to about 462.6 billion TWD (approximately 1,550 billion JPY) in
2011. In some years, disbursements exceeded revenues. To explain how this
Chapter 4: Taiwan 19

happened, we note that, while the adoption of a universal health insurance
scheme led to the securing of insurance premiums, premium rates have beenrevised only three times to date (they are systematically reviewed at least once
every two years), the growth of wages has been low, and medical costs
incurred for seriously ill patients and the elderly have ballooned (Table 4-7).
Current state of the system for providing medical care
The system for providing medical care in Taiwan that directly underpins the
National Health Insurance scheme consists of approximately 46,000 medical
doctors (including those practicing traditional Chinese medicine), about 12,000
dentists, and around 114,000 nurses (2011). For every 10,000 persons, thesenumbers are converted as follows: 19.6 medical doctors (including thosepracticing traditional Chinese medicine), 5.2 dentists, and 49.2 nurses. When
compared to figures for Japan (23.0 medical doctors, 7.9 dentists, and 101.2
nurses (including assistant nurses) in 2010)12, we see that there are far fewer
medical doctors and nurses in Taiwan than there are in this country. A closer
look reveals that there are also regional disparities in the system for theprovision of medical care. In examining the numbers for special municipalities
and county-controlled cities, it is clear that Taipei has the most number of
medical doctors (including those practicing traditional Chinese medicine) for
every 10,000 persons (35.1) while the lowest number of medical doctors
corresponds to the remote island of Kinmen County (5.3).
Table 4-7. Status of the National Health Insurance plan
Status ofapplication

Financialadministrati
on of
insurance(Per insured
person)Number of insured persons(as a percentage of the total population)
Individuals
Family members
Revenues
Insurance premiums
Other
Disbursements
Insurance benefits
Other
Insurance premiums(including portions assumed by thegovernment and employers)
Insurance benefits(x 10,000 persons)(x 10,000 persons)(x 100 mil. TWD)
(x 100 mil. TWD)
(x 100 mil. TWD)
(x 100 mil. TWD)
(x 100 mil. TWD)
(x 100 mil. TWD)

1995
1,912.3
89.5%
1,121.3
791.1
1,945.0
1,941.6
3.4
1,573.6
1,568.5
5.1

2000
2,140.1
96.1%
1,234.7905.4
2,914.0
2,907.3
6.7
2,904.4
2,821.1
83.3

2005
2,231.5
98.0%
1,341.0
890.5
3,660.6
3,561.0
99.6
3,723.9
3,674.0
50.0

2011
2,319.9
99.9%
1,504.5
815.4
4,967.6
4,694.7272.9
4,625.8
4,581.9
43.8

(TWD)

10,153

13,585

15,95820,237

8,202

13,182

16,46419,751

10.6

14.7

15.5

16.2

9.4

8.7

9.9

10.2

(x 10,000 persons)(TWD)
Status of
Average number of examinations (outpatient) (number of visits)
medical care
Average number of admission days
(days per admission)
received

Notes: “Other” in the revenues section includes insurance premiums in arrear (delayed payments) and subsidies
derived from lottery revenues and the health and welfare tax. “Other” in the disbursements section includes
payments of interest on loans payable and money set aside in the National Health Insurance fund. The
average number of examinations was obtained by dividing the number of outpatient visits by the number of
insured persons.
Source: Produced by the authors based on materials provided by the National Health Insurance Bureau.

20In addition, few medical doctors can be found in mountainous Hsinchu
County (9.1), Miaoli County (10.9), and Taitung County (12.7). In this way,
remote islands and mountainous areas are insufficiently served by providers of
medical care, such that regional discrepancies in terms of the system ofproviding medical care are problematic. To address this issue, traveling clinics
have been dispatched by designated medical institutions in cities tomountainous areas and medical treatment data are shared with the use of ITC(Table 4-8).
The use of family doctors is spreading in conjunction with the promotion of
preventive medicine in Taiwan. However, residents are not obligated to find afamily doctor; instead, this system is limited to persons with a history ofreceiving treatment for chronic conditions who wish to have a family doctor.
Table 4-8. System for the provision of medical services in Taiwan
1995
2000
2005
2011
Medical doctors (No. of people)
27,49533,16938,65745,516Main medical
Dentists(No. of people)
7,026
8,597
10,14011,992
practitioners
Nurses(No. of people)
56,74370,74392,447
114,300
Medical doctors (No. of people)
12.9
14.9
17.0
19.6
Per 10,000
Dentists(No. of people)
3.3
3.9
4.5
5.2
residents
Nurses(No. of people)
26.6
31.8
40.6
49.2
Hospitals(No. of sites)
787
669
556
507
Number of
medical
Medical clinics(No. of sites)
11,732
11,863
12,84814,226
institutions Dental clinics(No. of sites)
5,280
5,550
6,029
6,402
(No. of beds)
112,379
126,476
146,382
160,472
Number of hospital beds
(Per 10,000 residents)(No. of beds)
52.6
56.8
64.3
69.1
Notes: “Medical doctors” include the number of doctors practicing traditional Chinese medicine and the number ofhospitals and medical clinics include the number of hospitals and medical clinics at which traditional
Chinese medicine is practiced. “Nurses” represent the sum of therapists and nurses.
Source: Produced by the authors based on materials provided by the Ministry of Health and Welfare.

4. Current state of pension insurance
Income security for the elderly and pension schemes in Taiwan
As stated in the section on welfare for senior citizens in section 2 above,
public pensions are a form of welfare for the elderly (economic support).
Pension schemes in Taiwan are not centralized or integrated in the way that
medical insurance (National Health Insurance) is organized. Benefits areprovided by multiple schemes, including labor insurance and insurance forgovernment workers and schoolteachers. If we include the welfare allowance
for senior citizens as mentioned earlier, we see that the framework of income
security for the elderly in Taiwan is more complex than it is in Japan. In thisconnection, let us survey the system of income security for the elderly in
Taiwan and examine the positioning of pension schemes within this system.

Chapter 4: Taiwan 21

Figure 4-3 outlines the system of income-security schemes for the elderly in
Taiwan, which includes pension schemes, and the types of pension schemesthat are available. This table reveals that the base scheme (level 0) is a welfare
scheme for low-income senior citizens and that the living allowance for low-tomedium-income senior citizens and other such allowances fall under thisscheme. Above this scheme are positioned social insurance-type pension
schemes that are classified as level-1 schemes. These can be conceived ascorresponding to first-tier pension schemes in Japan. Above these level-1
schemes are positioned level-2 schemes in the form of (statutorily prescribed)
retirement allowance schemes. Level-3 schemes allow individuals to makeprovisions for their old age and correspond to private insurance plans(individual pensions), savings, and economic support as provided by family
members.
Figure 4-3. Pension plans in Taiwan(positioning in terms of income security for the elderly and key plans)
Positioning↓

Level 3:
private-sector
insurance

Individual
pensions

Level 2:
retirement allowance
schemesLevel 1:
public pension
schemesLevel 0:social welfare
schemes

Key plans↓
Military
personnel

Government
employees
andteachers(Privatesector)
workers

Retirement
scheme formilitary
personnel

Retirement
scheme forgovernment
employees
andteachersLaborpensionInsurance
for military
personnel(243,000
persons)
Lump-sumpayment

Insuranceforgovernment
employees
andteachers(593,000
persons)
Lump-sumpayment

Labor
insurance(9,807,000
persons)
PensionRetirement
allowance schemes

Labor pension, PublicService Pension Fund

Pensionschemes

Insurance for government
employees and teachers, insurance
for military personnel, labor
insurance, national pension
Living allowance for low-to-medium-income
senior citizens, veterans’ care allowance

Selfemployedpersons

National
pension(3,743,000
persons)
PensionFarmers

Allowance
for elderly
farmers
Healthinsurance forfarmers(1,454,000
persons)

Note: Figures in parentheses represent the number of enrollees (as of December 2012). Underlined parts indicate
the mode by which benefits are paid.
Source: Produced by the authors based on materials provided by the Council for Economic Planning andDevelopment, a branch of the Executive Yuan (and currently known as the National Development Council),and the Council of Labor Affairs (currently the Ministry of Labor).

In this way, social insurance-type pension schemes are positioned as
foundational elements of income security for the elderly. The adoption of anational pension scheme (2008) in Taiwan meant that all residents would be
legally covered under a pension scheme. However, the pension schemes inwhich individuals enroll differ according to occupation. Military personnel
enroll in an insurance plan for military personnel while government employees
and schoolteachers enroll in an insurance plan for government workers and22

schoolteachers. Persons employed by private-sector companies and otherworkers enroll in labor insurance while self-employed persons enroll in thenational pension scheme. These schemes are divided into schemes operated
through pensions by which old-age benefits can be regularly received (labor
insurance and the national pension scheme) and lump-sum payment schemes(insurance for military personnel and insurance for government employees andschool teachers), such that benefits are not provided according to a uniform
pattern.
Level-2 retirement allowance schemes correspond to retirement allowance
schemes for military personnel, government employees, and people enrolled inlabor insurance plans. However, such schemes (schemes similar to the national
pension fund and defined contribution-type pension for individuals that are
offered in Japan) do not exist for others (Figure 4-3).
Labor insurance
As can be seen in Figure 4-3, labor insurance (under the jurisdiction of the
Ministry of Labor (Bureau of Labor Insurance)) constitutes the largest social
insurance program providing pension benefits in Taiwan. As a scheme thatserves persons employed by private-sector companies and others, labor
insurance used to be operated in such a way that benefits corresponding to apension were paid on a lump-sum basis. Since 2009, benefits have been
provided as pension payments. Persons insured under labor insurance assume
insurance premiums equal to 8 percent of standard remuneration (20 percent of
which is assumed by the individual).
Pension benefits include three types: old-age pensions, disability pensions,and survivor’s pensions. An old-age pension can be received by anyone 60
years of age or older who has been enrolled in a labor insurance plan for 15
years or longer13. With respect to the level of benefits, the amount of benefits
to be paid is determined according to a formula as indicated below in Table 4-9
based on the individual’s average wage (average for the 60-month period
during which the individual was paid his or her highest wage amounts), thelength of enrollment in the insurance plan, and other factors (minimum
guaranteed amount of 3,000 TWD (approximately 10,000 JPY) per month).
However, a lump-sum system remains, such that an individual who has beenenrolled for less than 15 years in the insurance plan would be entitled toreceive an old-age lump-sum amount. This amount would be no greater thanthe equivalent of 45 months’ of the individual’s average monthly wage.

Chapter 4: Taiwan 23

Table 4-9. Outline of labor insurance (pension benefits)
and the national pension plan
Item
Insurer

Insuredpersons

Insurance
premium

Types ofbenefits

Labor insurance (pension benefits)
Ministry of Labor(Department of Labor Insurance)
Workers 15 years of age and older and under 65 years of age(Key conditions)• Employee of a private-sector company with a workforce of 5 ormore employees• Self-employed person belonging to a professional organization• 8 percent of standard remuneration (exclusive of portion
corresponding to industrial-accident compensation)
Burden of paying insurance premiums apportioned as follows:
individuals (20 percent), employers (70 percent), and government(10 percent)○Old-age pension (min. guarantee: 3,000 TWD monthly(approximately 10,000 JPY))
Age at which benefits will start to be paid: 60 years (at least 15
years of enrolment; can be moved up or deferred)○Disability pension (min. guarantee: 4,000 TWD monthly(approximately 13,000 JPY))
Paid where the insured person is certified as being heavily disabled○Survivor’s pension (min. guarantee: 3,000 TWD monthly(approximately 10,000 JPY))
Paid out when the insured person or a pension beneficiary dies
Beneficiaries: spouse, children, others○Old-age lump-sum payment
Paid out where the individual has been enrolled in the insurance
plan for less than 15 years
Up to 45 months’ average wages

Benefitamount(2012)

Old-age pension:
11,170 TWD (approximately 37,000 JPY)
Disability pension: 10,226 TWD (approximately 34,000 JPY)
Survivor’s pension: 12,305 TWD (approximately 41,000 JPY)

* Formula for calculating the amount of labor insurance
pension to be paid (key items)
Old-age pension (whichever is higher)(1) Average wage x insurance period (number of years) x
0.775% + 3,000 TWD (approximately 10,000 yen)
(2) Average wage x insurance period (number of years) x
1.55%* Average wage is the average for the sixty-month period
during which the individual was paid the highest wageamounts; the insurance period can include the period ofenrolment in the national pension plan.
Disability pension (general rule)
Average wage x insurance period (number of years) x
1.55%(Min. guaranteed monthly amount is 4,000 TWD(approximately 13,000 JPY)
Supplemented by 25% per additional family member(up to 50%)
Survivor’s pension(1) Average wage x insurance period (number of years) x
1.55% (death during period of enrolment)(2) 50% of above (death during period when old-age pension
or disability pension is being received)
Min. guaranteed monthly amount is 3,000 TWD(approximately 10,000 JPY)
Supplemented by 25% per additional family member(up to 50%)

National pension
Ministry of Health and Welfare(entrusted to the Ministry of Labor (Department of Labor Insurance))
Citizens under 65 years of age who are not enrolled in a social-insurance plan
(Key conditions)• 25 years of age or older and has never received social-insurance benefits(old-age benefits)• 15 years of age or older and is already participating in a health insurance planfor farmers• Amount equal to insurance amount (17,280 TWD (approximately 58,000 JPY))
times insurance premium rate (7.5 percent) (2013).
Burden of paying insurance premiums apportioned as follows: individuals(60 percent) and government (40 percent)* Rates of assumption by individuals and government will differ according toincome level and other factors.
○Old-age pension (min. guarantee: 3,500 TWD monthly(approximately 12,000 JPY))
Age at which benefits will start to be paid: 65 years○Disability pension (min. guarantee: 4,700 TWD monthly(approximately 16,000 JPY))
Paid where the insured person is certified as being heavily disabled○Survivor’s pension (min. guarantee: 3,500 TWD monthly(approximately 12,000 JPY))
Paid out when the insured person or a pension beneficiary dies
Beneficiaries: spouse, children, others○Other benefits (monthly)
Basic old-age security pension (3,500 TWD (approximately 12,000 JPY))
Basic security pension for physical or mental disabilities(4,700 TWD (approximately 16,000 JPY))
Pension for indigenous persons (3,500 TWD (approximately 12,000 JPY))
Paid to an individual who was, at the time the national pension plancame into effect (2008), already at least sixty-five years of age, a heavily
disabled person, or a Taiwanese indigenous person fifty-five years of age
or older (subject to income-related and other conditions)Old-age pension:
3,053 TWD (approximately 10,000 JPY)
Disability pension: 3,517 TWD (approximately 12,000 JPY)
Survivor’s pension: 3,394 TWD (approximately 11,000 JPY)

Apportioning burden of paying national pension insurance premiums (other than general)
1. Persons eligible for social assistance: fully assumed by government
2. Low-income persons:
Income is less than 1.5 times min. cost of living:
individual 30%, government 70%
Income is between 1.5 and less than 2.5 times min. cost of living:
individual 45%, government 55%
3. Disabled persons: heavy: fully assumed by government;
medium: individual 30%, government 70%;
light: individual 45%, government 55%* Formula for calculating the amount of national pension plan pension benefits to be paid
(key items)
Old-age pension (general rule; whichever is higher)(1) Insurance amount x insurance period (number of years) x 0.65% + 3,500 TWD(approximately 12,000 yen)(2) Insurance amount x insurance period (number of years) x 1.3%
The insurance period can include the period of enrolment in the national pension plan.
Disability pension (general rule)
Insurance amount x insurance period (number of years) x 1.3%
(Min. guaranteed monthly amount is 4,700 TWD (approximately 16,000 JPY))
Survivor’s pension(1) Insurance amount x insurance period (number of years) x 1.3%
(death during period of enrolment)(2) 50% of above(death during period when old-age pension or disability pension is being received)
Min. guaranteed monthly amount is 3,500 TWD (approximately 12,000 JPY)
Supplemented by 25% per additional family member (up to 50%)

Note: Actual amounts paid may be less than what is minimally guaranteed pursuant to detailed regulations (such as
in cases in which a welfare allowance is received).
Source: Produced by the authors based on materials provided by the Council for Economic Planning andDevelopment, a branch of the Executive Yuan (and currently known as the National Development Council),and the Council of Labor Affairs (currently the Ministry of Labor).

24

A disability pension is paid to insured persons with a heavy disability. The
minimum guaranteed amount is 4,000 TWD (approximately 13,000 JPY) amonth, with the amount to be paid determined, as with the old-age pension, in
accordance with the individual’s average wage, length of enrollment in theinsurance plan, and other factors. However, additional amounts for family
members are provided where the individual in question has a spouse or otherfamily members. The survivor’s pension allows the spouse and any children of
an insured person to receive benefits after the insured person or a beneficiary
dies. The minimum guaranteed amount is 3,000 TWD (approximately 10,000
JPY) a month and the amount paid is determined according to a prescribed
formula. As with the disability pension, additional amounts for family
members are provided (Table 4-9).
The lengths of enrollment in a labor insurance plan and in the national
pension plan to be discussed below can be aggregated, such that an individual
who may have been enrolled in a labor insurance plan for less than 15 years but
who is later enrolled in the national pension plan for long enough that the
combined length of duration in both plans is at least 15 years will be entitled toreceive an old-age pension under the labor insurance plan. (The pension
amounts to be paid will be calculated separately under each scheme.)
National pension
Taiwan’s national pension plan was put into effect in 2008. While the
Ministry of Health and Welfare is in charge of this scheme, its operations havebeen entrusted to the Ministry of Labor (Department of Labor Insurance),
which has jurisdiction over labor insurance. Persons insured under the national
pension plan consist of residents under the age of sixty-five years who are notenrolled in a labor insurance plan or any other social insurance (pension)
scheme14. In other words, self-employed persons, farmers, and others who are
not enrolled in a labor insurance plan or other such scheme (persons who had
not previously been covered by a pension scheme) constitute insured persons.
Insurance premiums equal the insurance amount equivalent to the standard
remuneration (17,280 TWD (approximately 58,000 JPY)) multiplied by the
insurance premium rate (7.5 percent). Since this insurance premium is applied
to each insured person, the insurance premium is, for all practical purposes, afixed amount. While the insurance premium rate was 7.5 percent in 2013, it is
to be noted that the rate stood at 6.5 percent in the year in which this schemecame into effect (fiscal year 2008) and that it is set to be raised by 0.5
percentage points every two years15. In addition to insurance premiums, thenational pension plan is funded in part by 1) subsidies provided by the central
and local governments (by way of waiving insurance premiums payable bylow-income individuals) and 2) a portion of the proceeds of public lottery sales
and an amount equivalent to 1 percent of sales tax proceeds (consumption tax).
Chapter 4: Taiwan 25

National pension benefits also include an old-age pension, disability
pension, and survivor’s pension. The old-age pension can be received when an
insured person reaches the age of 65 years. While the amount paid isdetermined according to a prescribed formula, an amount of 3,500 TWD(approximately 12,000 JPY) is, in principle, guaranteed monthly. The
insurance period that is plugged into this formula is added to the insurance
period for the labor insurance plan. The disability pension is a pension that is
paid when the insured person is incapable of making a living upon beingcertified as suffering from a serious physical or mental disability due to an
injury or illness sustained during the insurance period. The minimum guarantee
amount is 4,700 TWD (approximately 16,000 JPY) a month. The survivor’s
pension is a pension that can be received by surviving family members when
the insured person or the aforementioned pension beneficiary dies. Persons
entitled to receive this pension consist of the spouse, any children, the parents,
the grandparents, any grandchildren, and any siblings, and payment is subject
to the conditions based on the duration of the marriage, age of the deceased
person, and other variables. The minimum guaranteed amount is 3,500 TWD(approximately 12,000 JPY) a month.
Apart from these benefits, there are also benefits that can be received by anindividual who was, at the time the national pension plan came into effect,
already at least 65 years of age, a heavily disabled person, or a Taiwaneseindigenous person 55 years of age or older and who satisfies certain incomerelated and other conditions (old-age basic security pension, basic security
pension for physical or mental disabilities, and pension for indigenous persons).
When an insured person dies, an amount equivalent to five months’ insurance
amount for the month in which the person dies shall be paid to cover funeral
expenses. This is received by the person paying for funeral expenses (inprinciple, one person) (Table 4-9).
Other schemes
Government employees and school (including private school) teachers areenrolled in an insurance plan for government employees and teachers.
Insurance premiums equal to the insurance premium rate (8.25 percent)multiplied by salary are assumed. The insured individual assumes 35 percent ofthese premiums, with the rest assumed by the government (or the government
and the employer for private-school teachers). Old-age benefits can be received
when an insured person has paid insurance premiums for 15 years and retires
upon reaching the age of 55 years. This is, as it were, a lump-sum payment
made at the time of retirement. The amount is determined based on the lengthof time over which insurance premiums were paid (up to 36 months’ salary).
Professional military personnel are enrolled in an insurance plan for military
personnel and an insurance premium equivalent to 8 percent of their salary is26

paid (of which 35 percent is assumed by the insured individual). Old-age
benefits constitute a lump-sum retirement allowance received in accordancewith the number of consecutive service years (5 or more) accrued; up to 45
months’ salary is paid.
5. Future issues concerning social-security schemes
Direction of social security measures from the standpoint of the
Population Policy Guidelines of the ROC
An overview of social security schemes in Taiwan has been provided up to
this point. Taiwan too has been experiencing a decreasing birthrate and aging
population and its population is expected to peak in around 2025 before
declining. For this reason, the issue of reforming and building social security
schemes in accordance with population changes is more important than everbefore.
In Taiwan, the policy applicable to population concerns and relevantmeasures dealing with social security and other matters is prescribed in the
ROC Population Policy Guidelines. The first edition of these guidelines was
drawn up in 1969. A look at the guidelines as revised in 2011 reveals a numberof goals that conform to a basic line of thinking, including the goal of
maintaining a reasonable population structure through the implementation ofvarious measures (to mitigate the impact of aging) and the goal of improving
the health of residents. In response, the direction taken by measures relating tosocial security can be seen in efforts to prevent illness suffered by seniorcitizens, the enhancement of nursing-care services, the enhancement of pension
schemes and other income-security schemes, the promotion of health for all
residents, the enhancement of healthcare services, and the enhancement ofhigh-quality childcare-support services and welfare for the disabled andindigenous people16.
Direction in terms of the reformation of social security schemes
Some social security schemes in Taiwan, like the National Health Insurance
plan, have been fully established. Even as medical costs rise, however, reviewsof insurance premiums that should be conducted periodically are not being
adequately carried out, such that the finances of the insurance system are
hardly ample. Thus, the securing of insurance premiums and other sources offunding and the suppression of any expansion in medical costs are issues to be
tackled. Budgeting total amounts of medical costs is a specific means ofaddressing the latter. Regional discrepancies in terms of the system ofproviding medical care and the discrepancy in particular between mountainous
areas and remote islands on the one hand and elsewhere on the other hand are
significant. While urban medical institutions are taking the lead in providing
Chapter 4: Taiwan 27

traveling clinics with the aim of closing this gap, the elimination of regional
discrepancies in terms of accessing medical services is a vital matter.
These sorts of issues can also be seen in nursing-care schemes. Nursingcare workers across all of Taiwan urgently need to improve both quantitatively
and qualitatively. At the same time, there are regional discrepancies in terms of
the systems through which nursing-care services are provided. Efforts to
reduce these discrepancies are encapsulated in the Long-Term Care Service
Network Plan. Under the National Ten-Year Long-Term Care Plan, a budget
exceeding 5 billion TWD over 3 years has been committed. However, thesecuring of budgetary funding is hardly going according to plan. Nursing-careinsurance is being studied with the aim of legislating such a scheme in 2016 inorder to secure the funding that is required for nursing care. While it is said
that this process has included an examination of comparable schemes in Japan,
Germany, and South Korea for reference purposes, a scheme for nursing-careinsurance that is suitably adapted to the current state of Taiwan is required. In
this way, a nursing-care scheme in Taiwan should entail the development ofsocial-insurance schemes alongside the development of a scheme for providing
nursing-care services.
Pension schemes are fragmented and thus cause disparities in terms of themethod by which benefits are paid and the levels of benefits that are paid.
Studies to address these disparities are being carried out by the Council for
Economic Planning and Development, a branch of the Executive Yuan
(renamed the National Development Council in January 2014). As society
continues to age, it will become difficult to support senior citizens on the backsof the economic vitality of their children. In order to establish a foundation thatwould allow people to live independently in their old age, systemic reforms
designed to eliminate unfairness in terms of benefits and premium burdens
among different schemes are an urgent matter.
As for the provision of support for the raising of children, we see that, while
the integration of kindergartens and nurseries is proceeding at a faster clip in
Taiwan than it is in Japan, no framework equivalent to the children’s allowancethat is paid in Japan has yet been implemented. In the area of welfare for thedisabled, nursing-care services are moving towards integration with nursingcare schemes for senior citizens. The services required by the elderly and by
the disabled differ. Thus, the same method for evaluating needs should not be
adopted. Consideration of these points is needed.

28

1Formerly known as Takasago-zoku in Japanese, the indigenous people of Taiwan are
also known as Taiwanese aborigines. The Council of Indigenous Peoples, a bodyunder the Executive Yuan, has recognized fourteen tribes, including the Amis, as
official aborigine tribes (two new tribes were recognized in June 2014).
2
When converting new Taiwan dollar figures into Japanese yen in this chapter, thebase exchange rate or the arbitrated exchange rate as indicated by the Bank of Japan(publicly announced in October 2013) was used. Accordingly, 1 TWD = 3.34 JPY.
3
In looking at the era before the end of the Second World War, we see that a saltworkers’ insurance plan (for some salt-field workers in Sichuan) was launched on atest basis in 1943; the Social Assistance Act corresponding to livelihood protection
was also enacted in the same year. Before the end of the Second World War, a publichealthcare scheme (involving engagement in public health measures together withmedical care) was implemented. A pension act based on the Japanese system inplace at the time was promulgated in 1923 and a seamen’s insurance plan was put
into effect in 1940.
4Merged with an insurance plan for private-school teachers in 1999 to become an
insurance plan for government employees and teachers.
5
While this is a system based on the Social Assistance Act (enacted in 1980), public
assistance was previously provided in accordance with the Social Assistance Act of1943. However, as coverage was limited to the elderly and others whose healthcondition was poor, it was inadequate as a system addressing the needs of lowincome people.
6
In Taiwan, sons account for approximately 22 percent, spouses approximately 14
percent, the spouses of sons approximately 14 percent, and daughters approximately
11 percent of the primary caregivers of elderly people; in total, these relations accountfor about 60 percent of all primary caregivers (Survey of Senior Citizen Conditions in
Taiwan, Ministry of the Interior (2009)). Foreign care workers are also used to aconsiderable extent, such that approximately 190,000 foreign care workers were
working in the homes of persons requiring nursing care in 2012.
7
Under this plan, areas in Taiwan have been divided into communities (township andvillage (municipality) level), sub-regions (number of adjacent communities brought
together), and regions (level of special municipalities and county-run cities). For eacharea level, targets for the development of nursing-care services have been formulated.
8
In addition to provisions concerning childcare leaves and other forms of support for theraising of children as set forth in the Gender Equality in Employment Act (enforced as
the Gender Equality in Employment Act in 2002; name revised in 2008), provisions
prohibiting gender-based discrimination when recruiting, assigning, or promoting
workers and preventing sexual harassment are also prescribed.
9
Various items are subject to the health and welfare tax. For example, a tax of 1,000
TWD (approximately 3,340 JPY; cigarette tax is 590 TWD (approximately 2,000 JPY))
is imposed on every 1,000 rolled cigarettes. Tax proceeds are used to finance the
National Health Insurance plan, to prevent damage to health caused by cigarettes,
and for measures concerning systems for providing medical care to mountainous
regions. The health and welfare tax raised approximately 34.3 billion TWD(approximately 114.6 billion JPY) in proceeds in 2012 (according to statistics provided
by the Ministry of Finance).

Chapter 4: Taiwan 29

10

11

12

13

14

15
16

30

In determining an aggregate budget, population changes, changes in examinationrelated conduct, advancements in medical technology, and other factors areassessed to set the rates by which total costs will grow by category (such as medicalcare and dental care) in each fiscal year. Medical costs by category and region willthen be determined based on the results of this process of assessment.
Thanks to measures to enroll low-income persons in this insurance scheme and the
granting of eligibility to become insured persons to prisoners.
According to the Survey on Physicians, Dentists, and Pharmacists and the Report on
Public Health Administration and Services, Ministry of Health, Labour and Welfare.
It should be noted, however, that there are plans to raise the age at which benefits
will start to be paid beginning 10 years after the date of implementation of the current
scheme, with the age at which benefits will start to be paid expected to be ultimately
set to 65 years (slated for 2027).
The specific conditions are as follows: “person who is twenty-five years of age orolder and who has not received old-age benefits from another social-insurance
scheme to date”, “person who did not receive old-age benefits from another socialinsurance scheme prior to the implementation of the national pension plan (excluding
old-age benefits from labor insurance)”, “person who will receive old-age benefits
associated with a labor insurance plan before his or her period of enrollment reaches
fifteen years and who will not receive old-age benefits from any other social
insurance plan within fifteen years of the point in time at which the national pension
plan comes into effect”, and “person who is fifteen years of age or older and who isalready participating in a health insurance plan for farmers at the time the national
pension plan comes into effect (excluding persons who are under the age of sixty-fiveyears and who do not engage in agricultural activities)”.
Slated to be ultimately raised to 12 percent.
More details are included in the Population Policy White Paper (2013) as producedby the Ministry of the Interior.

Chapter 5: Thailand
Masato Kawamori
1. Overview of Thailand
Location
Thailand shares national borders with Myanmar, Laos, Cambodia, andMalaysia. If the portion of Southeast Asia on the continental mainland can belikened to a folding fan, then Thailand is situated at the head and rivet of thispart of the world. With a landmass spread across 513,000 square kilometers,
the country is about 1.4 times the size of Japan. Thailand can be broadly
divided into four regions. The mountainous north is adjacent to Myanmar andLaos. The central region comprises a delta zone built up alongside the Chao
Phraya River, forming one of the world’s biggest granaries. The industry of thenortheast region may consist primarily of agriculture but poor conditions interms of soil and weather account for income levels that are the lowest in the
country. The peninsular south produces tin, rubber, palm oil, and otherproducts.
Population
First, a look at changes in total population in Table 5-1 reveals that the
population of Thailand increased from 27.31 million in 1960 to 69.12 million
in 2010. Although this increasing trend is expected to persist for the next little
while, the United Nations Population Estimates and Projections (2010) calls
for the population to peak in 2039 before it begins to decline.
Next, if we look at changes in the total fertility rate from the 1960s onwards,
we see that, while the total fertility rate averaged 6.13 in the period from 1960
to 1965 and 5.05 in the period from 1970 to 1975, the tendency to marry later,
an increase in the number of unmarried people, and other such factors caused
the total fertility rate to rapidly decrease to 2.95 in the period from 1980 to
1985, 1.99 in the period from 1990 to 1995, 1.68 in the period from 2000 to
2005, and 1.53 in the period from 2010 to 2015 to bring the country withinreach of the level associated with developed countries. Thus, while thepopulation of young people under 15 years of age went from 42.7 percent of
the total population in 1960 down to 20.5 percent in 2010, the productive-age
population of people aged 15 to 64 years is expected to begin shrinking in 2020
according to the United Nations Population Estimates and Projections.
Even as the birthrate declines in this manner, the average lifespan rose formen from 54.5 years in 1960 to 71.1 years in 2010 and for women from 58.9
years in 1960 to 77.8 years in 2010. Accordingly, elderly people account for an
increasing percentage of the total population. The percentage of the total
population consisting of those aged 65 years or older has been steadily
Chapter 5: Thailand 31

increasing (United Nations Estimates and Projections, 2010): 3.6 percent in
1980, 4.6 percent in 1990, 6.9 percent in 2000, 8.0 percent in 2005, and 8.9
percent in 2010. This segment is expected to account for 15.0 percent of the
population by 2025 and 25.1 percent by 2050.
Table 5-1. Population and economy of Thailand
Year
Population (thousands of people)
Under 15 years of age (%)
Breakdown by
15-64 years of age (%)
age
65 years of age or older (%)
Total fertility rate
Males
Average lifespan
Females
Real growth rate (%)
Gross domestic
product
GDP per capita (USD)

1960
27,312
42.7
54.1
3.3
6.13
54.5
58.9
n.a.
n.a.

1970
36,915
44.1
52.5
3.4
5.05
58.5
63.6
n.a.
199.8

1980
47,483
39.4
57
3.6
2.95
64.7
70.7
4.78
704.8

1990
57,072
30.1
65.3
4.6
1.99
68.9
75.9
11.14
1,327.9

2000
63,155
24
69.1
6.9
1.68
69.3
76.7
4.52
1,997.4

2010
69,122
20.5
70.6
8.9
1.53
71.1
77.8
7.53
4,934.52025
72,884
15.9
69.1
15.0
1.47
73.8
80.0
n.a.
n.a.

2050
71,037
14.4
60.6
25.1
n.a.
n.a.
n.a.
n.a.
n.a.

Source: Population, breakdown by age, total fertility rate, and average lifespan figures compiled by the authors
based on Collection of Materials and Data on Employment Security in East Asia, edited by Akira Suehiro,
Institute of Social Science, University of Tokyo. Source book: United Nations, The World Population
Prospects, The 2010 Revision. Gross domestic product figures derived from Asia Trends Database, IDEJETRO. Source book: United Nations, National Accounts Main Aggregates Database, Basic Data Selection.

State of politics and the economy
In 1982, Thailand transitioned from an agriculturally based country to anindustrially based country as evidenced by the fact that the manufacturingsector finally surpassed the agricultural sector that year in terms of its
percentage contribution to the gross domestic product (GDP). Rapid economic
growth was achieved thanks to an increase in direct investment from overseas
beginning in the latter half of the 1980s, such that double-digit growth wasseen from the end of the 1980s to the beginning of the 1990s. The new middleclass—which resided primarily in Bangkok, a city that had growntremendously thanks to rapid economic growth—made its political influence
felt in the democratization events of May 1992, which caused the military tolose its political stranglehold on the country (after the military successfullylaunched a coup d’état in 1991). The Asian currency crisis subsequently struckin 1997 and gave rise to neo-liberal reforms. Inaugurated in 2001, the Thaksin
administration pushed through privatization and other neo-liberal reform
measures and implemented populist measures benefitting farmers in the northand northeast regions of the country to cultivate its popularity. However, theThaksin administration was felled by a coup d’état in September 2006 that was
supported by the new middle-class in Bangkok, a segment of the populationthat had been critical of the government for its economic policies. A pattern ofantagonism between the new middle-class in Bangkok and the opposing
farmers of the north and northeast regions emerged and has remained in place
to this day.
This dichotomy between urban and agricultural citizens is an important
point for thinking about the political and administrative framework operating32

in Thailand. Various initiatives have been implemented with a view to findinga remedy for this situation. An example of this can be found in stipulations
made in the Constitution of 1997 and the Decentralization Act of 1999 to theeffect that financial resources and personnel are to be transferred to the regions.
In this context, the goal of raising the percentage of government spending
accounted for by regional spending to 35 percent by 2006 was put forth. Moves
towards decentralization, however, were subsequently halted and this goal has
not been met. In particular, the transferring of schools and public health carecenters to local governments has hardly moved forward. Underlying the lack ofprogress in terms of the transferring of public health care centers is the concern
on the part of central government officials that the allocation of budgetaryfunds to healthcare will become undervalued in comparison to the allocation offunds to the field of construction. In other words, healthcare and welfare
remains under the direct administration of central government officials andlocal offices of the central government (76 provinces and 878 districts).
2. Rapid economic development and advancements in the development ofsocial security schemes
Thanks to the Vietnam War that raged from the second half of the 1960s to
the first half of the 1970s, Thailand came to be fully integrated into the world
economy. In turn, workers came to participate in the corporate economy that
arose in urban areas at this time. In 1990, the state chose to prepare socialinsurance schemes for the worker class. In 2002, the 30-baht healthcare
program was introduced to guarantee healthcare even for farmers and others
and realize a universal medical security scheme. The development of social
security schemes that began in the 1990s can be traced to a number of factors,
including the increase in direct investment in Thailand that was prompted inpart by the Plaza Accord of 1985, favorable corporate earnings, and the higher
government tax revenues that flowed from these changes in the economic
landscape. In addition, while democratic events that saw civilians confronting
the military occurred in May 1992 as noted above, we must also give credit tosubsequent democratic movements for the enactment of the Constitution in
1997.
In examining the rapid economic growth that began in the second half ofthe 1980s, it is to be noted that long-term currency trends marked by a rising
yen and falling dollar with roots in the Plaza Accord were formed. At that time,
the Japanese economy was doing well enough that the resulting bubble spreadto Southeast Asian countries and beyond. At the same time, the rising value ofthe yen caused Japan’s manufacturing sector to relocate manufacturing plants
to this region. Even as the bubble collapsed in Japan in 1991, Southeast Asian
countries continued to enjoy growth for some time. Nevertheless, investments
Chapter 5: Thailand 33

in areas outside the core elements of the manufacturing sector (such as in land)
contributed to the expansion of a bubble economy in this region as well.
Consequently, a six-year lag behind Japan eventually caught up to Southeast
Asia when the bubble in this region ultimately popped in what has become
known as the Asian currency crisis of 1997. The catalyst for this crisis was thepullout of funds from Thailand to overseas that was carried out primarily byhedge funds in the United States.
Let us briefly review the relationship between the rapid economic growththat occurred from the second half of the 1980s and the development of social
security schemes in Thailand with a focus on healthcare insurance. Lifestylediseases spread due to the rapid economic growth of the latter half of the 1980s
and caused national medical costs to rise by a breathtaking 15 percent a year.
Calls to suppress national medical costs began to grow louder from people both
inside and outside the country around this time. For example, the World Bank
submitted a report on healthcare service policies in developing countries in1987 wherein it recommended neo-liberal policies to increase the self-payment
rates imposed on patients at national public hospitals and limit spending on
medical costs by the government. Nevertheless, this World Bank report did nothave much of an impact on the domestic sphere in Thailand on account of thefact that it did not accurately reflect the reality of government spending on
medical care in developing countries.
Next, when we survey trends in total medical costs for the country as awhole from the middle of the 1990s, we first see that both government
spending on medical care (in other words, medical costs incurred throughout
the public medical-security system) and private spending on medical care
continuously increased by nearly 15 percent per annum for the period from1994 to 1996, following the second half of the 1980s. The important point tonote is that the ratio of spending on medical care by the public sector and theprivate sector flipped to 52:48 at the time of the Asian currency crisis in 1997.
Whereas government spending on medical care decreased by 1.7 percent on a
year-on-year basis in 1998, private-sector spending on medical care declinedby 13.7 percent. Subsequently, the growth in government spending on medicalcare outpaced that of private-sector spending on medical care, such that the gap
in spending on medical care between the government and the private sector
expanded. Of particular note is the 16.2 percent increase in government
spending on medical care in 2002, the year in which the 30-baht medical-care
program went into effect. To summarize, economic factors primed byeconomic globalization—in other words, the Asian currency crisis—played amajor role in bringing about a shift in the breakdown of spending on medicalcare in Thailand, which meant that the government’s role in terms of spending
on medical care had taken on greater significance. Moreover, the adoption of
the 30-baht medical-care program effectively further reinforced this trend.
34

Issues attributable to the aging of the population
Despite Thailand being a country in which social security is relatively moredeveloped than it is elsewhere in Southeast Asia, it is merely the case that
security in terms of medical care is offered on a universal basis in that country.
However, pensions for the populace at large are not very well developed at all.
Indeed, we may speak of the medical-security scheme that has been adopted
but there are doubts as to whether it is sustainable in light of the declining
birthrate and aging of society. Of course, the question of how the country
should conceive of a framework for supporting the provision of nursing care isa pressing issue.
In this connection, if we express the speed at which societies in Westerncountries are aging in terms of the length of time it takes for society totransform from an aging society (society in which persons aged 65 years orolder account for more than 7 percent of the total population) into an aged
society (society in which persons aged 65 years or older account for more than
14 percent of the total population), then the following figures should be noted:
115 years for France, 85 years for Sweden, 69 years for the United States, and63 years for Italy. In contrast, figures for the East Asian region (broadly
speaking) as provided by the United Nations Population Estimates andProjections are as follows: 24 years for Japan, 25 years for China, 18 years forSouth Korea, 16 years for Singapore, 22 years for Thailand, 20 years forIndonesia, 24 years for Malaysia, 18 years for Vietnam, and 22 years for thePhilippines. Thailand already became an aging society in 2001 and is expected
to become an aged one in 2023.
While we can thus see that there is a difference in the speed at whichsocieties are aging between Western countries and East Asia, it is important tonote that there are different patterns at play in terms of the relationship between
economic growth and aging between the developed countries of East Asia,
such as Japan and South Korea, on the one hand and China and Southeast Asia
on the other. That is to say, China and the countries of Southeast Asia are
rapidly becoming aging societies while income levels remain relatively low
and at the stage at which their social security schemes have not yet fully
evolved (the problem of “getting old before getting rich”). If we dig a little
deeper, it is expected that there will be a number of countries in East Asia in
which a demographic bonus (the state in which the population structure in agiven country is such that there are few children and elderly people and theworking-age population is large and in which an extensive labor force enables
rapid economic growth; this can be seen in the process whereby a society shifts
from one that has a high birthrate and low death rate to one that has a lowbirthrate and low death rate) will end before per capita GDP has risen verymuch. These countries are likely to become mired in a demographic onus (theChapter 5: Thailand 35

state in which the working-age population rapidly shrinks at the same time thatthe population of aged persons increases rapidly) before they have had achance to become sufficiently prosperous. In other words, countries andregions like Japan, South Korea, and Singapore will become burdened by ademographic onus only after reaching relatively high levels of income whereas
it is expected that China as well as Thailand and other Southeast Asian
countries will each have to deal with a demographic onus while per capita
GDP remains no greater than 10,000 dollars.
If we consider the above facts in terms of their connection to social security
schemes, it is conceivable that China and Southeast Asia will age at a point intime when they still have a considerably sized agricultural population in their
midst, thereby likely making it necessary to think about adopting social
security systems that differ from those that were adopted by the advanced
countries of East Asia, where relatively generous social security systems wereable to be introduced by the state. For example, the state laid the groundworkfor nursing-care insurance schemes and private-sector nursing-care service
operators, NPOs, and social-welfare corporations functioned as leaders in thisfield in Japan, South Korea, and Taiwan. In contrast, we cannot expect thatsuch schemes will be introduced or that leaders in this field will emerge inparticular for the benefit of rural areas in China and the countries of Southeast
Asia. Thus, the construction of an affordable nursing-care system and thepractical realization of local welfare to address the problem of aging that willarise acutely in rural areas are required.
3. Current state of social welfare
Welfare for persons with disabilities
In this section, let us take a closer look at welfare for the disabled andwelfare for the elderly. First, according to a database compiled by the National
Commission for the Promotion and Development of Disabled Persons’ Life
Quality, there were 1.42 million persons with disabilities in Thailand as of theend of September 2013 (2.2 percent of the population). Through the enactmentof the Social Welfare Promotion Act of 2003 and the Persons with Disabilities’
Quality of Life Promotion Act in 2007 (a statute that effectively replaced the
Rehabilitation of Disabled Persons Act of 1991), various welfare policies tosupport the lives of the disabled have come to be developed. In particular, thePersons with Disabilities’ Quality of Life Promotion Act is the focus of muchattention for having been enacted based on a disability-society model (which
posits that, as society creates obstacles and barriers, it is society that should
work to eliminate these obstacles and barriers). The backdrop to thesedevelopments is the rising awareness of human rights in Thailand that beganwith the enactment of the Constitution in 1997. The framework of welfare
36

services that were rather randomly deployed under a centralized, vertical
governing structure was reviewed and five-year plans to improve the quality oflife of persons with disabilities have been formulated to consolidate these
services under a comprehensive system that focused on improving the settings
in which disabled people live. The fourth iteration of these plans (2012 to2016) is currently underway. Basic policies in medicine, rehabilitation,
education, employment, and other such fields are being drafted. The Ministryof Social Development and Human Security is carrying out enlightenment
activities with a view to registering people with disabilities and eliminating
discrimination. The Ministry of Labor issued a ministerial decree calling forthe statutory employment rate of the disabled to be one percent and set about
securing employment and providing work training through the establishment of
eleven work training centers. The National Health Security Office, which
oversees the 30-baht medical-care program, and the Ministry of Health havebeen endeavoring to consolidate medical care and welfare.
In this connection, let us examine in greater detail the thorough initiatives
concerning welfare for the disabled being carried out by the National Health
Security Office and the Ministry of Health in Thailand. The National Health
Security Office has, mainly through district-level community hospitals,
attempted to reorganize public, program-based services that had previously
existed in a disorganized manner and compel community hospitals to assume
functions for promoting both activities based on the participation of residents
and local welfare by way of empowerment. Specifically, there is a frameworkin which the National Health Security Office, which operates against the
backdrop of a huge pool of financial resources (budget for the 30-baht medicalcare program), and the Ministry of Health, a provider of medical care (in otherwords, encompasses most medical-care institutions in Thailand) in this country,
spearhead matters concerning medicine and welfare in communities. We cansee that the National Health Security Office is attempting to organize local
actors consisting of local governments and resident organizations (such as
health-care volunteers organized by the Ministry of Health and home-welfare
volunteers for the elderly organized by the Ministry of Social Development andHuman Security) into a network for which community hospitals act as the hub.
In terms of medical security matters, we see that capitation is used by which
per capita medical-care costs are prescribed in advance for the 30-baht
medical-care program and that the amount of capitation per person in fiscal
year 2013 was 2,755.6 baht. Since fiscal year 2003, however, this amount has
included a budgeted amount for the welfare of persons with disabilities. The
amount of capitation for the provision of welfare to persons with disabilities
was initially set to four baht but has since then been raised to 12.88 baht. This
represents the amount of budgetary funds used for welfare for the disabledwithin the 30-baht medical-care program and means that a total of 12.88 baht x
Chapter 5: Thailand 37

48.45 million people (the population of people covered by the 30-baht medicalcare program) = 624 million baht has been allocated. Moreover, this is further
supplemented by the budgets of local governments. In other words, this is amatching-funds framework underpinned by the National Health Security
Office and local governments. Rehabilitation and other services provided in
response to industrial accidents are handled separately as they are subject to theSocial Security Scheme. Rehabilitation and the acquisition of adaptive devices
account for 90 percent of the budget of this scheme. The remaining 10 percent
is allocated to the promotion of a community-based rehabilitation (CBR)
program and other initiatives. CBR is made possible by harnessing health-carevolunteers, home-welfare volunteers for the elderly, and other local resources.
Welfare for the elderly
In 2002, the National Commission on the Elderly formulated the Second
National Plan for the Elderly to serve as a guide for the enactment of welfare
policies for the elderly. This is a long-term plan to remain in force for a periodof twenty years and comprises three basic philosophies. First, the primary
providers of support for the elderly are family members and the community,
such that welfare provided by the state occupies no more than a supplementary
position in the sense that it provides a basic guarantee for this state of affairs.
Second, measures concerning health, income stability, education, and welfare
are to be comprehensively promoted. Third, an evaluation system shall be
developed through the setting of attainment targets and benchmarks formeasuring the attainment of these targets. Next, let us examine the division ofroles between families and the community. In Thailand, it is not yet common
to find nursing care provided in facilities. Instead, nursing care is mainly
provided at home.
First, according to the National Statistical Office (NSO), elderly persons
whose primary source of income was funds received from family members(child, spouse, or sibling) accounted for 61 percent of all elderly persons in2009. As for nursing care, elderly persons who require nursing care and who
have caregivers themselves accounted for 10.9 percent of all elderly persons. A
significant 80 percent of nursing caregivers consist of children (especiallydaughters) and spouses. While the role played by families in terms of income
security and the provision of nursing care remains accordingly huge, theSecond National Plan for the Elderly aims to maintain, over the course of a 20year period, the rate at which elderly persons reside together with family
members at 90 percent or above. Since money to cover living expenses can still
be sent even if elderly persons reside apart from family members, thesignificance of maintaining the rate of co-habitation is bigger in terms of theprovision of nursing care.

38

In this connection, let us touch on the volunteer project for home-based
elderly care, which was set up in recent years to complement the provision ofnursing care by families. While this was originally a project promoted by the
Ministry of Social Development and Human Security’s Office of Welfare
Promotion and the Protection of Children, Youth, the Vulnerable, the Disabled,
and the Elderly, volunteer projects for home-based elderly care werecommenced on a trial basis in eight provinces between 2003 and 2004. In
November 2005, the National Commission on the Elderly determined thatthese projects should be spread nationwide, with the result that they were
implemented on a trial basis by local governments in 15 provinces in 2005 and48 provinces in 2006 (1 model local government in each province). Forty
volunteers were trained per local government with the aim of having one
person engaging in health-promotion activities or the provision ofrehabilitation during recovery periods for at least five elderly persons. In otherwords, the goal was to have volunteers establish linkages between secondary
prevention and tertiary prevention elements or take charge of nursing-carefunctions. In January 2007, the National Commission on the Elderly decided
that a policy to have these projects operated under the jurisdiction of local
governments while pertinent matters are subject to coordination with thegovernment and residents would be submitted to a meeting of the cabinet. This
policy was approved at a cabinet meeting held in April 2007 and a plan toassign volunteers for home-based elderly care to all 7,778 local governments
nationwide by 2013 was finalized. It was decided that the central government
would provide financial support for the first two years of this program withlocal governments assuming costs incurred thereafter. However, this plan
appears to be unfolding slower than expected. In 2011, only 568,966 elderly
persons were supported by 31,272 volunteers for home-based elderly care. The
government subsequently announced a plan to increase the number ofvolunteers for home-based elderly care to 100,000 by 2020. With respect to thetraining of volunteers for home-based elderly care, there are even cases inwhich courses are being given with funds budgeted for preventive services
under the 30-baht medical-care program. Many volunteers for home-based
elderly care also serve as healthcare volunteers.
Community elderly support centers have begun to be developed in order toplay a key role in the provision of elderly support in the community and consistof both centrally controlled centers established by basic local government units
in the form of thesaban (“municipal”) or tambon (“sub-district”) local
governments and small-scale community centers that provide actual services
under the supervision of centrally controlled centers.
Small-scale community centers are fundamentally set up at the muban(“village”) level. Private homes, community centers, primary care units, andother such locations are used and it is expected that services will be provided
Chapter 5: Thailand 39

by volunteers for home-based elderly care. An allowance of 600 baht permonth is paid to volunteers for home-based elderly care. While thisarrangement can be simply described as one in which healthy elderly persons(volunteers for home-based elderly care) assist elderly persons who require
support, the idea behind this scheme is to rely on essentially free labor inaccordance with the principle of reciprocity in that even healthy elderly
persons will eventually require assistance themselves.
The services provided by small-scale community centers are outlined in
Figure 5-1.
First, elderly persons aged 60 years of age or older are divided into threegroups: Group 1 (the individual can engage in daily life actions on his or herown), Group 2 (the individual can engage in daily life actions independently to
an extent but requires assistance in certain cases), and Group 3 (the individual
requires assistance as the person cannot engage in daily life actions on his or
her own).
Figure 5-1. Classifications of services provided by small-scale community centers and elderly persons

Service
Support and nursing care provided to persons
requiring nursing care who do not have a
caregiverDay service
Short-stay services
Activities for elderly persons
Visiting services

Entitled
group
3
2,3
2,3
1,2,3
1,2,3

Group 3(the individual requires
assistance as the
person cannot engage
in daily life actions on
his or her own)
Group 2(the individual can engage indaily life actions independently
to an extent but requires
assistance in certain cases)
Group 1(the individual can engage in daily life
actions on his or her own)

Source: Produced by the authors based on materials provided by the Ministry of Social Development and Human
Security.

Five different services are provided: 1) support and nursing care provided
to persons requiring nursing care who do not have a caregiver, 2) day services,3) short-stay services, 4) activities, such as those involving avocations andrehabilitation, for elderly persons, and 5) visiting services through which
support as desired by elderly persons is provided on an at-home basis. Twoorganizations—centrally controlled centers and small-scale community
centers—provide five different services to three groups of elderly persons all
week without taking any time off. Local governments are endeavoring topromote the spread of what is thus known as the “2-3-5-7 program.”
While we cannot make a simple comparison, it would be permissible toliken small-scale community centers to the small-scale multifunctional40

residential nursing-care facilities found in Japan. These small-scale
multifunctional residential nursing-care facilities were built around the conceptof pain to enable elderly persons to continue living at home despite dealing
with moderate difficulties by combining and providing visits and stays as
needed according to the condition and preference of each person requiring
nursing care.
If we were to reduce the external characteristics of the Thai framework
down to their essential points by way of comparisons with Japan, we would seethat this framework is similar to that of the “small-scale multifunctional
residential nursing-care” that is provided in Japan. However, in regards tonursing-care insurance plans and nursing-care professionals, financing and theprovision of services are based on the assumption that labor is provided
virtually free-of-charge by welfare volunteers for home-based elderly care.
Nevertheless, there are a number of issues and concerns. Up to what levelof services can you expect with a system that relies on virtually free labor? To
what extent can volunteers be made to bear responsibility for errors perpetrated
in the course of providing nursing care? To what extent can emergency care beprovided in the face of a shortage of nurses and other professionals? Is it evenpossible for volunteers to become accepted in the personal realm of nursing
care in agricultural communities where everyone knows one another?
Welfare for children
Next, let us examine the subject of welfare for children. First, facility
services are provided at a number of different locations, including eight
welfare facilities for infants, 15 welfare facilities for children, 1 occupational
training facility, 4 juvenile rehabilitation facilities, and 76 temporary shelters
for use by abused children and children who have been subject to humantrafficking.
The following concerns the allowance for children and other relevant
matters. Workers enrolled in a social security fund (to be discussed later) areentitled to receive a children’s allowance of 350 baht per month per child under
the age of six years (up to two children). Needy families are entitled to receive
2,000 baht per time per child (3,000 baht if there are two or more children). In
addition, there is a foster-parent scheme that temporarily places children
residing in a facility for children with a general household. If the foster-parent
household is in a needy situation, an allowance of less than 2,000 baht permonth for child support costs and daily essentials valued at less than 500 baht
per month are provided. If two or more children are being raised, an allowanceof less than 4,000 baht per month for child support costs and daily essential
valued at less than 1,000 baht per month are provided. In addition, there is a
program to support adoption (including those by foreign nationals).

Chapter 5: Thailand 41

4. Current state of medical security
Three schemes
If the existence of universal health insurance (universalization of theprovision of medical-care services) can be taken as an important indicator of awelfare state, then we can regard Thailand in recent years as a country that
aspires to become a welfare state. In Thailand, universal health insurance for
employed persons was realized through the mandated enrollment of all privatesector places of business in the Social Security Fund (SSS; based on a socialinsurance model and operated under the jurisdiction of the Ministry of Labor)
in 2002 to complement the medical security scheme that had already been inplace for government employees and the employees of public-sector companies(CSMBS; based on a tax model and operated under the jurisdiction of the
Ministry of Finance). Moreover, local medical security was consolidated
through the introduction of the 30-baht medical-care program in 2002 (UC;based on a tax model and operated under the jurisdiction of the National Health
Security Office). Thus, universal medical security has been achieved by thesevarious means.
In this connection, let us examine the characteristics of three key medicalsecurity schemes in Thailand: the medical security scheme for government
employees and the employees of public-sector companies, the Social Security
Fund, and the 30-baht medical-care program. As for funding, the Social
Security Fund is funded by insurance premiums based on contributions madeby the government, labor, and management (1.5 percent of wages each) whileboth the medical security scheme for government employees and theemployees of public-sector companies and the 30-baht medical-care program
are funded by taxes. If we compare these three schemes, we see that there issignificant inequality among the covered populations and inequality in terms ofper capita spending. In other words, while the 30-baht medical-care program
covers 48.45 million people, the medical security scheme for government
employees and the employees of public-sector companies and the Social
Security Fund cover no more than approximately 5 million and 10 million
people, respectively. Incidentally, the 30-baht medical-care program
effectively covers non-wage earners, such that it has been systematicallydesigned to include farmers and self-employed persons as well as elderly
persons who have retired from a private-sector job. With respect to inequality
in terms of per capita spending, we see that government employees, contract
employees, and their family members are eligible to receive benefits under the
medical security scheme for government employees and the employees ofpublic-sector companies. However, per capita spending, at 11,000 baht, isalmost four times as great as per capita spending, at 2,755.6 baht, for the 30baht medical-care program. The inevitable result of this difference is a42

discrepancy between schemes in terms of the medical services that areavailable. Thus, benefit levels under the medical security scheme forgovernment employees and the employees of public-sector companies are
exceptionally high. Doctors who frequently engage in excessive diagnostic
actions and excessive treatment actions and over-prescribe drugs have been
seen for quite some time as a key factor behind the rising national cost of
medical care in the aggregate. Since capitation based on the prior stipulation of
per capita medical costs each year is used for the 30-baht medical-care
program and the Social Security Scheme, medical costs can be kept within
defined limits. In contrast, since the medical security scheme for government
employees and the employees of public-sector companies is a fee-for-service
system, there is the risk that medical costs will continue increasing without
restraint.
Services provided through the 30-baht medical-care program
Let us take a closer look at the 30-baht medical-care program, a scheme thatprovides coverage to 70 percent of the total population. In Thailand, a medical
assistance program for low-income persons operated to provide public
assistance and a health-care scheme operated as a voluntary insurance scheme
were discontinued in 2002 and replaced with the 30-baht medical-care program,a new local medical security scheme designed to cover the 20 million persons
that had been previously covered under the medical assistance program for
low-income persons and the 7 to 8 million persons that had been previously
covered under the health-care scheme as well as 15.50 million persons that had
previously been uninsured. Under this scheme, various services are covered
with the payment of a fee amounting to 30 baht per visit or admission,
including the diagnosis and treatment of illnesses (including high-costtreatments for heart disease and other such conditions and traditional medical
as prescribed in the Traditional Thai Medical Professions Act), childbirth (upto 2 times), meal and room costs for admitted patients, dental care, drugs
indicated in the basic national pharmaceuticals list, and referrals between
medical institutions (transfers). Enrolled persons pay nothing more than the fee
mentioned above. While a tax-based approach is used for this scheme as noted
earlier, this scheme is characterized by the fact that budget allocations are
made for the prevention of illnesses and the promotion of health in contrast to
the Social Security Fund, which is a scheme that fundamentally pays only for
medical costs incurred.
For this scheme, capitation is used whereby yearly medical costs per person
are covered. This amount is determined through negotiations conducted
between the National Health Security Office, which has jurisdiction over the
30-baht medical-care program, and the Budget Bureau in the Office of thePrime Minister. Below, let us examine the changes in per capita medical costs
Chapter 5: Thailand 43

that have occurred since 2002 (Figure 5-2). In looking at changes in the percapita budget for this scheme as determined by the Budget Bureau in the Officeof the Prime Minister, we see that the per capita budget for this scheme had
been subject to exceedingly strict financial rules as enacted by the Budget
Bureau in the Office of the Prime Minister until around fiscal year 2005.
However, the per capita budget for this scheme has been growing at aconsiderably fast clip since fiscal year 2006. In particular, this figure stood at
2,089 baht in fiscal year 2007 in the wake of the coup d’état of September 19,
2006, a sudden increase of more than 400 baht in a single year.
Figure 5-2. Per capita medical costs for the 30-baht medical-care program

Source: Produced by the authors based on annual reports for each year as issued by the NHSO.

Established after the coup d’état of September 2006, the Surayud
administration scrapped the per-visit 30-baht fee two months after the coupd’état took place. It is notable that the Surayud administration, by this action,
reinforced rather than eliminated the 30-baht medical-care program, which had
been former prime minister Thaksin’s political crown jewel and a target of
opposition for the new government. While the amount of capitation for fiscal
year 2009 stood at 2,202 baht per person, it rose by nearly 200 baht to 2,401
baht in fiscal year 2010. The amount of capitation rose to 2,546.5 baht in fiscal
year 2011 and by a further 200 baht to 2,755.6 baht in fiscal year 2012 before
remaining at the same level in fiscal year 2013. The per-visit 30-baht fee wasreinstated in fiscal year 2012. Accordingly, we are likely going through aperiod during which the sustainability of the financial base of the 30-baht
medical-care program should be re-examined.
44

Features of the 30-baht medical-care program
There are three particular features of the 30-baht medical-care program: 1)
reinforcement of the links between community hospitals and primary care units,
2) separation of the service purchaser and suppliers, and 3) illness prevention,
rehabilitation, and nursing care based on the use of matching funds. Let us
examine these features in order below.
As we can see in Figure 5-3, singular and multiple primary-care units(PCUs) operate at a tambon (“sub-district administrative unit”) level
underneath district-level community hospitals under this scheme. At primarycare units, nurses, midwives, and administrators work full-time to provide
healthcare and public health services, carry out elementary treatment actions,and prescribe basic pharmaceuticals. Where a matter cannot easily be handled
at a primary-care unit such that the medical actions of a physician are required,
the patient is referred (transferred) from the primary-care unit to a community
hospital, which invariably constitutes a national medical institution. While theamount of capitation for the registered population is allocated from community
hospitals (CUP) to primary-care units, the aim is to leverage this to cement therelationship between community hospitals and primary-care units and ensurethat sustainable, detailed examinations are conducted by full-time family
doctors and general physicians at community hospitals. As already mentioned
earlier, the 30-baht medical-care program is generally characterized in terms ofpolicies for limiting medical costs through a general-framework budgeting
approach. In addition, long-term policies for limiting medical costs by way ofthe prevention of illnesses at a local level have also been systemized. In otherwords, the management of patient referrals to higher-grade institutions throughthe thorough implementation of illness prevention efforts in community
hospitals—in other words, a gatekeeper role—came to be imposed oncommunity hospitals. Subject to certain restrictions, management is delegatedto community hospital directors (CEOs) under the 30-baht medical-care
program. A neo-liberal management approach has been incorporated whereby
management by results (MbR) is undertaken in place of the expansion of
discretionary power over the use of management resources. At the same time,
primary-care units are subject to the production of family folders and thescoring of performance in such terms as family visits made by public healthnurses. Evaluations based on these processes are reflected in the allocation ofbudgetary funds.

Chapter 5: Thailand 45

Figure 5-3. Systematic design of the 30-baht medical-care program (UC)
Purchaser

Ministry of
the Interior

Provincial
governor

Budgetallocation:
OP, IP, PP

Provincial healthofficeNHSO branch office
Provincial(branch officesurgeondirector-general is a
generalprovincial surgeongeneral)

Tambon local
government

Taxation

Suppliers
Budgetallocation: OP, PP

Budget allocation:
OP, PP Community& Facility

Referrals
systemPersonnel
authority

Tambon healthfund:
PP Community

Health volunteers

MedicalservicesPrimary medical
agreement units (CUP)
Community hospitals

Primary-care units(PCU)
Public health centers

Citizens

District health officeDistrict surgeongeneral

Bureau of
the Budget

Population covered by UC

County head

Office of theViceMinister of
HealthNational Health
Security Office(NHSO)

Health services

Resident organizations

Source: Kawamori (2009), p. 131.

In elaborating on the budgetary flow that applies to the 30-baht medicalcare program, we see that the per capita budget for medical costs in the context
of the 30-baht medical-care program includes the following: 1) outpatient
services (OP), 2) inpatient services (IP), 3) preventive services (PP), 4)
accident and emergency services (AE), 5) high-cost medical services (HC), 6)
emergency medical services (EMS), 7) investment budget items for which
additional remuneration is required, 8) additional amounts for remote areas,
and 9) one-time ex-gratia payments for malpractice as stipulated under Article
41 of the National Health Security Act. To illustrate, the per capita budget
amount in 2013 was already noted above to be 2,755.6 baht. While budget
funds corresponding to the registered population are disbursed by the National
Health Security Office to its branch offices, these funds specifically covermainly 1) outpatient services, 2) inpatient services, and 3) prevention services,funding for other items is retained by the central government. Budget funds
disbursed to local branches include salary for the employees of medical
institutions. Budget funds for allocation are subject to revision according to thebreakdown of age brackets and special circumstances in the area under thejurisdiction of each branch office. Operations at branch offices are based on a
separate per-capita distribution approach whereby 1) outpatient services and 2)
inpatient services are separated and the 1) budget funds for outpatient services
and 3) budget funds for preventive services for the registered population are46

accordingly distributed to community hospitals. These funds are distributed
every two months. On the other hand, the budget funds for 2) inpatient services
are managed according to diagnosis-related groups (DRG) based on global
budgets at a branch office level.
Next, let us look at a second feature to be noted: the separation of theservice purchaser and suppliers in the context of the 30-baht medical-care
program. As indicated in Figure 5-3, the purchaser (specifically, the National
Health Security Office) and suppliers (specifically, primarily consisting of
national medical institutions) were separated to provide medical services to thepeople in conjunction with the introduction of the 30-baht medical-care
program. The attempt to expand the range of options available to consumers by
separating the public sector fields of education and medicine into the purchaserand suppliers to essentially create a (quasi-)internal market and thereby bringcompetitive conditions into interactions between the purchaser and suppliers
was inspired by the National Health Service and Community Care Act (U.K.).
Under the 30-baht medical-care program, people are now statutorily entitled to
select their personal medical institution within a certain scope of options. In
other words, a person can choose from among medical institutions situated in
the district or tambon jurisdiction in which the person has registered aresidence, medical institutions situated in an adjacent district or tambon
jurisdiction, and medical institutions situated in the district or tambon
jurisdiction in which the person is currently residing. However, it is arguably
too early to expect a successful replication in Thailand of efforts that have been
made elsewhere in a developed country to create competitive market-like
conditions through the decentralization of the public sector, which is typicallyinefficient and which has traditionally responded poorly to needs. In particular,
the creation of competitive conditions in agricultural areas is exceedingly
difficult. This is because there are very few suppliers—in other words, medical
institutions—to be found in agricultural areas. Given such a state of
insufficiency, it is a difficult task to eject players providing inadequate services
from the market.
Next, let us focus on the third feature: the Tambon Health Fund, which wasconceived as a financial and organizational basis for the promotion of healthand the provision of rehabilitation and nursing-care services at a local level.
This is a matching fund operated through contributions made by three parties:
the National Health Security Office, local governments, and residents.
Disbursements made by the National Health Security Office are derived fromthe budget funds corresponding to the budget particulars for the 30-baht
medical-care program as they pertain to “preventive services provided within
the community (PP Community)”. With funds issued by the Tambon HealthFund, health volunteers can give health guidance to populations at risk oflifestyle diseases (primary prevention) and provide rehabilitation and nursingChapter 5: Thailand 47

care services to persons with disabilities and elderly persons requiring nursing
care (tertiary prevention).
5. Current state of pension security
Formal sector (government employees)
Since the Government Employees’ Pension Act was enacted in 1951,
government employees at the national and local levels have been receiving
contribution-free pensions financed by taxes. At the same time, the government
enacted the Government Pension Fund Act in 1996 to stabilize pension
finances. Presently, the benefits system that is fully funded by taxes and that
had existed under the Government Employees’ Pension Act and the benefits
system that is funded by insurance premiums under the Government Pension
Fund Act coexist (Figure 5-4). With the enactment of the Government Pension
Fund Act, all persons hired on or after March 27, 1997, (the date on which thisstatute went into effect) have been required to enroll in the Government
Employees’ Pension Fund (Ko.Bo.Kho.). However, persons hired prior to thisdate were given the choice of receiving benefits under the Government
Employees’ Pension Act or receive benefits through enrollment in the
Government Employees’ Pension Fund. Insurance premiums for theGovernment Employees’ Pension Fund are paid at a rate of 3 percent by boththe individual and the employer (government). There were 1,156,246 persons
enrolled in the Government Employees’ Pension Fund as of 2010.
With respect to benefits to be paid to persons who have chosen to receive
benefits under the Government Employees’ Pension Act, such persons canchoose to receive either a lump-sum retirement allowance or a pension. For
example, a person who chooses to receive a lump-sum retirement allowanceupon reaching the mandatory age of retirement after putting in 25 consecutive
years of service will be entitled to receive an amount equal to the final month’s
monthly salary multiplied by the number of consecutive service years that theperson has accrued. If the same person were to choose to receive a pension, theperson would be entitled to receive an amount equal to the final month’s
monthly salary multiplied by the number of consecutive service years that theperson has accrued divided by 50.
Persons hired after the enactment of the Government Pension Fund Act andpersons hired before the enactment of this law who wish to enroll in this fundare entitled to choose to receive either a lump-sum retirement allowance or apension. A person who chooses to receive a lump-sum retirement allowance
where the person reaches the mandatory age of retirement after working for atleast 25 consecutive years is entitled to receive an amount equal to the final
month’s monthly salary multiplied by the number of consecutive service years
that the person has accrued as well as the insurance premiums and investment
48

gains that have been accumulated by the individual and the employer(government). An individual who chooses to receive a pension shall be entitled
to receive an amount equal to the average monthly salary over the 60-month
period leading up to the point at which the person reaches the mandatory age ofretirement multiplied by the number of consecutive service years that theperson has accrued divided by 50 (no more than 70 percent of the averagemonthly salary over the 60-month period leading up to the retirement) as wellas the insurance premiums and investment gains that have been accumulatedby the individual and the employer (government).
Figure 5-4. Structure of pension plans in Thailand
Government
Employees’
Pension Fund
(Ko.Bo.Kho.)

Government
Employees’
PensionRetirement
Allowance Fund

Local
Government
Employees’
PensionPrivateSchool
WelfareFund

Social Security Fund
(Articles 33, 39)

Social Security
Fund (Article 40)

Formal sector

National Savings Fund(suspended as of the end of2013)

Livelihood Subsidy

Informal sector

Source: Produced by the authors based on Wiphan Prachuapmo ed. (2012) p. 74.

Formal sector (private-sector employees)
The Social Security Act was enacted in 1990 against the backdrop ofvarious factors brought on by the Plaza Accord of 1985 (which resulted incurrency adjustments in the form of yen appreciation against the US dollar),including an increase in direct investment in Thailand, favorable corporate
performance, and increasing government tax revenues. This led to an
expansion of social security benefits, which theretofore had been limited towork-related accidents and the like, to cover injuries and illnesses, childbirth,
disabilities, and death. While the scope of the application of this statute wasinitially restricted to places of business with 20 or more employees, it was
subsequently increased to places of business with 10 or more employees in1993 and to places of business with at least 1 employee in 2002. With respect
to the contents of benefits provided, old-age benefits (pension) and a children’s
allowance were added in 1998 and an unemployment allowance was added in
2004. There are two types of enrollment under this statute: active workers
subject to Article 33 of the Social Security Act (mandated enrollment) andretired workers subject to Article 39 of the same statute (voluntary enrollment).
Guaranteed benefits under Article 33 cover occupational accidents, injuries
and illnesses, childbirth, disabilities, and death and consist of a children’s
Chapter 5: Thailand 49

allowance, old-age benefits, and unemployment benefits. The insurance
premium rate paid by the individual is revised by ministerial ordinance andwas set to 5 percent of salary as of 2009 (up to 15,000 baht) and 4.5 percent asof 2011. While the insurance premium rate paid by the government and theinsurance premium rate paid by employers were set to 5 percent and 2.75
percent, respectively, as of 2009, they were reduced to 4.5 percent and 2.5
percent, respectively, in 2011. The right to receive old-age benefits (pension)
arises when an individual reaches the age of 55 years and has paid insurance
premiums for a total of 180 months or more. While the benefit rate is set to 20
percent of the average salary over the 60-month period leading up to anindividual’s retirement, the monthly salary shall be no higher than 15,000 baht
for calculation purposes. If the individual has paid insurance premiums for atleast 180 months, the benefit rate shall be increased by 1.5 percentage points
for every 12 months of payments made. If the individual has paid insurance
premiums for at least 12 months and less than 180 months, an amountequivalent to insurance premiums paid by the individual and the employer
shall be paid on a lump-sum basis. If the individual has paid insurance
premiums for less than 12 months, only the amount equivalent to insurance
premiums paid by the individual will be paid on a lump-sum basis. In addition
to benefits under Article 33, benefits under Article 39 are also provided. Thesebenefits are provided to any person who wishes to enroll in the Social Security
Fund even after retirement. In such a case, the individual will need to havealready paid insurance premiums for at least 12 months and must submit anapplication within six months of retirement. With insurance premiums set to432 baht per month, benefits covering industrial accidents, injuries andillnesses, childbirth, disabilities, and death as well as old-age benefits can bereceived.
For a private-sector employee, first-tier benefits under Article 33 andsecond-tier benefits under a retirement savings fund (Provident Fund)(voluntary enrollment) are available. The individual accumulates savings at a
rate of between 2 percent or more and less than 15 percent of the salary. Thesesavings are supplemented by an amount assumed by the employer (no less than
the amount saved by the individual). As of 2011, there were 2,316,771 persons
enrolled in this fund.
Informal sector (farmers, self-employed persons, and others)
In 1993, the government (Office of Social Security, Ministry of the Interior)commenced paying a livelihood assistance benefit of 200 baht per month toneedy persons 60 years of age and older. This monthly amount was raised to
300 baht in 2000 and increased again to 500 baht in 2007. In 2009, a program
to pay a livelihood subsidy of 500 baht a month to all elderly persons 60 yearsof age and older, with the exception of the recipients of a government
50

employee’s pension and persons receiving a government employee’s salary,
was adopted. Since 2012, the following monthly amounts have been paid: 600
baht to elderly persons aged 60 to 69 years, 700 baht to elderly persons aged 70
to 79 years, 800 baht to elderly persons aged 80 to 89 years, and 1,000 baht toelderly persons aged 90 years or older.
Individuals belonging to the informal sector can also receive benefits under
Article 40 of the Social Security Act. Enrollment for this scheme is voluntary
and there are two different modes by which this scheme is offered. For the first,
the individual pays an insurance premium of 70 baht per month, which issupplemented by 30 baht by the government, and is entitled to receive benefits
on suffering an industrial accident, injury or illness, or death. For the other, theindividual pays an insurance premium of 100 baht per month, which issupplemented to the tune of 50 baht by the government, and is entitled toreceive benefits on suffering an industrial accident, injury or illness, or death aswell as an old-age benefit. The old-age benefit is paid as a lump-sum amount at
the time the individual reaches 60 years of age. The amount of this benefit thatis paid is equal to the total amount of insurance premiums paid plus aprescribed additional amount.
The benefit under Article 40 of the Social Security Act constitutes a lumpsum old-age amount rather than a pension. To supplement this benefit, thegovernment enacted the National Savings Fund Act in May 2011 and thereby
established a savings scheme based on insurance premiums. To be eligible toenroll in the National Savings Fund, an individual has to be between 15 andless than 60 years old and shall not be enrolled in the Social Security Fund,
Government Employees’ Pension Fund, or any other such fund. Insurance
premiums are at least 50 baht a month and are supplemented by fixed
additional amounts according to age bracket as paid by the government. The
monthly benefit amount equals the sum of insurance premiums paid by theindividual and additional amounts paid by the government plus any investment
gains earned. However, the Ministry of Finance suspended the further
recruitment of enrollees in the National Savings Plan in 2013 on the grounds
that benefits from the National Savings Plan overlap with benefits under
Article 40 of the Social Security Act.
The Community Welfare Fund—a matching fund to which contributions
are made by 3 parties consisting of the central government, local governments,
and citizens—is beginning to be established throughout the country for the
purpose of supplementing the above schemes. Coverage applies to pensions aswell as to childbirth, education, injuries and illnesses, the maintenance of
livelihoods, and job training. Fund authorization functions and the provision of
guidance are to be carried out by the Community Organizations Development
Institute (CODI), which operates under the purview of the Ministry of Social
Development and Human Security.
Chapter 5: Thailand 51

6. Potential issues concerning the future of social security schemes
To this point, we have outlined what has been achieved by the various
social security schemes in place in Thailand. We shall conclude by identifying
potential issues that may arise in the future. The primary issue is the existence,as is the case in China, of discrepancies between cities and rural areas withinsocial security schemes that have been established in Thailand.
First, let us take a look at medical security. In Thailand, the 30-baht
medical-care program for farmers and self-employed persons was adopted in
2002 to complement the medical security scheme for government employees
and the employees of public-sector companies and the Social Security Fund forthe employees of private-sector places of business. With this development,
universal health insurance was established. If we compare the duration required
to go from the establishment of a health insurance scheme for the employees ofprivate-sector places of business primarily in the cities to the attainment of
universal health insurance in Thailand (with both points in time marked by theenactment of relevant statutes) to the length of time that this process took inother countries (127 years in Germany (1854-1981), 36 years in Japan (19221958), 26 years in South Korea (1963-1989), 12 years in Thailand (19902002)), we see that Thailand was able to offer universal health insurance in an
extraordinary short period of time. Incidentally, primary industry workers
accounted for 32 percent of the total workforce in Japan and 46 percent of thetotal workforce in Thailand as of the time that each of these countries
successfully instituted a system of universal health insurance (Yearbook ofLabor Statistics, ILO). In contrast to the West, Japan was able to offer
universal health insurance at a stage when the absorption of farmers into fields
of modern employment was at a relatively low level. Thailand managed tooffer universal health insurance at a stage when the absorption of farmers into
fields of modern employment was at an even lower level than it was for Japan.
However, if aging were to proceed at a stage when income levels are low
and this issue of aging were to emerge rather acutely in rural areas, there would
be questions as to the sustainability of schemes. There are two factors that
could give rise to volatility or instability. First, there is the fact that, while the
30-baht medical-care program covers persons other than salary earners, it is ascheme that has been designed to allow for an inflow of low-income persons
who are at a high risk of becoming ill and elderly retired persons. Second, theconsolidation of the healthcare insurance system has been pushed further backamid moves to shift the dependents of workers (a spouse and children) at
private-sector places of business from the 30-baht medical-care program to theSocial Security Fund, such that there is the possibility that the 30-baht medicalcare program will effectively become a medical assistance scheme for lowincome persons primarily consisting of farmers and informal sector workers. In
52other words, the system is transforming into a bipolar structure comprising, on
the one end, the Social Security Fund, a scheme for those with a comparatively
high level of income and relatively low risk of becoming sick, and, on the otherend, the 30-baht medical-care program, a scheme for those with acomparatively low level of income and relatively high risk of becoming sick.
There are also discrepancies between urban and rural areas in the area of
nursing care for elderly persons and in terms of pension schemes. For example,
government policy on the question of nursing care for elderly persons entails a
commitment to supporting families and communities from behind the scenes.
However, the existence of elderly persons who live alone and who requirenursing care is becoming a significant issue in the northeast part of Thailand,
where incomes are the lowest in the country and where population outflows
have become pronounced. The situation has even become difficult for the
purpose of recruiting volunteers. Even for rural areas, the income-security
scheme for elderly persons, which consists of a livelihood subsidy of 600 to
1,000 baht, is not sufficient. Benefits under Article 40 and other relevant
provisions of the Social Security Act have not spread to their intended targets
to an especially substantial extent.
The shift in political logic from the construction of public buildings and theprovision otherwise of ad-hoc pork barrel to local areas as part of efforts toprovide livelihood security and empowerment tools to farmers and othermembers of the “excluded majority”, which had previously been neglected as apolitical constituency, occurred with the arrival of the first decade of the new
century. This can also be seen as a step towards getting in line with recent
international trends in terms of human development and human security. Suchconsideration for the “excluded majority” was reinforced and came to assume acentral part of what was seen as politically correct even as the mantle ofgovernment was passed from Thaksin to Surayud to Abhisit. The Surayud
administration embraced the ideal of a society that excluded no one while theAbhisit administration eliminated means testing and income restrictions fromthe process of paying livelihood subsidies to elderly and persons withdisabilities. In these ways, it is evident that the principle of the universality of
welfare is becoming firmly entrenched in Thailand.
However, in order to sustain this move towards universalism, tax revenues
based on steady economic growth as well as an expansion of the tax basethrough the introduction of an asset tax and a stronger ability to capture taxes
will be required. The way ahead on these points is full of difficulties. The
government is fettered in terms of the increasing fiscal burden that will need to
be assumed as the population ages, such that it is uncertain how much longer
the commitment to universalism can be maintained. Consequently, it is highly
likely that, in accordance with the principle of subsidiarity, the government
will take on a behind-the-scenes role in supporting local communities in which
Chapter 5: Thailand 53

people are subsumed. This state of affairs will be supplemented by the Tambon
Health Fund and the Community Welfare Fund, which constitute matchingfunds to which contributions will be made by the government, local
governments, and residents. It is expected that a system incorporating homebased welfare volunteers for the elderly and other service suppliers will emerge
in time. In other words, the structure will be one in which the 30-baht medicalcare program and livelihood subsidy scheme, as means of providing minimum
security, will be merged with these types of matching funds. Nevertheless,there are numerous issues connected to these points. With further
decentralization taking place, discrepancies in terms of the quality of medical
and welfare services provided could very well emerge as a function of the
fiscal competence of local governments and residents. That is to say, we may
see discrepancies in terms of service arise within rural areas. Thus, the question
as to how social security will be conceived in rural areas will become a key
issue in the future.

54

Chapter 6: Japan
Masanobu Masuda
1. Overview of Japan
Location
Japan lies at the eastern edge of the Asian continent and constitutes a cornerof a group of countries forming the region known as East Asia. It is an island
country surrounded completely by the ocean and comprises numerous islands,
including the four main islands of Hokkaido, Honshu, Shikoku, and Kyushu.
The area of Japan measures 378,000 square kilometers in total. Japan is a small
country in terms of area compared to China or the United State but only France,
Spain, and Sweden among the countries of Western Europe can claim to begeographically bigger than Japan. If we were to take the countries of Western
Europe to be our benchmark, then one cannot reasonably describe Japan as asmall country in terms of area.
Mountains and forests account for about 80 percent and plains account foraround 20 percent of the geographic area of Japan. The country is home to
many volcanoes and experiences an exceedingly large number of earthquakes
thanks to the convergence of the Pacific Plate, North American Plate, andPhilippine Sea Plate at the bottom of the ocean along the Pacific coast. The
Great East Japan Earthquake that struck on March 11, 2011, caused enormous
damage with the loss of about 20,000 lives, the evacuation of approximately
400,000 persons, and the destruction of nuclear power generating plants
attributable to major seismic activity and tsunamis.
As for the climate, Japan—with the exception of northern Hokkaido, thenorthernmost part of the country, and Okinawa, the southernmost part of thecountry—is situated in the mild temperate climate zone, which is characterized
by clear changes in the four seasons of the year.
Changes in population and the aging rate
According to the national census of 2010, the total population of Japan is
127 million people, which ranks the country in tenth place in the world behindthe likes of China, India, and the United States and makes her among the mostpopulous of the approximately 200 countries of the world.
Changes in the population and the aging rate are one among many factors
pushing the government to develop social security schemes.
The Japanese population rose rapidly after the country joined the ranks ofmodern states thanks to the Meiji Restoration that took place in the latter halfof the nineteenth century. The population at the time of the Meiji Restoration isestimated to have stood at around 30-something million people and grew to43.3 million people by 1899 (thirty-second year of the Meiji era). The very first
Chapter 6: Japan 55

national census was carried out in 1920 (ninth year of the Taisho era) andyielded a count of 50 million people. The population continued to grow andsurpassed 70 million people prior to the Second World War. Unfortunately, theSecond World War (including the Second Sino-Japanese War and the PacificWar) resulted in a loss of about 3.1 million people and caused the population toshrink.
After the Second World War, the population rebounded rapidly, thanks inpart to the first baby boom (generation born between 1947 and 1949;
approximately 2.7 million people were born in each of these years; at greaterthan 4, the total fertility rate was very high during these years). In 1967 (fortysecond year of the Showa era), the population surpassed 100 million. Growthin the population of young laborers constituted the engine supporting economic
growth. Lionized as “golden eggs,” junior high school graduates flocked from
Hokkaido, Tohoku, Kyushu, and elsewhere to the capital city and the Kinki
region to find jobs en masse at companies and factories. The population
underwent social mobility at a tremendous pace, such that cities became
overpopulated while agricultural and mountainous areas suffered fromdepopulation. As explained later in this chapter, a period of rapid economic
growth in Japan began in around the middle of the 1950s. Social security
schemes evolved against the backdrop of growth in both economic andpopulation terms.
If we take a look at the white paper on health and welfare that was issued at
the time (currently known as the Annual Report on Health, Labor and Welfare),we see that matters were being discussed with an awareness of the question as
to whether Japanese society could withstand the pressures of an increase inpopulation. While this description of Japanese society back then definitely
makes it feel like a different age in comparison to the society of today(characterized as it is by a declining birthrate), officials at the time regarded
high numbers of children as a factor behind the poverty of families andrecommended family planning to reduce childbirth numbers with a view topromoting fewer births and encouraging parents to raise their children very
carefully. In 1952 (twenty-seventh year of the Showa era), the total fertility
rate was between two and three; the rate remained at this level until the second
half of the 1970s. The second baby boom (generation born between 1971 and1974; approximately 2.0 million people were born in each of these years)
occurred in the first half of the 1970s.
Thereafter, however, the total fertility rate would continue to drop over a
prolonged period of time. In 1990 (second year of the Heisei era), the nation
awoke to what was then called the “1.57 shock” (the total fertility rate for theprevious year in 1989 was found to be 1.57, lower than the postwar record
lowest level of 1.58 that was recorded in 1966 due to superstitions associatedwith hinoeuma, an inauspicious year). This caused the government and society56

to take a growing interest in the issue of a falling birthrate. From around the
middle of the 1990s, the government began to implement measures to counterthe falling birthrate but was unable to halt the decline in the birthrate. The total
fertility rate fell to 1.26, its lowest level ever, in 2005 (seventeenth year of the
Heisei era). While this rate has picked up slightly in recent years (1.43 in 2013
(twenty-fifth year of the Heisei era)), the number of live births per year has
fallen to around just over a million a year and is soon expected to fall below
this level.
At the same time, the average lifespan of Japanese people (average numberof remaining years of life at age zero) remained low throughout the Meiji andTaisho eras but began to increase with the arrival of the Showa era (whichbegan in 1926). The average lifespan of Japanese people rapidly rose in the
postwar years thanks to the increases in levels of public health and nutrition
and the development of schemes for providing medical care and public medical
insurance schemes.
In 1947 (twenty-second year of the Showa era), the average lifespan of men
in Japan was 46.9 years and the average lifespan of women was 49.6 years;
these years were thus referred to as the “era of 50-year lives.” Subsequently,
the average lifespan of women surpassed 60 years in 1950 (twenty-fifth year of
the Showa era), reached 70 years in 1960 (thirty-fifth year of the Showa era),and exceeded 80 years in 1984 (fifty-ninth and last year of the Showa era). For
men, increases in the average lifespan lagged behind those of women.
Nevertheless, it exceeded 60 years in 1951 (twenty-sixth year of the Showaera), reached 70 years in 1971 (forty-sixth year of the Showa era), andsurpassed 75 years in 1986 (sixty-first year of the Showa era). The middle ofthe 1980s came to be referred to as the “era of 80-year lives” and both men andwomen in Japan were among the longest-living humans in the world. The “eraof 85-year lives” arrived in 2013 (twenty-fifth year of the Heisei era), when
men and women can expect to live an average of 80.2 and 86.6 years,
respectively.
A decreasing number of children tied to a declining birthrate and declining
number of births and an increase in the average lifespan of people have caused
the aging of Japanese society to accelerate. The aging rate in the immediate
postwar years (percentage of the total population accounted for by people aged
65 years or older) was 4.9 percent in 1950 (twenty-fifth year of the Showa era).
In 1970 (forty-fifth year of the Showa era), Japan became an aging society
when the rate of aging surpassed 7 percent. Low levels were maintained fortwo decades thanks to the first baby boom and to the relatively high total
fertility rates (never less than 2.0) that were subsequently recorded.
From around the 1980s, however, the aging rate rapidly rose. A country
becomes an aged society when the aging rate surpasses 14 percent, which
occurred in Japan in 1994 (sixth year of the Heisei era). The period between
Chapter 6: Japan 57

the time when a country’s aging rate hits 7 percent and the time when acountry’s aging rate hits 14 percent is known in demographic terms as the
doubling time and is used as a measure for indicating the speed at which asociety ages. In the case of Japan, the doubling time was 24 years. Major
Western countries took between 50 and 130 years to become aged societies. In
contrast, the speed at which Japanese society aged is highly notable.
The aging rate continued to increase thereafter and exceeded 20 percent in2005 (seventeenth year of the Heisei era). The aging rate is thought to be an
estimated 25.0 percent as of October 1, 2013 (twenty-fifth year of the Heiseiera), which would make the aging rate in Japan the highest in the world. One infour people is 65 years old or older and one in nine people is 75 years old orolder. The White Paper on Health and Welfare of 1986, which was issued
around the time when the aging rate surpassed ten percent, described a society
in which elderly persons comprise one in every four persons as a hyper-agedsociety. Such a description is certainly apt for the situation in which Japan
currently finds itself. The population of elderly persons has hit 31.9 million
people (2013), having doubled over the last 20 years; we are now in an era inwhich there are over 30 million elderly persons in Japan.
There are many fields of social security in Japan that are characterized bydeep links between elderly persons and pensions, medicine, and nursing care.
For this reason, the ways in which social security schemes in an elderly society
would be constituted and operated came to be issues of policy in the 1980s.
Since that time, necessary systemic modifications have been carried out
numerous times by focusing on what was shaping up to be a true aged society
and while taking fairness in terms of benefits and cost burdens and thesustainability of schemes into account.
According to estimates provided by the National Institute of Population andSocial Security Research, Japanese society will continue to age in the years tocome. With the first baby boom generation slated to become a population
segment aged 65 years or older in 2015 (twenty-seventh year of the Heisei era),
the number of elderly persons and the aging rate will both rise. The aging rate
will hit 29.1 percent, 31.6 percent, and 38.8 percent, or almost 40 percent, in
2020, 2030, and 2050, respectively.
As of October 1, 2013, the Japanese population was 125 million people(estimated by the Ministry of Internal Affairs and Communications). This
number more or less represents the historic peak in terms of population in
Japan. Thanks to declining numbers of children and an increase in the numberof deaths of elderly persons, Japan has been in a state of natural attrition(population decline that occurs when the number of deaths exceeds the numberof births) since 2010, such that the state of a shrinking population in Japan has
become extraordinary and noted. It is already estimated that the population will
have contracted by 250,000 people on a year-on-year basis as of October 1,
58

2013. According to estimates provided by the Ministry of Internal Affairs andCommunications, the total population is on a long-term downward slope. It is
expected that it will shrink to 116 million people and 107.3 million people in
2030 and 2040, respectively, before crossing below the 100 million people
threshold and hitting 97 million people in 2050.
Aging in Japan is characterized by the speed with which aging is
progressing, the bigger size of the population segment comprising elderly
persons relative to the size of this segment in Western countries, the fact thataging in taking place as the population itself is shrinking, and the exceptionallyhigh projections of the aging rate in the future.
In this way, an examination of the future of social security schemes inJapan must take into account a future that will see levels of population aging
and a full-scale shift to an aged society with a low birthrate unlike anything
seen previously in the world today.
Political and economic situation
Japan’s political system is one in which sovereignty resides with the people.
There are two houses of government: the House of Representatives and theHouse of Councillors. A parliamentary cabinet system is in place whereby theprime minister is selected by way of the election of members of the Diet for
both Houses. In this sense, Japan’s political system resembles the British
system among those found in advanced countries.
Beginning in around the middle of the 1950s, the “1955 system” (named forthe fact that this system was formed in 1955) persisted in which the Liberal
Democratic Party (LDP) constituted the governing party, the Social
Democratic Party constituted the opposition, and the prime minister was
selected from among the ranks of the LDP. With the arrival of the 1980s,
however, these parties notably split into multiple parties. In the first half of the
1990s, coalition cabinets became the norm. In 1993, the first prime ministerchosen by a party other than the LDP in 47 years was elected as the head of a
non-LDP coalition government. The 1955 system in that year came to an end.
In 1994, the LDP and Social Democratic Party formed a coalition governmentand selected the first Social Democratic Party prime minister in 49 years.
Prime ministers from the LDP were subsequently chosen and this coalition
government managed to survive for a few years. Nevertheless, the generalelection of 2009 was won big by the Democratic Party of Japan (DPJ), which
campaigned for a change in government that year. The cabinet of the DPJ,
which successfully drove the LDP into the role of the opposition, emerged. The
LDP then scored a large electoral victory in the general election of 2012. Onceagain, a coalition government led by an LDP-chosen prime minister is incharge of governing the country.

Chapter 6: Japan 59

60

0 to 14 years ofage

15 to 64 yearsof age65 to 74 yearsof age75 years of age
or olderAging rate (percentage of total populationaccounted for by persons aged 65 years or older)

Actual values
Total population(bar graph values)

Projected values

Figure 6-1. Changes in aging and future projections

Year

Note: Total figures for the period between 1950 and 2010 include persons of unknown age; persons of unknown age have been excluded from the denominator for calculating theaging rate.
Materials: Until 2010, National Census (Ministry of Public Management, Home Affairs, Posts and Telecommunications/ Ministry of Internal Affairs and Communications); for 2012,
Population Estimates (as of October 1, 2012) (Ministry of Internal Affairs and Communications); for 2015 and beyond, estimates based on medium-range birth andmedium-range death assumptions as outlined in Population Projection for Japan (estimates as of January 2012) (National Institute of Population and Social Security
Research).
Source: 2013 White Paper on Elderly Society (Cabinet).

(Ten thousands ofpeople)In this way, the government of Japan has been changing at a dizzying pacesince the 1990s, such that there have been 15 prime ministers in the twentyfive-year period between 1990 and 2014 1 . Such a frequent change in thegovernment causes the political situation to suffer from instability and also
affects the establishment and implementation of social security policies.
Local administrative organs consist of prefectures (47 nationwide) andmunicipalities (1,550 nationwide). The heads of these organs and the membersof their legislative assemblies are also selected by direct vote on the part ofcitizens. Cities with especially large populations constitute designated cities as
designated by government ordinance (20 nationwide) or core cities. In the areaof social welfare, these cities possess virtually the same authority as
prefectures do. Since the 1990s, the administrative authority and subsidies ofthe state have been flowing to local governments according to the philosophyof local decentralization.
On the economic front, Japan is the world’s third largest economy after theUnited States and China in terms of gross domestic product (GDP).
After the end of the Second World War, a period of rapid economic growththat continued from the middle of the 1950s to the first half of the 1970s
enabled Japan’s economy to undergo dramatic growth. The Japanese economy
was based on processing trade whereby petroleum, iron ore, and otherresources were imported from other countries and products were manufactured
in Japan and then exported overseas. The primary industrial goods for export
initially consisted of textiles but before long came to consist of steel,automobiles, electric appliances, and other products manufactured by the heavy
and chemical industries. Many world-famous companies were establishedduring this period. At the end of the 1960s, Japan’s gross national product(GNP) surpassed that of West Germany. Japan thereby became world’s thirdlargest economy in terms of GNP, after the United States and the Soviet Union.
It was from around this time that Japan was acknowledged as a great economic
power. In the 1980s, the Japanese economy was heating up to such an extent
that the economic climate was described in terms of the existence of a bubble
economy.
However, a slow-growth economy has persisted over a period of twenty
years since the 1990s—known as the “lost decades”—thanks to a number offactors, including loans issued by financial institutions that turned bad due tothe popping of the bubble economy, changes in manufacturing due to theevolution of IT technology in the United States, and a decline in thecompetitiveness of Japanese companies brought about by the growth of
economies in China, South Korea, and other Asian countries. The countrycame to rely more on international proceeds to offset reductions in tax
revenues caused by the slump in the economy, as a result of which proceedsfrom selling government bonds came to account for about half of all annual
Chapter 6: Japan 61

government revenue and long-term debt amounting to approximately double
the GDP of Japan came to be assumed, thereby worsening the state of publicfinances.
Changes in postwar social security schemes
Japan’s defeat in the Second World War led to the installment of an
occupation force by the Allies in Japan until 1952 (twenty-seventh year of the
Showa era). By authority of the mandated directives issued by the General
Headquarters of the Allied Powers (GHQ; headed by Supreme Commander
MacArthur of the United States), the prewar militarism of Japan was
dismantled and various reforms were instituted with the aim of building a
democratic country. These reforms included the enactment of a new
constitution (Constitution of Japan), farmland reforms, education reforms, thedismantling of corporate conglomerates, and the implementation of generalelections for which women were extended the franchise. GHQ directives also
encompassed the overall system of social security.
The Constitution of Japan, advisories issued by the Advisory Council on
Social Security, and political elements seeking to build a welfare state can be
described as having influenced the direction taken by Japan in constructing
social security schemes in the postwar years. Replacing the Constitution of the
Empire of Japan (which was enacted during the Meiji era), the newly enacted
Constitution of Japan clarified, in Article 25, the obligations of the state inconnection with the securing of the right to life of citizens and with thedevelopment of social security schemes. The first paragraph of Article 25
reads: “All people shall have the right to maintain the minimum standards ofwholesome and cultured living.” The second paragraph of the same article
reads: “In all spheres of life, the State shall use its endeavors for the promotionand extension of social welfare and security, and of public health.” Theprovisions of Article 25 of the Constitution of Japan generally constitute thesource of law for statutes relating to social security schemes that are enacted inJapan.
The Advisory Council on Social Security was established as an advisory
council tasked with reporting on matters relating to social security schemes to
the Prime Minister. In 1950 (twenty-fifth year of the Showa era), it submitted
its Recommendations on Social security Schemes and thereby proposed
directions applicable to the construction of social security schemes in postwar
Japan and specific proposals for schemes to be established. These
Recommendations were influenced by the Beveridge report, which was
authored in the United Kingdom. For example, the concept of national
insurance plans for enrollment by all citizens to enable the implementation ofunemployment measures and the provision of an income guarantee was put
forth.
62

There was also political regret over the prioritization that was given to themilitary during the prewar years, such that the construction of a welfare state
became a central theme of politics for both the governing and opposition
parties. While funds that could be allocated to reinforcing social security
schemes were limited due to the severe fiscal conditions of the postwar era,such efforts were openly declared as matters of top priority in political slogans.
Table 6-1 outlines the history of changes in social security schemes inJapan from the end of the Second World War to the present day. Let us
examine this history in accordance with its division into five periods as follows.
(1) Postwar emergency relief and the development of a foundation (from 1945
to around 1955)
The period from the end of the Second World War to around 1955 (thirtiethyear of the Showa era) was one in which emergency relief was provided tomany needy persons in a society devastated by war, war orphans, homelesschildren, and persons left disabled by war and in which work to develop afoundation for social security schemes proceeded. The Three Welfare Laws
were enacted at this time: the Public Assistance Act (enacted in 1946; revised
based on provisions of Article 25 of the Constitution of Japan in 1950), Child
Welfare Act (enacted in 1947), and Disabled Persons Welfare Act (enacted in1949). Furthermore, the Social Welfare Service Act, which formed thefoundation of the development of social-welfare enterprises in the postwar
years by way of defining the term “social-welfare enterprise” and prescribing
the system of social-welfare juridical persons, was enacted (in 1951).
With respect to the development of a foundation, a system concerning
public health centers and welfare offices as administrative organs in charge ofthe administration of public health and the administration of social welfare wasput in place. The development of a foundation for local governments also
proceeded with the enactment of the Local Autonomy Act and the creation of
the Ministry of Home Affairs (1950; presently merged with the Ministry ofInternal Affairs and Communications).
(2) Development of universal health insurance and pension plans and social
security schemes (from around 1955 to the Oil Shock)Triggered by the special procurement effect of the Korean War, aneconomic boom began in around 1955 (thirtieth year of the Showa era) andmarked the start of a full-blown process of economic growth for Japan. From
this point in time until the Oil Shock hit in 1973 (forty-eighth year of the
Showa era), a period of rapid economic growth continued for a longer period oftime than had ever before been seen in the world. The government, companies,
and people were working to “catch up to and surpass” the advanced countriesof the West. Various milestone events occurred during this period, including
the Tokyo Olympics (1964), the opening of the Tokaido Shinkansen bullet train
line (1964), the world’s fair held in Osaka (1970), and the Sapporo
Chapter 6: Japan 63

Table 6-1. Changes in Japan’s social-security plans (since 1945)
Period○ Postwar emergency relief
and the development of afoundation(from 1945 to around1954)○ Development of universal
insurance and pension
plans and social-security
plans(from around 1955 to the
Oil Shock)○ Period during whichsocial-security plans werere-examined(from the second half ofthe 1970s to the 1980s)○ Period for Establishment
to deal with an aged
society with a lowbirthrate(from the 1990s to 2000)○ Structural reforms andsocial-security reforms(from 2001 to the presentday)

Main changes in social-security plans
1946: (Old) Public Assistance Act enacted, Constitution of Japan promulgated;
1947: Health Center Act enacted, Child Welfare Act enacted;
1948: Medical Service Act, Medical Practitioners’ Act, and Act on Public Health Nurses, Midwives and Nurses
enacted;1949: Disabled Persons Welfare Act enacted;
1950: (New) Public Assistance Act enacted (framework of Three Welfare Laws), Mental Health Act enacted,
recommendations submitted by the Advisory Council on Social Security;
1951: Social Welfare Service Act enacted;
1952: Act on Relief of War Victims and Survivors enacted.
1957: Universal health insurance plan;
1958: National Health Insurance Act amended (universal health insurance);
1959: National Pension Act enacted (universal pension);
1960: Welfare Act for Mentally Retarded Persons enacted;
1961: Universal health insurance and universal pension plans implemented, Child Support Allowance Act enacted;
1962: Recommendations submitted by the Advisory Council on Social Security;
1963: Act on Social Welfare for the Elderly enacted;
1964: Mother and Child Welfare Act enacted (framework of Six Welfare Laws);
1970: Basic Act on Countermeasures Concerning Mentally and Physically Handicapped Persons enacted, five-yearplan for the emergency development of social welfare facilities;
1971: Child Allowance Act enacted;
1973: Act on Social Welfare for the Elderly amended (making medical costs incurred by elderly persons free ofcharge), Health Insurance Act amended (including 70 percent benefits for family members), pension plan
revised (including raising of benefit levels and introduction of cost-of-living indexing) (“First Year of Welfare in
Japan”).
1981: Mother and Child and Widows Welfare Act (amendment of the Mother and Child Welfare Act);
1982: Act on Health and Medical Services for the Aged (including adoption of co-payment system, healthcontribution plan for the aged);
1984: Health Insurance Act amended (including 90 percent benefits for insured person, medical-care plan for retired
persons);
1985: Pension plan revised (including adoption of a basic pension), Medical Service Act amended (including adoptionof local medical service plans);
1986: Act on Temporary Special Provisions for State Subsidies, etc., enacted (review of the division of the assumptionof costs between the state and local governments);
1987: Certified Social Workers and Certified Care Workers Act enacted, Mental Health Act enacted (amendment of
the Mental Health Act), Act on Health and Medical Services for the Aged amended (including health-carefacilities for the aged);
1989: 10-year strategy for promoting the health and welfare of elderly persons (Gold Plan) formulated.
1990: Eight welfare acts, including the Act on Social Welfare for the Elderly, amended (including municipalitycentered welfare services);
1991: Act on Health and Medical Services for the Aged amended (including plan for providing elderly persons withvisiting nurses);
1993: Basic Act for Persons With Disabilities enacted (amendment of the Basic Act on Countermeasures Concerning
Mentally and Physically Handicapped Persons);
1994: Angel Plan formulated, new Gold Plan formulated, pension system revised (including raising the age at which
payments corresponding to the fixed portion of an employee pension commence);
1995: Recommendations submitted by the Advisory Council on Social Security, a plan for disabled persons
formulated, Basic Law on Measures for an Aged Society enacted, Mental Health Welfare Act enacted(amendment of the Mental Health Act);
1997: Child Welfare Act amended (including revisions to the system of admissions to a child-care center), Health
Insurance Act amended (80 percent benefits for the insured person), Long-Term Care Insurance Act enacted,
Act to Promote Specified Non-profit Activities enacted, Psychiatric Social Workers Act enacted;
1999: Act for the Welfare of Persons with Intellectual Disabilities enacted (amendment of the Welfare Act for
Mentally Retarded Persons), Gold Plan 21 formulated, new Angel Plan formulated;
2000: Nursing-care insurance plan put into force, pension system revised (including re-examination of benefits andassumption of costs), Social Welfare Act enacted (amendment of the Social Welfare Service Act), Child Abuse
Prevention Act enacted.
2001: Defined Contribution Pension Act enacted;
2002: Health Insurance Act amended (including 70 percent benefits for the insured person and amendment of thesystem for health and medical services for the aged);
2003: Basic Act on Measures for Society with a Decreasing Birthrate enacted;
2004: Pension system revised (including a re-examination of benefits and the assumption of costs);
2005: Long-Term Care Insurance Act amended, Services and Support for Persons with Disabilities Act enacted;
2006: Medical system revised, Child Allowance Act amended (benefits provided for children up to sixth year of
primary school);
2008: Medical-care plan for later-stage elderly persons put into effect;
2010: Children’s allowance implemented;
2011: Basic Act for Persons With Disabilities amended, Long-Term Care Insurance Act amended;
2012: Act for the Provision of Comprehensive Support to Persons with Disabilities enacted, pension system revised(consolidation of employee pension plans), 3 laws for the provision of support for children and child carepassed;2013: Act on a Program for Reforming Social Security enacted.

Produced by the authors.

64Winter Olympics (1972). The latter half of the 1960s saw Japan overtake theUnited Kingdom, Germany, and others in terms of gross national product(GNP) and become the third-largest economic power in the world after theUnited States and the Soviet Union. Politically speaking, the LDP consistently
formed majority governments in the Diet and a stable form of government rule
as led by the prime minister and cabinet members selected by the LDP underthe “1955 system” was applied throughout this period.
Just as we have seen happen in the developed countries of the West, Japanaspired, in line with economic growth, to become a welfare state for which
ensuring enhancements in welfare for the people was a prime objective andthereby endeavored to develop various types of legal systems towards this end.
Amendments made to the National Health Insurance Act and the enactment of
the National Pension Act in the decade beginning in around 1955 led to theimplementation of universal health insurance and pension plans, which allowed
each citizen to be enrolled in some sort of public medical insurance plan andpublic pension scheme, from fiscal year 1961 (thirty-sixth year of the Showaera). Universal health insurance and pension schemes subsequently came toform the core of Japan’s social security system.
This was also a time when enhancements to social security schemes and theamelioration of benefits were actively undertaken thanks to the support
provided by increased tax revenues made possible by economic growth. In thearea of social welfare, a framework known as the Six Welfare Laws wasestablished through the enactment of the Act on Social Welfare for the Elderly
and the development otherwise of key legal systems relating to welfare.
Benefits were improved, such as by raising the standards for livelihood
assistance provided through livelihood protection schemes, raising pension
benefit levels in pension schemes, and raising benefit rates within medical
insurance schemes. In fiscal year 1973 (forty-eighth year of the Showa era), thecreation of a scheme for paying medical costs incurred by elderly persons
effectively exempted elderly persons from paying any portion of such medical
costs on an out-of-pocket basis. However, this policy caused a dramaticincrease in medical costs incurred for elderly persons and was reviewed in the
period discussed below.
(3) Period during which social security schemes were reviewed (from thesecond half of the 1970s to the 1980s)
The oil crisis that struck in the fall of 1973 (forty-eighth year of the Showaera) drove up the price of petroleum. The economy of Japan, which relied onoil, was affected by a state of severe inflation and stagnation. The period of
rapid economic growth in the country came to a halt as the country entered anera of steady growth. With the state of national finances worsening due to adrop in tax revenues and other such factors, administrative and financial
reforms at the state level became a huge political concern. Social security
Chapter 6: Japan 65

schemes in other advanced countries were also subject to re-examination
during this period in what is referred to as the welfare-state crisis.
Representative of the systemic reforms that are associated with this period
is the establishment (in 1982) of a healthcare scheme for elderly persons for the
purpose of introducing an approach involving the partial assumption of
medical costs incurred by elderly persons and ensuring the equitable
assumption of medical costs incurred by elderly persons through medical
insurance schemes. Medical insurances schemes were also modified with thepartial amendment of the Health Insurance Act (in 1984), which introduced theidea of having insured persons assume ten percent of patient costs, which had
previously not been charged to the patient. As for pension schemes, schemesthat had up until then been separated according to occupation were reexamined and a basic pension scheme applicable to all citizens was introduced(in 1985).
(4) Establishment of schemes to deal with an aged society with a low birthrate(from the 1990s to 2000)
In the 1990s, social security schemes to primarily deal with an aged society
with a low birthrate were constructed. The issue of providing care for theelderly in response to the rapid aging of society is a significant matter ofsocietal concern. The government began implementing in 10-year plan for
promoting the health and welfare of the elderly (“Gold Plan”) in 1990 (second
year of the Heisei era). Under this plan, at-home services and facility services
were set to undergo development on a systematic basis during the 10-year
period until 1999 (eleventh year of the Heisei era). In around the middle of the
1990s, a nursing-care insurance scheme began to be studied. Accordingly, theLong-Term Care Insurance Act was enacted in 1997 (ninth year of the Heiseiera).
As for the issue of a declining birthrate, we see that the second baby boom
that occurred in the middle of the 1970s was followed by ongoing downward
trends in terms of the rate of childbirth and number of children born. The total
fertility rate in 1989 (first year of the Heisei era) reached a historic low, thus
giving rise to what was known as the “1.57 Shock,” in response to which thegovernment decided to launch countermeasures. The formulation andintroduction of the Angel Plan (1994) and the New Angel Plan (1999)
represented attempts to increase the capacity of child-care centers and thescope of infant child care. However, the decline in the birthrate has not yet
been halted, such that measures to address this issue remain a pressing matterto this day.
In the field of social welfare, systemic reforms resulting in significant
changes to the framework of postwar welfare schemes based on new notions—such as notions concerning the universalization of the idea of normalization; anemphasis on at-home welfare; linkages among health, medicine, and welfare;66the deployment of municipality-centered welfare administration; a userorientation and support for autonomy; and the use of private-sector
initiatives—were undertaken.
Illustrative of this process were the amendments made to eight welfarerelated statutes, including the Act on Social Welfare for the Elderly, in 1990
(second year of the Heisei era). These amendments led to efforts to introduce
municipality-centered welfare administration and establish a systematic
foundation of health and welfare for the elderly in local governments. The
enactment of the Long-Term Care Insurance Act in 1997 (ninth year of the
Heisei era) caused measures and schemes in the area of welfare for the elderly
to shift to a mode of usage contracts according to a model of social insurance.
Since measures and schemes in the area of social welfare until then had been
expected as a matter of course, the introduction of a usage contract approach
represented a major occurrence referred to in terms of the shift from “measures
to contracts.” As part of the structural reformation of the foundation of social
welfare that was carried out primarily through amendments made to the Social
Welfare Service Act (renamed the “Social Welfare Act” as a result of theseamendments) in 2000 (twelfth year of the Heisei era), new ideas concerning
welfare services were set forth, measures and schemes were re-examined in thearea of welfare for persons with disabilities, and the system was updated to one
based on usage contracts that attached importance to choices made by users.
(5) Structural reforms and social security reforms (from 2001 to the present
day)
The Japanese bubble economy that prevailed during the second half of the
1980s popped at the beginning of the 1990s, which led to an ongoing economic
slump and persistent deflation. From the 1990s to the present day, theeconomic growth rate has been mired in stagnation and the unemployment rate
has hovered at a relative high level compared to the period of rapid economic
growth. Notably in the context of the global economy, competition with theAmerican IT industry and the low-priced manufactured goods coming out ofChina intensified, companies sought to establish offshore locations to reduce
costs and expand markets, and the labor force of non-permanent workers grewin response to efforts to reduce wage costs. As for state finances, a reduction intax receipts and other factors caused greater reliance on the issuance of large
amounts of government bonds to raise government revenue. Huge amounts oflong-term debt came to be accrued, thus placing Japan in the worst position
among advanced countries of the world by this measure. In this connection, theKoizumi administration, which was formed in 2001 (thirteenth year of the
Heisei era), launched numerous systemic reforms according to the slogan of“no growth without structural reforms”, including economic structural reforms,
administrative reforms, financial structural reforms, social security reforms,
regulatory reforms, and postal reforms.
Chapter 6: Japan 67

In the area of social security, the pension system was revised (in 2004), thelong-term care insurance (nursing-care insurance) system was revised (in 2005),
and the medical-care system was revised (in 2006) in the interests of ensuring
the sustainability of social security schemes into the future. In the area of
welfare for persons with disabilities, welfare services that had previously been
provided separately to persons with physical, intellectual, and mental
disabilities were consolidated and the Services and Supports for Persons with
Disabilities Act was enacted in 2005 (seventeenth year of the Heisei era). At
the same time, the careless manner in which pension records were handled by
the Social Insurance Agency became an issue and the pension records fiasco
became a significant point of political controversy. As non-permanent workers
increased in number and disparities in income grew, the need to reinforce thefunctions of social security came to be identified.
The general election of 2009 (twenty-first year of the Heisei era) resulted ina change of government that saw the LDP-led government of the time replacedby one led by the DPJ. The DPJ government replaced the old child allowancewith a new child allowance. A significant political issue arose in efforts tocarry out the “integrated reformation of social security and taxes”, which
involved the simultaneous implementation of social security reforms in
response to the aging of society and the declining birthrate, changes in
employment patterns, and other changes in socioeconomic conditions as well
as taxation reforms designed to secure stable fiscal funding for social security
and promote fiscal soundness. Specifically, fiscal funding for social security
schemes would be secured and functions would be reinforced by increasing theconsumption tax from 5 percent to 10 percent with the increased portion of tax
receipts being allocated to four areas: pensions, healthcare, nursing care, andthe declining birthrate. In August 2012 (twenty-fourth year of the Heisei era),bills tied to the integrated reformation of social security and taxes—including abill to raise the consumption tax, a bill relating to children and the process ofraising children, and a bill relating to revisions to the pension system—wereenacted.
The general election of 2012 (twenty-fourth year of the Heisei era) once
again resulted in a change in government by which the coalition government of
the LDP and Komeito Party was restored to power. For the time being, social
security schemes are slated to be revised according to the Act on a Program for
Reforming Social Security.
Characteristics of social security schemes in Japan
Figure 6-2 outlines the changes in the costs of social security benefits inJapan (amounts paid to citizens through social security schemes in a year;
child-care services, medical services, and other forms of services have also
been converted into monetary amounts). In fiscal year 2011 (twenty-third year68

of the Heisei era), the costs of social security benefits reached a total of 107.5
trillion JPY, surpassing the general accounting budget for the state. On a percapita basis, this amounts to 840,000 JPY per year. In breaking this figure
down by field, we see that pensions accounted for 49.4 percent of the total
amount while medical care accounted for 31.7 percent and welfare and otheritems (including nursing care) accounted for 18.9 percent. Spending on social
security as a percentage of the national income has been rising in recent years.
Whereas spending on social security was equal to 17 percent of the national
income thirty years ago in 1985 (sixtieth year of the Showa era), this figurerose by 14 percentage points to 31 percent in fiscal year 2011.
Characteristics of social security schemes in Japan can be described asfollows with reference made to the situation behind the costs of social security
benefits.
First, universal health insurance and universal pensions are the foundational
elements of such schemes.
As of 1960, medical security was extended to over 90 percent of the
population. The countries where universal pensions were offered consisted ofonly four countries worldwide: the United Kingdom, Sweden, Norway, andIceland. The fact that Japan became just the fifth country in the world toprovide medical insurance to all of its citizens and universal health insurance
and pension plans to enable the provision of income security to the elderly at atime when economic levels at the beginning of Japan’s period of rapid
economic growth were still low was truly monumental. Subsequently, these
universal health insurance and pension plans formed the essential backbone of
the country’s social security schemes.
Second, social security schemes in Japan are primarily centered on social
insurance. In Japan, there are five different types of social security schemes:
pension insurance, medical insurance, long-term care insurance (which is what
nursing-care insurance is known as in Japan), employment insurance, andworkers’ accident compensation insurance. This number is the highest among
advanced countries and puts Japan on par with Germany and South Korea inthis respect. Benefits provided under social-insurance schemes account for
about 90 percent of the costs of social security benefits. At least half of thisamount comprises benefits from pension insurance plans. An outline of these
five types of social-insurance schemes is provided in Table 6-2. As indicatedlater, these schemes are characterized, for medical insurance, by the fact that
medical insurance is divided into numerous different types of schemes and thefact there are scores of insurers in this field, and, for medical insurance andlong-term care insurance, by the fact that administrative organs in the form ofmunicipal governments are the insurers.

Chapter 6: Japan 69

70
346.9

3.6 (14.5%)
12.15%

0.6 (16.8%)
5.77%

Welfare and other items

B/A

18.4 (38.9%)

10.7 (43.3%)

2.1 (58.9%)

21.01%

10.9 (14.0%)

26.0 (33.3%)

41.2 (52.7%)

78.1 (100.0%)

371.8

2000

31.09%

22.2 (19.3%)

37.0 (32.1%)

56.0 (48.6%)

115.2 (100.0%)

370.5

2014
(budget base)Welfare and other items

MedicalPensions(Budget base)(Ten thousands of JPY)

Note: Figures above constitute the costs of social-security benefits (trillions of JPY) in fiscal years 1950, 1960, 1970, 1980, 1990, 2000, 2010, and 2014 (budget base).
Materials: 2011 The Cost of Social Security in Japan, National Institute of Population and Social Security Research; for fiscal years 2012, 2013, and 2014 (budget base), statistical
data provided by the Ministry of Health, Labour and Welfare; for the national income amount for fiscal year 2014, 2014 Economic Forecasts and Basic Stance for
Economic and Fiscal Management (Cabinet decision of January 24, 2014).
Source: Materials provided by the Ministry of Health, Labour and Welfare.

Per capita costs of social-security benefits (right-hand scale)

13.61

4.8 (10.2%)

24.0 (50.9%)

10.5 (42.2%)

0.9 (24.3%)

47.2 (100.0%)

24.8 (100.0%)

203.9

1990

3.5 (100.0%)

61.0

1980

Pensions
MedicalWelfare and other items
Per capita costs of social-security
benefits

MedicalPensions(Breakdown)

Total cost of benefits (trillions of JPY) B

1970

Figure 6-2. Changes in the costs of social-security benefits

Amount of national income (trillions of JPY) A(Trillions of JPY)

Table 6-2. Outline of social-insurance plans
Pension insurance

Medical insuranceLong-term care(nursing-care)insurance

InsurerState or mutual
benefit association

Japan Health Insurance
Municipality
Association, healthinsurance society,mutual benefit
association, municipality,
or others
Employee, person with a Person 40 years
home in theof age or older
municipality, or others

InsuredpersonEmployee or person
between 20 years ofage and under 60
years of age

Key types of
insurance
benefits
Examples ofplans

Cash benefits

Benefits in kind, cash
benefits

Benefits in kind

National pension,
employees’ pension
insurance, mutual aid
pensionHealth insurance under
the jurisdiction of a
relevant society or
association or the Japan
Health Insurance
Association, mutual
benefit association,national healthinsurance, and others

Long-term careinsurance

Employment insurance

Workers’ accident
compensation
insurance

State

State

Worker belonging to abusiness subject toemployment insurance(excluding government
employees)
Cash benefits

Employer
operating in an
applicablebusiness

Employment insurance

Workers’ accident
compensation
insurance,
disastercompensation forstate government
employees, andothersCash benefits andbenefits in kind

Produced by the authors.

Third, social security schemes in Japan are primarily centered on theprovision of benefits for the elderly. The costs of benefits relating to elderly
persons amount to 72 trillion JPY, which accounts for 70 percent of the total
cost of social security benefits. In line with the rising rate of aging in Japan, thecosts of pensions, medical care for the elderly, nursing care for the elderly, andbenefits relating to elderly persons are rising year after year. In contrast, thecosts of benefits relating to children and families stand at approximately 6
trillion JPY (6 percent), a pittance compared to the costs of benefits relating toelderly persons in the country.
2. Current state of social welfare
Japan’s social-welfare schemes have been set up and expanded for different
targeted persons. A livelihood protection scheme is operated for needy persons;a children’s welfare scheme is operated for infants and children; a welfare
scheme for persons with disabilities is operated for persons with disabilities; awelfare scheme for mothers, children, and widows is operated for mothers,
children, and widows; and an old age welfare scheme is operated for elderly
persons. The statutes forming the basis for each of these schemes consist of the
Public Assistance Act, Child Welfare Act, Disabled Persons Welfare Act, Act
for the Welfare of Persons with Intellectual Disabilities, Mother and Child andWidows Welfare Act, and Act on Social Welfare for the Elderly. These statutes
have been collectively referred to as the “Six Welfare Laws.”
Chapter 6: Japan 71

Since the 1990s, the enactment of the Long-Term Care Insurance Act, theenactment of the Services and Support for Persons with Disabilities Act, andother events have brought about changes whereby a long-term care insurance
scheme has come to play a key role in the area of welfare for elderly persons
and a scheme providing support for the independence of persons withdisabilities has come to play a key role in the area of welfare for persons withdisabilities. In 2012, the Services and Support for Persons with Disabilities Act
was amended and renamed the Comprehensive Support for Persons with
Disabilities Act.
The following table provides an overall outline of Japan’s social-welfare
schemes:
Covered persons

Names of key statutes

Low-income persons, needy Public Assistance Act, Act on Services and Support for the Independence of thepersons
Needy
Children, disabled childrenChild Welfare Act, Child Allowance Act, Child Abuse Prevention Act
Act for the Provision of Comprehensive Support to Persons with Disabilities,
Act for the Welfare of Persons with Physical Disabilities,
Disabled persons
Act for the Welfare of Persons with Intellectual Disabilities,
Disabled Abuse Prevention Act,
Employment Promotion Act for Persons with Disabilities
Long-Term Care Insurance Act, Act on Social Welfare for the Elderly,
Elderly persons
Elderly Abuse and Welfare Act
Note: The names of some statutes may be indicated here in their abbreviated form.

The Ministry of Health, Labour and Welfare operates as the administrative
organ in connection with social welfare. Bureaus in charge of relevant mattershave been set up in prefectures and municipalities. Welfare offices and childconsultation centers have been set up in prefectures and ordinance-designatedcities and welfare offices have been set up in cities as specialized agencies forthe administration of welfare.
Livelihood protection
Livelihood protection schemes guarantee a minimum level of living forneedy citizens and are intended to promote the independence of such people.
They are schemes designed to translate the philosophy of guaranteeing theright to life as prescribed in Article 25 of the Constitution of Japan into
concrete actions. In protecting livelihoods, other laws and schemes takepriority according to the principle of complementarity, such that livelihood
protection only comes into play when relief cannot be found in any other laws
or schemes. For this reason, it is referred to as the “safety net of last resort.”
Livelihood protection consists of 8 types of assistance: livelihood assistance(food costs, clothing costs, lighting and heating costs, and other costs necessary
for daily living), educational assistance (such as the costs of school supplies),
housing assistance (such as rent and land rent), medical assistance, nursing72

care assistance, childbirth assistance, occupational assistance (occupationalcosts, skill-learning costs, job-search support costs), and funeral assistance.
The number of persons receiving livelihood protection is a function ofchanges in economic conditions. The number of protected persons in the
chaotic period of the immediate postwar years was high but trended
downwards during the period of rapid economic growth and reached a record
low point in 1995 (seventh year of the Heisei era). However, the prolonged
period of economic stagnation since the second half of the 1990s caused thenumber of protected persons to turn around and begin rising. A record high2.14 million persons received livelihood protection in 2012 (twenty-fourth yearof the Heisei era).
The cost of providing livelihood protection in fiscal year 2011 (twenty-thirdyear of the Heisei era) was 3,693 billion JPY, of which 46.9 percent went
towards medical assistance costs, 34.5 percent went towards livelihood
assistance costs, and 15.4 percent went towards housing assistance costs. This
cost was covered with the state assuming three-quarters of this amount andlocal governments with welfare offices assuming the rest.
These days, focus is being directed towards providing support for theemployment and independence of protected persons. In addition, the Act on
Services and Support for the Independence of the Needy was enacted (in 2013)
in order to reinforce the provision of support for the independence of lowincome persons just prior to the stage at which livelihood protection comes intoplay.
Welfare for children
The area of welfare for children encompasses a wide range of concerns andfeatures, including child-care centers, the sound nurturing of children, achildren’s allowance, and the handling of child abuse. Child-care centers havebeen developed to deal with the increase in dual-income households andcounter the declining birthrate. As of April 2012 (twenty-fourth year of the
Heisei era), there were 23,470 child-care centers in the country. Despite adecline in the number of births yearly due to a drop in the birthrate, an increasein the participation of women in the workplace has bolstered demand for childcare centers. In April at the beginning of each fiscal year, children on waiting
lists who are unable to enroll in a child-care center number around 25,000,
most of whom live in urban areas. The government is working to expand thecapacity of child-care centers under what it calls Operation Zero WaitingChildren. While the consolidation (or centralization) of kindergartens andchild-care centers was a matter of concern for many years, policies promoting ashift to “certified day-care centers” that function as both child-care centers andkindergartens are being promoted.

Chapter 6: Japan 73

The establishment of a children’s allowance, which was set up in 1972
(forty-seventh year of the Showa era), was late by comparison to Westerncountries. For a long time, this allowance was limited to the third child and any
subsequent children in a household and the amounts involved were on the low
end. The scheme was expanded to include the first two children in eachhousehold in 1992 (fourth year of the Heisei era) but was limited to children
under the age of 3 years. Since 2000 (twelfth year of the Heisei era), the age of
eligibility and the levels of benefits provided have been raised as part ofmeasures designed to counter the decline in the birthrate. The DPJ governmentthat was inaugurated in 2009 (twenty-first year of the Heisei era) established achildren’s allowance for which the age of eligibility was raised to 15 years (ageat which a child finishes junior high school) and benefit levels weresignificantly increased. This scheme, however, was highly problematic in suchterms as fiscal funding. Adjustments made by the ruling and opposition parties
resulted in the elimination of this version of the children’s allowance and therestoration of the older version of the children’s allowance. The current scheme
provides coverage to children between 0 and 15 years of age (age at which achild finishes junior high school) and benefits equaling 15,000 yen per monthfor children under the age of 3 years and 10,000 yen per month for children 3
years of age and older.
With measures to deal with child abuse having become an issue in recent
years, the Child Abuse Prevention Act was enacted and put into force in 2000
(twelfth year of the Heisei era). Child-abuse consultations are held andprevention and relief measures have been taken with child consultation centers
playing a key role in these actions. Nevertheless, the number of cases of childabuse consultations is on the rise and serious cases involving the loss of achild’s life still occur. Thus, the issue of child abuse is a serious one thatshould be resolved by society as a whole rather than be addressed only byadministrative organs.
Welfare for persons with disabilities
Nationwide, there are approximately 3.94 million children and adults withphysical disabilities, 740,000 children and adults with intellectual disabilities,
and 3.2 million persons with mental disabilities (estimated figures).2 For many
years in the area of welfare for persons with disabilities, the needs of persons
with physical disabilities (18 years of age or older) were addressed through the
Act for the Welfare of Persons with Physical Disabilities, the needs of persons
with intellectual disabilities (eighteen years of age or older) were addressed
through the Act for the Welfare of Persons with Intellectual Disabilities, theneeds of children with disabilities (under eighteen years of age) were addressed
through the Child Welfare Act, and the needs of persons with psychologicaldisabilities were addressed through the Act on Mental Health and the Welfare74

of Persons with Mental Disabilities. In 2005 (seventeenth year of the Heiseiera), measures applicable to persons with any of three types of disabilities(persons with physical, intellectual, and mental disabilities) were consolidated.
The Services and Support for Persons with Disabilities Act was enacted thatyear and put into force in fiscal year 2006 (eighteenth year of the Heisei era)
for the purpose of reorganizing these measures into a system of user-focusedservices, fortifying employment support, and making support decisions
transparent and clear.
This law transformed existing welfare measures for persons withdisabilities but was criticized by persons associated with groups representing
persons with disabilities for imposing costs equal to 10 percent of a fixed rateon users. This statute was re-examined upon the inauguration of a government
led by the DPJ, which campaigned on a platform calling for the repeal of thislaw. Under amendments passed in 2011 (twenty-third year of the Heisei era),
the imposition of costs on users according to the ability to pay was codified asa general principle to be followed. In June 2012 (twenty-fourth year of the
Heisei era), this statute was amended and renamed the Act for theComprehensive Provision of Support to Enable Persons with Disabilities to
Engage in Daily and Social Living (Act for the Provision of Comprehensive
Support to Persons with Disabilities). Under the Act for the Provision ofComprehensive Support to Persons with Disabilities, the scope of eligibility for
persons with disabilities was expanded to include not just physical disabilities,
intellectual disabilities, and mental disabilities (including developmental
disabilities) but also patients with intractable diseases.
The employment of persons with disabilities is an exceptionally important
point from the standpoint of providing persons with disabilities with livelihood
security, a reason for living, and the opportunity to participate in society.
Employment measures for persons with disabilities have consisted of thepromotion of employment in companies (general employment), work infacilities and workshops (welfare jobs), and numerous other modes of work
according to the physical and mental state of persons with disabilities.
The Act for the Promotion of Employment of Persons with Disabilities(Employment Promotion Act for Persons with Disabilities) was enacted inorder to promote the employment of persons with disabilities in private-sector
companies. This statute mandates that a certain percentage of the workforce of
employers shall comprise persons with physical and intellectual disabilities.
These percentages are as follows as of April 2013: 2.0 percent for privatesector companies, 2.3 percent for the public bodies of state and local
governments, and 2.2 percent for prefectural boards of education. An employer
that fails to meet this statutory rate of employment will be required to pay adisabled employment levy according to the given shortfall in terms of thenumber of persons with disabilities required to satisfy this condition while an
Chapter 6: Japan 75

employer that hires persons with disabilities at a rate higher than the statutory
employment rate will be paid a disabled employment adjustment subsidy
according to the number of persons with disabilities hired over and above thiscondition. As of June 2012, the employment rates for persons with disabilities
stood as follows: 1.69 percent for private-sector companies, 2.1 percent for
public bodies, and 2.0% for prefectural boards of education.
Long-term care insurance (nursing-care insurance)
With respect to the system for providing nursing-care security to elderly
persons, it is to be noted that, while at-home services and facility services had
been provided through a welfare scheme for elderly persons under the Act on
Social Welfare for the Elderly as enacted in 1963 (thirty-eighth year of the
Showa era), the Long-Term Care Insurance Act was enacted in 1997 and along-term care insurance scheme was implemented in April 2000.
Japan’s long-term care insurance scheme was studied and created withreference made to the nursing-care insurance scheme in place in Germany.
However, there are many points of difference between Japan’s scheme andGermany’s scheme in terms of the specific contents of both. Germany’s
nursing-care insurance scheme should be described as one that is based on a“medical insurance-usage model” and was established based on the use of a
medical insurance scheme. A medical fund constituting the insurer for the
medical-insurance scheme set up a nursing-care fund and has been engaging ininsurer operations for the nursing-care insurance scheme. The scope of insured
persons covered under the nursing-care insurance scheme is the same as thescope of insured persons covered under the medical insurance scheme.
On the other hand, the long-term care insurance scheme in Japan wasestablished as a separate social insurance scheme from that of the medical
insurance scheme (and conforms to an “independent insurance model”). Thus,
the scope of insurers and insured persons differs from the scope of insurers andinsured persons under the medical insurance scheme. This scheme is based on a“local insurance model” whereby each municipality serves as an insurer and theresidents living in the municipality are the insured persons to whom coverage isprovided. This scheme also differs in terms of insured persons from the medical
insurance scheme that applies universally to all residents of Japan in that
persons aged 40 years or older are covered, with persons under the age of 40
years excluded from the scope of the long-term care insurance scheme. Persons
aged 65 years or older are treated as primary insured persons and persons aged
40 years to under 65 years are treated as secondary insured persons. Conditions
for receiving insurance benefits and the methods by which insurance premiums
are assessed and imposed differ between primary and secondary insured
persons. A secondary insured person assumes insurance premiums at the samelevel as that assumed by a primary insured person but insurance benefits are76

Chapter 6: Japan 77

limited in the event that nursing care is required owing to an injury or illness
attributed to aging (including where support is required; same hereinafter). For
this reason, 97 percent of persons requiring nursing care who are entitled toreceive long-term care insurance benefits (including persons requiring support;
the same shall apply hereinafter) consist of primary insured persons. From thestandpoint of insurance benefits, Japan’s long-term care insurance scheme
constitutes a de-facto nursing-care insurance scheme for elderly persons.
In order to be certified as a person requiring nursing care, the individual
needs to be certified as requiring nursing care by a municipality. There areseven nursing care levels in total for a finer approach to classification than has
been adopted in Germany (basically 3 levels) and South Korea (initially 3
levels). This number reflects the fact that the scope of the application of thisscheme to persons requiring nursing care is broad. Compared to the scheme inJapan, the nursing-care insurance schemes in Germany and South Korea are
fundamentally restricted in terms of eligibility to persons with a medium or
heavy need for nursing care.
Types of insurance benefits consist of at-home services and facility services
as well as region-based services. There are clearly more types of services
offered in Japan than are offered as insurance benefits under nursing-careinsurance schemes in Germany and South Korea. On the other hand, cash
benefits (nursing-care allowance) constitute a key benefit provided through athome services in Germany but are not available in Japan.
For at-home services, a user of nursing-care services, once certified as aperson requiring nursing care, will essentially have a nursing-care service plan
(care plan) prepared by a nursing-care support professional (care manager) at
an at-home nursing-care support business office before he or she selects a
service-providing business office and uses the services in question. The user
assumes costs at a fixed rate of 10 percent. For facility services, the user
assumes costs at a rate of 10 percent but fully assumes the costs of meals andaccommodations. From fiscal year 2015, users who report a minimum level ofincome will assume 20 percent of applicable costs.
With respect to the fiscal funding of long-term care insurance, publicmoney is allocated to cover 50 percent of the costs of insurance benefits
exclusive of the portion of costs assumed by the user on a copayment basis
while the remaining 50 percent is covered by insurance premiums. Whereas
nursing-care insurance in Germany is funded by insurance premiums alone, thefact that public money covers such a large percentage of the costs of insurance
benefits in Japan is a notable feature of this country’s long-term care insurance
scheme. In principle, the portion paid with public money is divided as follows:
the state (national government) pays half while the prefectural government andmunicipal government pay one-quarter each. The portion covered by insurance78

premiums is split evenly between primary insured persons and secondary
insured persons.
In fiscal year 2012, there were 30.94 million primary insured persons and5.61 million persons requiring nursing care in Japan. Certified persons
accounted for 17.6 percent of all primary insured persons (certification rate),such that approximately one in six elderly persons is a person requiring nursing
care. Of this group of people, 87 percent consists of the so-called “later-stageelderly persons” (persons aged 75 years or older). There are 3.38 million
persons receiving at-home services, 330,000 persons receiving region-based
services, and 870,000 persons receiving facility services. The amount of longterm care insurance benefits provided totals 8,100 billion JPY, the cost of
benefits per primary insured person equals 263,000 JPY per year, and theinsurance premiums for a primary insured person equal a national average
4,930 JPY per month.
3. Current state of medical insurance
As indicated earlier, a universal health insurance system obligating all
citizens to enroll in a medical insurance plan has been adopted in Japan.
While medical insurance is divided into many schemes in part due to ahistory that saw different schemes established for different occupations, it canbe broadly divided into occupational insurance (employee insurance) andregional insurance. Occupational insurance includes health insurance forgeneral employees (salaried white-collar workers) and mutual aid associations
and seamen’s insurance for government employees, mariners, and otherspecific employees. Health insurance comprises insurance administered by theJapan Health Insurance Association primarily for salaried white-collar workers
belonging to small and medium-sized companies and union-administeredhealth insurance established by companies for salaried white-collar workers
belonging to large companies.
Regional insurance includes national health insurance in which theresidents of each municipality are enrolled. Municipalities are insurers under
the national health insurance scheme. Insured persons comprise self-employedpersons, farmers, part-time workers, unemployed persons, and all otherresidents not covered under occupational insurance. The national healthinsurance scheme is the foundation that underpins the universal healthinsurance system. Regional insurance schemes like the national healthinsurance scheme for which municipalities serve as insurers are uniquely
Japanese schemes found in no other advanced country in the world.

Chapter 6: Japan 79

80Japan Health
Insurance
Association (1)Insurers (number)

Mutual aid
associations andothers (85)Self-employed persons,farm employees, parttime workers,
unemployed persons,and others
Professional groups

Employees of privatesector companies (mainly
small and medium-sizedcompanies) and family
members
Employees of privatesector companies (mainly
large companies) andfamily members
Government employees
and family members

Coverage

1,473

312

3,520

919

2,950

3,488

Number ofenrolled persons(x 10,000 persons)○Cash benefits
Including injury or illness
allowance, lump-sum birthallowance, and funeral
expenses(differs according to plan andinsurer).
○Medical benefits
Assumed by patient: 10 percent(30 percent for persons whose
income is on par with those ofcurrently working individuals).
A high medical expenses system
is in place to cap copayment
requirements imposed on
patients.
○Cash benefits
Funeral expenses and more

○Medical benefits
Assumed by patient: 30 percent
20 percent for persons prior tocommencing compulsory
education or between 70 andunder 75 years of age
A high medical expenses system
is in place to cap copayment
requirements imposed on
patients.

Contents of insurance benefits

Differs according to
wide-area union

Differs according toinsurer

Differs according tomutual aid
association

Differs according toinsurance union

National average:
10.0 percent

Insurance premium
rate

Note: Data consist of figures current as of the end of March 2012.
Source: Produced by the authors based on the 2013 White Paper on Health, Labour and Welfare (Ministry of Health, Labour and Welfare).

Medical plan for Wide-area unions for Persons aged 75 years orlater-stage
the medical-careolder
elderly persons system for laterstage elderly persons(47)

National healthinsurance societies(164)

National health Municipalities
insurance(1,717)

Mutual aid

AssociationHealth insurance
provided health unions (1,443)
insurance

Kyokai Kenpo

Name of plan

Table 6-3. Outline of Japan’s public medical insurance plans

Premiums:
approximately 10 percent
Support funds:
approximately 40 percent
Public funds:
approximately 50 percent(Breakdown of public funds
in terms of ratio:state:prefecture:municipality= 4:1:4)

41 percent of benefit costs(in addition, 9% fromprefecture)
47 percent of benefit costs

None

Fixed amount(budget subsidy)

16.4 percent of benefit costs

State subsidy

Medical care provided through a medical insurance scheme consists
primarily of benefits in kind whereby medical care can be received simply byfulfilling a copayment requirement. In addition, fixed amounts of cash benefits,
such as an injury or illness allowance or lump-sum birth allowance provided ascompensation for an absence from work owing to an injury or illness or tochildbirth, are also available. Presently, both persons insured under a medical
insurance scheme and the dependents thereof assume 30 percent of incurredcosts (20 percent for dependents prior to the commencement of compulsory
education and 20 percent for insured persons and dependents between the agesof 70 years and under 75 years (30 percent for currently working income
earners)). However, a high medical expenses system is in place to cap
copayment requirements according to income.
The characteristics of medical insurance in Japan include the following: 1)
universal health insurance scheme, 2) medical insurance schemes are classified
according to occupation and other variables, and 3) the fundamental principleof “free access”, such that an insured person can, in principle, exercise choicein seeing a doctor at any medical institution in the country as long as a healthinsurance card is presented. This last point is a significant point ofdifferentiation between the system in place in Japan and the systems in place inthe United Kingdom and northern Europe. For example, an individual who has
fallen ill in the United Kingdom is unable to go directly to a hospital to see a
doctor within the framework established by the National Health Service (NHS).
The person must first see a local registered doctor (general practitioner) andobtain this doctor’s permission before he or she can go to a hospital. In contrast,
the system of seeing a doctor in Japan is very much one that is focused on theinsured person (or patient). On the one hand, this system is advantageous formaking it easy to see a doctor at a medical institution and for respecting thewishes of the insured person. On the other hand, such a system is problematicin that it leads to a rise in insurance benefit costs.
In addition to the above characteristics, medical insurance in Japan ischaracterized by 4) the fact that medical care for the elderly is provided
through a different medical insurance scheme. As medical costs for the elderly
have increased to impose a large burden on the finances of the national healthinsurance system due to the progression of the aging of society and theincreasing size of the population of elderly people in Japan, an approach tosegregate the elderly from the generations still working and deal with theirissues through a separate scheme was taken. The first such scheme was the oldage healthcare scheme under the Act on Health and Medical Services for the
Aged that was implemented in January 1983. In reforming the medical system
in 2006, the Act on Health and Medical Services for the Aged was amended
and renamed the Act Concerning the Security of Healthcare Treatment for
Senior Citizens (Senior Citizens’ Healthcare Security Act). Under this statute,
Chapter 6: Japan 81

a medical scheme for later-stage elderly persons aged 75 years or older was
established. With insurers consisting of prefectural wide-area unions for the
medical-care system for later-stage elderly persons, insured persons are allelderly persons aged 75 years or older within each prefecture. With the patient
assuming 10 percent of costs (30 percent where income is on par with those ofcurrently working individuals), insurance benefits are paid for as follows:
approximately 50 percent from public funds (2/3 by the state and 1/6 by eachof the prefectural and municipal governments), approximately 10 percent fromthe insurance premiums paid by elderly persons, and approximately 40 percent
from a support fund for later-stage elderly persons to which contributions are
made by the generations still working through medical insurance schemes.
At the same time, an examination of Japan’s system for providing medicalcare reveals that there were 177,769 medical facilities and 1,695,210 hospitalbeds nationwide as of October 1, 2013. Among medical facilities, hospitals(where a “hospital” is a medical facility with hospitalization facilities capableof accommodating 20 or more patients) numbered 8,540. Internationally
speaking, Japan boasts exceptionally high levels in terms of number ofhospitals and number of hospital beds per 100,000 people. Private-sector
medical corporations account for a high proportion—two-thirds—of all
hospital establishers. While public medical insurance guarantees medical costs,
the fact that the private sector plays such a leading role in the system ofproviding medical care in this country is a salient feature of healthcare in Japan.
As the high numbers of hospital beds also leads to an increase in national
healthcare costs, regional medical plans are being formulated at a prefecturallevel in an effort to regulate the total number of hospital beds. The
coordination of efforts to resolve disparities among medical zones in eachprefecture and promote functional differentiation on the part of medical
institutions has become a challenge.
4. Current state of pension security
Figure 6-4 presents an outline of Japan’s pension system.
The characteristics of Japan’s pension system are as follows.
First, a universal pension scheme has been in place since 1961 (thirty-sixthyear of the Showa era) under which all citizens, including self-employed andunemployed persons, are enrolled in a public pension scheme.
Second, the pension system corresponds to a social-insurance system
whereby enrolled persons contribute insurance premiums and receive pension
benefits accordingly. Note, however, that persons who were already elderly
and persons whose period of enrollment as insured persons was forced to be
shortened upon the introduction of the national pension scheme in 1961 werehandled through an old-age welfare pension funded by taxes.
82Third, while pension finances were based on a reserve financing system atthe time of the introduction of this scheme, this scheme is presently operated
based on a pay-as-you-go system (as is the case in Western countries), whereby
costs incurred for pension benefits are covered by the insurance premiums
currently paid by enrolled persons. The government has coined the term
“intergenerational support” to describe the provision of support to thegeneration of elderly persons by the generations of currently working people
by way of the assumption of insurance premiums.
Figure 6-4. Outline of Japan’s pension plans (current as of the end of March 2012)
Defined contribution
pension(individuals)
Number of enrolled
persons: 130,000

National pension fund(number of members:
520,000)

Number of enrolled
persons: 4.21 million

Number ofmembers: 4.37
millionNumber ofenrolled persons:8.01 million

Employees’
pension funds

Defined benefit
company
pensions(Agency
component)

Employees’ pension insurance

Defined contribution
pension (companies)

Additionalamounts by
occupation

Number ofmembers:
34.51 million

Mutual aid
pension(number ofmembers:
4.41 million)

National pension (basic pension)

Dependent spousesof secondary
insured persons

Self-employedpersons, others

9.78 million
persons
Tertiary insured
persons

19.04 million persons
Primary insured persons

Government
employees,
othersPrivate-sector business persons,others
38.92 million persons
Secondary insured persons, others

67.75 million persons

Source: p. 236, 2013 White Paper on Health, Welfare and Labour.

Fourth, the pension system conforms to a framework corresponding to a
two-tiered structure consisting of a pension proportional to compensation
received (tied to income) for employees atop a basic pension universally
applicable to all insured persons.
Japan’s pension system used to be divided into the following: an employees’
pension for private-sector workers, mutual aid pension for government
employees, and national pension for self-employed persons, farmers, andothers. However, as the fiscal basis of such a setup of schemes came to be
Chapter 6: Japan 83

unsound for some schemes, a statutory amendment carried out in 1985 (sixtiethyear of the Showa era) with the aim of ensuring long-term soundness andfairness among insured persons caused this system to be reconfigured into asystem consisting of the following: a national pension in which all citizens(persons between the ages of 20 and under 60 years) are enrolled and thatprovides basic benefits (basic pension) as well as an employees’ pension ormutual aid pension for employees to whom an additional pension is provided
commensurate with compensation received. The introduction of a basic
pension resulted in the establishment of the “one person, one pension” generalrule, thereby vesting even employees’ unemployed wives (in other words,
homemakers)—who had previously enrolled in pension plans on an optional
basis—with the right to obtain their own pensions.
Discussions on consolidating the pension system continued. In October
2015, the employees’ pension scheme and mutual aid pension scheme weremerged into a single pension scheme for employees.
Fifth, pension finances have incorporated an enormous amount of state
liabilities. One-half of the basic pension is based on state liabilities in part tomitigate the burden placed on premiums corresponding to the basic pension.
If we look at matters from the perspective of benefits from pension
insurance schemes3, we see that the following exists for national pension plans:a basic old-age pension (for a full pension, 778,500 JPY per year), basic
disability pension (for a class 1 disability, 973,100 JPY per year; for a class 2
disability, 778,500 JPY per year), and basic survivors’ pension. The following
exists for employees’ pension plans: an old-age employee’s pension (for abusinessperson who had been enrolled for 40 years with an average salary,
approximately 230,000 JPY a month for basic pensions for both himself andhis wife), employee’s pension for a disability or disability allowance, andemployee’s pension for survivors. In this way, while the primary purpose ofpensions is to provide livelihood security for elderly persons in their postretirement years, they also play a huge role in providing livelihood security inthe event that the individual becomes disabled or livelihood security through apension for survivors in the event that the primary breadwinner in a family dies
first.
5. Issues concerning the future of the social security system
After the end of the Second World War, Japan sought to deal with theadvanced countries of Europe and the United States by taking a “catch up andovertake” approach. In assessing its own social security schemes, it was theseadvanced countries of the West with which Japan consistently madecomparisons. At the time a scheme for providing a children’s allowance was
set up in 1972, it was said that a social security scheme on par with those found84

in Western Europe had been established. However, actual pension levels at thistime were low as pension schemes had not yet reached their periods ofmaturation. Areas of welfare for children, welfare for the elderly, and welfare
for the disabled were rife with inadequacies. Known as the First Year of
Welfare in Japan, fiscal year 1973 was when pension benefit levels rose andthe ratios of insurance benefits provided to dependents under medical
insurance increased. With the arrival of the 1990s, a foundation of nursing carefor the elderly was developed under a 10-year plan for the promotion of healthand welfare for the elderly (Gold Plan) and welfare services for the disabledwere enhanced under a plan for the disabled. These initiatives allowed thegovernment to declare that Japan’s “social security schemes were not inferior
to those of Europe and the United States” in its 1999 White Paper on Public
Welfare.
Since the 1990s, however, Japan’s economic growth rate has fallen and thecountry has been mired in an ongoing period of economic stagnation anddeflationary pressures. Tax revenues have declined at both the state and local
government levels due to these factors. The environment surrounding social
security schemes has become far more austere owing to a sluggish rise inproceeds from insurance premiums attributed to stagnancy in the wage levelsof workers as well as to an increase in the number of low-income households
and households receiving public assistance attributed to growth in the size ofthe non-permanent labor force.
One of the biggest issues concerning Japan’s social security schemes is the
securing of funds to ensure the sustainability of these schemes.
Table 6-4 presents changes in the make-up of funding for social security
schemes. In fiscal year 2011, the costs of social security benefits equaled
approximately 107 trillion JPY, the fiscal sources for which can be broken
down as follows: insurance premiums accounted for 52.0 percent of funding
and public funds accounted for 37.6 percent of funding. Both insurance
premiums paid by insured persons and insurance premiums assumed by
employers reached enormous sums, each surpassing in magnitude theaggregate amounts of income taxes and corporation taxes that were collected.
Between fiscal years 2000 and 2011, a total of 250 trillion JPY, an amount thatexceeded total proceeds from income taxes and corporation taxes, was paid outof the state coffers to fund social security schemes. Moreover, as tax revenues
during this period were stagnant, annual revenues were raised by the statethrough the issuance of huge sums of government bonds. For this reason,
proceeds from government bonds account for nearly half of all annual revenues
and the balance of long-term government debt is approximately double theGDP of the country, such that this state of affairs represents a serious fiscal
matter.

Chapter 6: Japan 85

86335,258

485,773

663,782

851,390901,768

1,174,996

1,121,707

1,156,566

1975

1980

1985

1990

1995

2000

2005

2010

2011

52.0

51.6

46.5

61.0

60.2

59.6

56.8

55.6

56.8

59.7

57.4

Socialinsurance
premiums

26.9

27.0

24.1

29.6

28.7

27.9

27.1

26.5

26.4

28.5

27.0

25.1

24.5

22.4

31.4

31.5

31.7

29.7

29.1

30.4

31.2

30.4

Contributed byContributed byinsuredemployers
persons

37.6

35.7

25.3

27.8

24.3

24.3

28.4

32.9

33.1

30.0

32.5

Public funds

27.3

26.2

18.7

21.9

19.5

20.3

24.3

29.2

29.0

26.4

28.3

State treasury

Breakdown ratio (%)

10.3

9.5

6.6

5.9

4.9

4.1

4.1

3.7

4.1

3.6

4.1

Other public
funds

Source: Fiscal Year 2011 Statistics on Social Security Costs, National Institute of Population and Social Security Research, 2013.

54,681

167,375

1970

23,996

1965

Fiscal year

Revenue(x 100 million
JPY)

Table 6-4. Breakdown of social-security funding (ILO standards)

11.9
7.3

3.2

12.1

4.0

4.0

3.5

2.1

1.8

1.3

1.6

3.8

Other

0.7

16.0

7.2

11.5

12.6

12.8

9.7

8.7

8.8

6.3

Asset income

1,074,950

1,034,879

877,766

781,391

647,247

472,203356,798

247,736

117,693

35,23916,037

Social security
benefit costs(x 100 million
JPY)

Under these conditions, the government undertook an integrated reform ofsocial security and taxes through which it sought to allocate increased tax
revenues obtained by raising the consumption tax rate to four areas: pensions,medicine, nursing care, and the declining birthrate. With the enactment of a
relevant bill by the Diet in 2012, the consumption tax rate was raised from 5
percent to 8 percent in April 2014 and is set to be increased to 10 percent in
October 20154.
Based on a report issued (in August 2013) by the National Council on
Social Security System Reform (which was established under the Act for the
Promotion of Social security System Reform (enacted in 2012)), the Act
Concerning the Promotion of Reform to Establish a Sustainable Social Security
System (Act on a Program for Reforming Social Security) was enacted (inDecember 2013). This statute outlines the specific direction to be taken interms of reforming the social security system for the next several years.
However, since it is expected that tax revenues will rise by approximately
13 trillion JPY as a result of raising the 5 percent consumption tax rate, theallocation of the entire sum of this increase in tax revenues to the social
security system will still fall short of what would be considered sufficient.
According to the Ministry of Health, Labour and Welfare, the costs of social
security benefits are estimated to equal approximately 149 trillion JPY in fiscal
year 2025, a figure that is 39 trillion JPY higher than the approximately 110
trillion JPY in social security benefit costs incurred in fiscal year 2012. The
securing of fiscal funding and the re-examination of benefits provided throughvarious social security schemes are now imperative.
If we examine key issues in individual areas, we see that limiting increases
in and reducing the number of recipients by promoting support for employment
and self-reliance through the livelihood protection scheme, which is providing
benefits to more recipients than ever before in history, are issues to beaddressed in the area of social welfare. In 2014, the Abe Cabinet set forth a
population target of 100 million people in 2050. The deployment of measures
to counter the declining rate of childbirth—such as by reducing the number ofchildren on waiting lists to enter childcare centers through an expansion in thenumber of childcare centers, providing economic support to members ofyounger generations, making it easier to take childcare leaves, and promoting awork-life balance in the workplace—is a concern.
Limiting the ongoing growth in national healthcare costs is the biggest issue
being faced in the area of medical security. The placement of national healthinsurance operations under prefectural control is being studied as a measure for
dealing with the structurally deficit-laden municipally run national healthinsurance scheme. The municipally run national health insurance scheme is thebasis of universal health insurance. It is hoped that the placement of operations
under the control of prefectural governments will stabilize national health
Chapter 6: Japan 87

insurance operations and enable fiscal funding to be secured. For the long-termcare insurance scheme, the establishment of a comprehensive local-care systemin each municipality is an issue, such that linkages between medical care andnursing care are important.
In the area of pension security, it will be necessary to ensure fairness interms of benefits and the applicable cost burden assumed between thegeneration of people receiving benefits and the generation of people who are
currently working in order to make sure that the pension system is sustainable.
To this end, the lowering of pension benefit levels and the raising of the age at
which pensions can start to be paid are issues that need to be addressed.
In any case, Japan is forced to confront a huge question: how will thecountry be able to maintain and develop its social security system—thelinchpin for ensuring the security and stability of the lives of all citizens—in
the context of Japan’s status as an “advanced elderly country” for having an
aging rate that is the highest in the world and even as it is expected that her
population will rapidly shrink in the years to come?

88

1

2
3

4

In the period between 1990 and 2014, the United States had 5 presidents, the United
Kingdom had 5 prime ministers, France had 4 presidents, and Germany had 3
chancellors.
2011 estimates based on the 2014 White Paper on Health, Welfare and Labour.
National pension and employees’ pension amounts shown here are figurescorresponding to fiscal year 2013 (twenty-fifth year of the Heisei era).
In November 2014, the Abe Cabinet decided that the raising of the consumption tax
from 8 percent to 10 percent would be deferred to April 2017.

Chapter 6: Japan 89

Introducing the authors(In order of appearance)

Masanobu Masuda, editor of this entire work and author of Chapters 1 and 6
Professor, Faculty of Health and Welfare Science, Okayama Prefectural University
Major written works:
Annotations to the Long-Term Care Insurance Act (sole author); Houken Corporation, 2014.
Points at Issue in Re-examining Long-Term Care Insurance (sole author); Horitsu Bunka Sha,
2003.

Min Bao, Chapter 2
Associate professor, Faculty of Health and Welfare, Hiroshima International University
Major written works:
Supporting the Elderly and the Long-Term Care Insurance Scheme (as edited by Takeshi Owada
and contributed to by others) (joint author); Mirai, 2014.
China’s Vulnerable Class and the Light and Shadows Cast by Chinese Economic Reform in
Terms of Social Security (as edited and written by Takafumi Uzuhashi and others) (joint author);
Akashi Shoten, 2012.

Jung-Nim Kim, editor of this entire work and author of Chapter 3
Professor, Faculty of Social Welfare, Tokyo University of Social Welfare
Major written works:
Welfare for the Elderly and the Pursuit of Learning (as edited and written by Toshio Sugimoto
and Yuriko Hashimoto) (joint author); Hoiku Publishing, 2013.
Changes in Families and Communities and the Development of the Welfare State (edited by
Sumie Goto, Risako Komatsu, and Sadahisa Noguchi) (joint author); Chuohoki Publishing,
2011.

Katsuhisa Kojima, Chapter 4
Director, Second Office, International Relations Division, National Institute of Population andSocial Security Research
Major written works:
Nursing-Care Security Around the World (2nd edition) (edited and written by Masanobu
Masuda) (joint author); Horitsu Bunka Sha, 2014.
National Federation of Health Insurance Societies: Overseas Medical Security (State ofMedical Care in Taiwan) (National Federation of Health Insurance Societies), Issue 92; 2011.
Social Security in Asia (edited and written by Yoshinori Hiroi and Kohei Komamura) (joint
author); University of Tokyo Press, 2003.

Masato Kawamori, Chapter 5
Professor, Graduate Course, School of Human Sciences, Graduate School of Human Sciences,
Osaka University
Major written works:
The New East-Asian Century: Generating Rhizomatic Systems (sole author); Osaka University
Press, 2013.
Reforming the Medical Welfare System in Thailand (sole author); Ochanomizu Shobo, 2009.

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This book was originally published by Horitsu Bunka Sha in March 2015. With the consent of theauthors and the publisher, OLICD Center translated the book into English in December 2016