Local governments crack down on health insurance scofflaws

September 11th, 2011 by Philip Brasor & Masako Tsubuku

Enough to make you sick: monthly Kokuho payment schedule

According to an article in the Aug. 29 Asahi Shimbun, the number of asset seizures initiated by local governments in an attempt to recoup delinquent national health insurance payments has increased startlingly in the past four years. Asahi asked the pertinent sections of all 23 wards in Tokyo, as well as those in 19 major cities about seizures. They received responses from 37 local governments in all, and the data indicates that between fiscal 2006 and fiscal 2010, the number of delinquent payments that led to actual seizures of assets increased by almost sixfold.

In this case, we’re talking about Kokumin Kenko Hoken, or National Health Insurance, which is paid by anyone who is not a member of the Shakai Kenko Hoken system, which is paid for by contributions from employers. Traditionally, National Health Insurance, known as Kokuho for short, was carried by people who are self-employed. And that’s still true. However, the ranks of Kokuho carriers has increased greatly over the past two decades as the employment situation has changed. With more people out of work and even more changing over from so-called lifetime employment to so-called non-regular employment, the number of people who are compelled to pay into the Kokuho system gets larger and larger. Kokuho is administered by local governments, and national insurance, whether paid for by the individual or by his/her employer, is mandatory in Japan. If the individual is too poor to pay the premiums, he or she should go to the local government office and tell an official. The only real way to get out of the system and still have insurance is to qualify for welfare. Other than that, in principle everyone has to pay. Some local governments have a system wherein someone who has not paid because of financial difficulties but needs medical care can pay the full amount of that care up front and receive at least partial reimbursement later, but those are exceptional cases.

As society ages, medical costs are rising dramatically; and now Kokuho also includes nursing care insurance (kaigo hoken) if you’re over 40 and “support money” (shienkin) to pay the insurance of citizens over the age of 75. Moreover, because of the ongoing recession and the resulting injection of the marginally employed and unemployed into the Kokuho roles, the percentage who pay their due premiums is going down — about 88 percent nationwide in 2009 — so local governments are cracking down on health insurance scofflaws. The local goverments who answered Asahi’s survey reported 3,429 cases of property seizures for failure to pay premiums in 2006. This number rose to 17,020 in 2010. The reason is to “maintain the system” and “equalize the burden.” The top ten cities in terms of seizures were Yokohama with 2,913, Fukuoka with 1,745, and Nagoya with 1,254. Among the assets seized, 50 percent were savings accounts of some type, 22 percent insurance policies, and 15 percent real estate. The total amounts seized by 36 of the local governments in 2010 was ¥9.13 billion, an increase over the amount seized in 2006 by a factor of 4.6.

It isn’t as if a local government goon suddenly appears at your house and asks for you bank book. Local governments typically send a number of notices by mail and if no response is forthcoming they send an officer to the address of the non-payer to discuss options. Seizure of assets is a last resort. Some local governments, however, have resisted the trend. Tokyo’s Chuo Ward, for instance, has not carried out any property seizures, saying that doing so would only make the financial situation of the scofflaw that much worse. Some local governments draw the line on seizures at certain assets. For instance, they may avoid seizing special “insurance” accounts for children’s education purposes.

Many local governments are asking the central government to contribute more tax money to their Kokuho coffers, the idea being that health care is guaranteed by the central government and people at the bottom are being asked to pay a larger burden relative to their ability to do so. A 64-year-old taxi driver in Osaka had some of his savings seized because he hadn’t paid his ¥130,000 yearly premium. His annual income, which includes a small pension, is ¥800,000, with which he supports two other people. Since he is a diabetic, he needs his insurance, but the main point is that even if you never use your national health insurance you still have to pay for it. In that regard, “insurance” is an imprecise term for the system. It is basically a tax: You cannot opt out.

This aspect was brought home to us after our recent move. The local government of the city we now live in charges more for Kokuho than did Arakawa Ward in Tokyo, where we used to live. The reasons are demographic: A smaller population and thus smaller tax base combined with a higher percentage of older people. As it turns out we will have to pay in 2011 almost 20 percent of our adjusted 2010 income for national health insurance, after paying 10 percent of that income in national income tax and another 20 percent in local income tax. It’s not as if we made a lot of money last year, either. Our income has been dropping steadily since 2008. But except for semi-annual dental checkups, we haven’t used our health insurance for any medical purpose since 2006. In Japan, it doesn’t pay to be healthy.

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4 Responses

  1. Philip, the city that I live in routinely sends a small gift if you go a whole fiscal year without using your health insurance card. For example, one year I got a set of locally made bath towels. Another year I was sent a hanko-pen, with my name carefully engraved in katakana! Have you ever gotten anything like that? Although I’m happy to receive these gifts, I’d be much happier to get a cash-back reward. It doesn’t seem fair that I get penalised for staying healthy. Most of the Japanese people I know say the same thing.

  2. I’ve never received a present for not using my insurance, but back in the 90s I remember that if you paid your premium all at one time rather than in monthly installments, you could get a small discount. These sort of things–the presents, the discounts–are designed to make Kokuho seem more like “insurance,” rather than like the tax it really is. And actually I have no problem with calling health care contributions a tax, but then it should actually be incorporated into the income or other conventional tax and made truly universal. The main problem with Kokuho is that you could pay your fair share for 25 or 30 years without ever using it and then, due to a serious financial setback such as losing your job, you can’t pay and lose it completely. Those 25 or 30 years count for absolutely nothing once you miss a few months.

  3. (Speaking of taxes, make sure that you are getting *all* your deductions. Every little bit helps. GaijinTax.Com)

  4. How does this work when companies, typically eikaiwa, refuse to put their workers on Shakai Kenko Hoken and fail to inform their employees about Kokumin Kenko Hoken while pushing for them to join the cheaper (and sometimes dubious) travel insurance schemes out there? I was unaware of Japan’s health insurance rules my first year or two here (and the Ward Office mentioned nothing about the need to have it). Back home, if a company supplies you are lucky and don’t really ask too many questions. At the time, any hospital visits that didn’t exceed ¥50,000 were almost entirely compensated, so I didn’t think anything of it. Afterward, I learned about the scam and then found out that I’d owe almost ¥2 million for the previous years when I should have been on the systems in place in Japan, despite my company taking money out for another insurance company. Flash forward a few years when I had to update my visa and gaijin card and the ward office staff asked for proof of Kokumin or Shakai Kenko Hoken. Then, I pulled out the contract my company gave me (and was even given to immigration for verification) and pointed out the section that prohibited me from enrolling. The staff said nothing and walked away. A year later, I thought about changing jobs and brought up insurance with the company and the company said, “there are no such rules and any travel insurance is perfectly acceptable.
    In all honesty, if they’d drop the backpay, individuals like myself would enroll in the system. My friend just went through a similar situation. I am not sure how many warning he received, but his savings account was suddenly drained to cover part of the backpay. But that is another story.

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