On Geographic Inequality in Japanese Regional Health Insurance

Transcription

1 On Geographc Inequalty n Japanese Regonal Health Insurance Narmasa KUMAGAI Faculty of Economcs Knk Unversty 10 February 2010 Abstract In Japan, economc stagnaton due to the lack of aggregate demand has ht the regonal health nsurance system and ths affects most retred pensoners. The fscal state of nsurers n rural areas deterorated. Ths paper ams to nvestgate whether the regonal dspartes n medcal leves per household make a contrbuton to ncome-related geographc nequaltes n health care fnancng. Data of the central two regons of the Japanese Natonal Health Insurance n 2005 were extracted. Ther share of populaton was about 41.5 percent. Retred employees and self-employed ndvduals are covered by ths nsurance system. We conducted the geographc decomposton usng the concentraton ndex. The wthn-area nequalty n medcal leves manly accounted for geographc nequalty n medcal leves per household. The hypothess that there was no between-area nequalty n medcal leves was not rejected. We revealed the dfferences n the wthn-area nequalty n medcal leves n the central Kanto. Ths means such proportonalty was not bult nto the NHI system through near constant contrbuton rates across the dstrbuton of lvng standards. It can be consdered that the dfferences n the wthn-area nequalty were caused by the nequalty n ncome per household and the multpler of ncome leves. We found that ncome per household, the standard land prce of resdental dstrcts and the sze of an nsurer are major determnants of the multpler of ncome leves. The hgher land prce tends to greater the multpler of ncome leves. The expanson of nsurer s sze ncreases the multpler of ncome leves n most of dstrcts. The nequalty n the multpler of ncome leves wll reduce f local governments rase per-household levy n proporton to the sze of an nsurer and lower the multpler of ncome levy. Keywords: Decomposton, Inequalty, Japan, Medcal Leves, Natonal Health Insurance 1 Introducton Japan has an advanced socal nsurance system coverng the entre populaton and famly allowances for old age, for dsabltes, sckness and maternty, work njures, and unemployment (USDHH 2000). But, because of tghtenng budgetary constrants, benefts are lkely to be reduced even as contrbutons rse. Total government debt was 170 percent of GDP at the end of Ths s the hghest n the ndustralzed world, and twce what t was twelve years ago. Unless fscal polcy s tghtened ths rato could rse to 200 percent by the end of The Mnstry of Health and Welfare (MHW 2000) reported gloomy prospects for the socal securty system. Socal securty pay-outs by the government wll nearly trple by fscal 2025 to 207 trllon yen based on the projected rate of beneft growth of the past decade. The mnstry calculated that the - 1 -

2 Natonal health care expendtures (NHE) accounted for about 9.11 percent of natonal ncome (NI) n The rse n ths rato durng the decade rased concerns that health care costs were out of control. After 1991 the Japanese economy declned sharply, whle NHE ncreased at an annual rate of 4.9 percent compared to 0.46 percent for NI for the perod From 1987 to 1991, NHE grew at about the same rate as NI, so the rato of NHE to NI remaned below 6.5 percent. Ikegam and Campbell (2004) ponted out that economc stagnaton has ht the Natonal Health Insurance (NHI) system, whch covers most retred pensoners, n two ways. 2 Frst, declnng ncomes have meant that worker s premum contrbuton rates have had to be rased. Second, the fscal state of NHI has become even more precarous as lad-off workers wth low ncomes have enrolled and as more people have been unable to pay premums. For NHI, t s well known that the premum n the most expensve muncpalty s fve tmes that of the least expensve muncpalty. The dstrbuton of ncome and health can be altered by changng medcal leves to health nsurers under a stuaton of economc stagnaton. % Change rate n NI Change rate n NHE Fgure 1. Trends n Natonal Income and Natonal Health Care Expendtures Prevous studes have shown horzontal nequty n health care utlzaton n Japan (Endo and Shnozak 2003, Ohkusa and Honda 2003, Kumaga 2007, O Donnell et al. 2008). 3 O Donnell et al. (2008) estmated the Kakwan ndces of 13 Asan terrtores and concluded that socal nsurance s slghtly regressve and drect payments are regressve. Ther results for Japan were derved from the 1998 Comprehensve Survey of Lvng Condtons, whch covered the whole populaton. consumpton tax of 5 percent would have to be ncreased to percent to cover the 100 trllon yen needed for basc benefts a quarter century down the road. 2 They paraphrased NHI as Ctzens Health Insurance. 3 Kumaga (2007) found that the muncpal subsdy showed almost horzontal equty for npatents wth a cerebrovascular dsease. Based on estmaton results of censored regresson, Kumaga (2007) concluded that muncpaltes can gan hosptal revenues by rasng the utlzaton of beds slghtly and then reduce the muncpal subsdy

3 However, they dd not analyze dspartes n the Japanese regonal health nsurance system. It s beleved that wealther s healther. But, are the dstrbutons of medcal leves to health nsurers proportonal to the nsured s health? A purpose of ths study s to examne the regonal dspartes n medcal leves to health nsurers contrbutng to ncome-related nequaltes n health care fnancng. Prevous studes have not revealed the extent of wthn-area ncome-related nequalty n medcal leves. Ths paper presents the frst research to nvestgate the characterstcs of Japanese Natonal Health Insurance from the vewpont of geographc nequalty n health care fnancng. The structure of ths paper s as follows. In Secton 2, Japanese health nsurance system s brefly summarzed and recent changes to premum rates set that reflect dfferences n health care expendtures among prefectures are shown. Secton 3 presents emprcal results usng concentraton ndex. We analyze the determnants of the nequalty n medcal leves per household and consder local government s health polcy to reduce ncome-related nequalty n health care fnancng. Secton 4 offers a concluson. 2 Health Care Fnancng and Health Insurance System n Japan Japan has a polcy of unversal health care and Japanese publc health nsurance covers the entre populaton. The compulsory health nsurance system wth ncome-based premums has been unversal snce 1961 and s organzed on an occupatonal-based system or regonal-based (muncpalty-based) system. Socal nsurance schemes and taxaton consttute the man sources of health fundng n Japan. Approxmately half of the NHE are fnanced by health nsurance plans and the remanders are fnanced by subsdes from the government, co-payments, and other out-of-pocket expenses (See Fgure 2 and Table 1). Medcal servces n Japan can be accessed freely and patents can vst medcal nsttutons of ther choce at any tme. Payments for medcal treatment are based on the medcal and techncal servce fee. 4 Rembursements to health care provders are unform across regons wth lttle concern for dfferences n type of faclty or severty of llness because the government sets the fee schedule and drug prces. Many people n Japan obtan nsurance va employer-related groups. For example, employees of large companes and ther dependent famly members enroll n plans for whch occupaton-based cooperatves are the nsurers. Insurance socetes or mutual ad socetes are establshed wthn ndustres. Most employer-group plans requre copayments for dependents. These plans also have a catastrophc cap feature that lmts monthly out-of-pocket expenses. 5 Japanese publc health nsurance systems are classfed roughly nto [1] nsurance for employees and ther dependents, [2] nsurance for the self-employed, retrees and ther dependents, and [3] nsurance for the elderly. 4 The fee schedule s decded through key bennal negotatons between nsures and provders, and that forum -the Central Socal Insurance Medcal Care Councl (Chukyo) - has provded a mechansm for dealng wth many recurrng ssues n a routnzed way wth very restrcted partcpaton. Proof of nsurance s submtted when recevng health care and medcal compensaton s decded after the Mnstry of Health, Labour and Welfare consults wth the Chukyo. 5 When the monthly out-of-pocket amount was hgher than the celng, the excess amount was pad back to the patent from nsurance funds. A celng on patent cost-sharng was ntroduced for the frst tme n

4 The frst type of nsurance s Employee s Health Insurance, whch conssts of Government-managed Health Insurance (GHI), Socety-managed Health Insurance (SHI), Mutual Ad Assocatons (MAA), and Seamen s Insurance (SI). MAA ncludes natonal and local publc employees, and prvate school teachers and staff members. Self-employed ndvduals, farmers, and retred employees enroll n Natonal Health Insurance (NHI) for whch muncpaltes are the nsurers. In general, an employee and hs/her dependents are covered by a regonal-based system after hs/her retrement. The system s not an ndependent health nsurance system for the retrees but s a fnancal support system for physcan vsts wth small copayments at the tme of a medcal servce s provded. Employees' Insurance contrbutes to NHI to cover retred employees. For most NHI nsurers, the premum s supplemented by subsdes from natonal and local governments. Insured persons [2] Provson of Health Servces [1] Insurance contrbutons [8] Notfcaton of health expendtures Mnstry of Health, Labor and Welfare Supervson Prefectures Central Socal Insurance Medcal Councl Fee Schedule Hosptals and Physcans [7] Fee Payments [3] Patent cost-sharng Sckness funds [5] Sendng [4] Fee Clams the [6] Payments of the blls examned blls Socal Insurance Medcal Fee Payment Fund, Federaton of Natonal Health Insurance Assocaton Fgure 2. Flow of Funds n the Japanese Health Care System GHI ncludes workers employed by small and medum-szed companes. The nsurer of GHI was the natonal government as of September The GHI receved around 8.3 percent of the nsured s monthly ncome durng the last two decades, evenly splt between employer and employee. Because of regonal dfferences n respectve health care expendtures, the partcpaton of the prefectures, whch are responsble for health care systems, s needed to control health care expendtures n a systematc manner. To promote prefectural ntegraton, GHI became a publc corporaton of the Japan Health Insurance Assocaton n October It s able to set premum rates that reflect the relevant health care expendtures of the dfferent prefectures, as well as offer health servces accordng to the actual stuaton n the respectve regon. In SHI, large frms organze ther own nsurance group. The contrbutons to SHI are ncome-related. It s set as a percentage of monthly remuneraton. The legslaton requres the contrbutons of employers and employees to be shared equally. The proporton of the share can be changed by agreement. Casual and Part-tme employees and most of dspatched workers are excluded from socety membershp and have to be covered by the other type of publc health nsurance unless ther workng hours exceed three quarters of regular workers. Those ndvduals who are not enrolled through ther

5 job must enroll n the NHI Program through the government offce n the cty, town, or vllage n whch they lve. Insures are lnked to a person s employer, occupaton, or geographc locaton, and each nsurer operates a dfferent scheme. People are assgned to one or other scheme dependng on ther occupaton or place of resdence. Table 1. Outlne of Health Insurance System n Japan (As of March 2007) Insured Persons Employer-based health nsurance Government managed Manly employees at small and medum-szed companes Socety managed Manly employees at large companes Mutual Ad Assocatons Natonal and local publc servce employees, and Prvate school teachers and staff members Natonal Health Insurance Farmers, selfemployed, and so on Long lfe medcal care system Persons aged 75 and over as well as dsabled persons aged Insurer Number of subscrbers (Total, Insured, Dependents) 1000 people Populaton Covered (%, 127.3mllon people) Partal cost-sharng (%) Natonal Government 35938, 19501, Health nsurance socetes: , 15456, Muncpaltes: Mutual ad 1818, NHI assocatons: 76 assocatons: (21, 54, 1) , 4399, (Muncpaltes: 47380) 28.2% 23.9% 7.4% 40.3% 30% (After enterng school age to 69 years old), 20% (Before enterng school age), 20% (People aged 70 to 74, 30% for those earnng full salares) Long lfe medcal care partal-affars assocaton (FY2008 estmate) 10% (30% for those earnng full salares) Premum rate (%) 8.2% % Government subsdy 13% of beneft costs Fxed amount None Muncpaltes: 43% of beneft costs, NHI assocatons: 32-55% beneft costs Support coverage 40%, Publc fund 50% (Natonal: Prefecture: Muncpalty = 4:1:1) Note: The arrow mples that the transton of the elderly from NHI to Long lfe medcal care system. Source: Whte Paper on Health, Labour and Welfare 2009 Edton. Table 1 shows that the outlne of the health nsurance system n Japan. For smplcty, t excludes SI. The rate of subscrbers n NHI s almost 40 percent (the - 5 -

6 hghest) and the rate of government subsdy for muncpaltes s almost 43 percent of beneft costs. 6 The NHI account s under fnancal pressure as most of the nsured are elderly. NHI fscal revenues are prmarly derved from nsurance premums and the central government subsdy, although money s transferred from employer-based nsurance to NHI to help cover the costs of retred employees. The focus of reformng health nsurance for the elderly s always to provde approprate nursng and care servces, as well as health servces, and ensure the long-term stablty of the system (Fukawa 2002). 3 Emprcal Analyses Ima (2002) argued that uneven geographcal dstrbuton of resources and treatments largely reflects dfferent needs n dfferent prefectures, because there are good correlatons between need and access rates varously measured,.e., doctors and beds per capta, consultatons and admssons per capta, and health expendture per capta f the crude mortalty rate of each prefecture s taken as a proxy for the need for healthcare. 7 In ths secton, we examne the regonal dfferences n medcal leves because prevous studes have not revealed the ncome-related geographc nequalty n medcal leves Data As the level of geographc aggregaton nfluences the extent to whch ncome nequaltes exst, the choce of the level of analyss (country, state, county, urban versus rural, census tract, block level) wll nfluence conclusons about the dstrbuton of ll health (Starfeld 2006). We use data for each muncpalty, because a local government bascally calculates NHI premums for a gven year by estmatng the expected cost of health care per member of the muncpalty. Insurance premums are pad monthly under NHI. The per capta levy s reduced by 70 percent or 50 percent when the nsured person s annual ncome falls below a specfed amount. The maxmum annual premum for medcal nsurance s about AU$6600 (AU$=80yen). 70 percent of medcal treatment costs beng pad by the NHI Program, wth the remanng 30 percent pad by the nsured. Copayment rate of persons under 3 years of age s 20 percent, and 10 percent or 30 percent for persons 70 years or older. 6 In 1982, the Health Care System for the Elderly (HCSE) was establshed. Elderly was defned as aged 70 and over n the 1990s. The defnton of the elderly changed n the 2000s. Snce October 2002, the mnmum elgblty age has been ncreased by one year each year and contnued to rse untl t reached 75 n October Senors aged 75 and older enrol n HCSE and receve benefts through contrbutons from other nsurance plans. It s well known that one of the major causes of the fnancal dffcultes of health nsurers s the Contrbuton for the HCSE (Senkn), whch s mposed on nsurers to fnance the health care expendtures of the elderly. 7 Good correlatons among health varables do not mply horzontal equty n health. Kumaga (2009) nvestgated the relatonshps among the need for npatent care, the amount of npatent care servces provded, and money transfers to Japanese muncpal hosptals n the Kansa regon from the vewpont of vertcal equty. It was found that allotments (muncpal subsdy) showed vertcal nequty n the number of npatents per day after takng nto account the overall socal welfare regardng the dstrbuton of allotments

7 A porton of health care costs s leved on the tax base as medcal nsurance. Income levy s determned accordng to household ncome. 8 Asset levy s excluded n many large ctes and per-household levy s excluded n some ctes. In such a settng, contrbuton rates are fxed by law, and the rsk profle and per capta revenue depend on the profle of the scheme s members. 9 It s hghly lkely n ths scenaro that the beneft package dffers across schemes, wth low-ncome hgh-rsk schemes beng unable to offer a very generous package, and hgh-ncome low-rsk schemes beng able to offer a more generous package (Wagstaff 2009). Natonal Health Insurance Premum=Medcal Insurance + Long-term (Nursng) Care Insurance Medcal Insurance = Income Levy (or Taxes from ncome) + Asset Levy (or Taxes from fxed asset) + Poll taxes Poll taxes=per-capta Levy (nsured persons) + Per-Household Levy Table 2. Characterstcs of Health Varables Kansa SMRs Income Medcal Leves Kanto SMRs Income Medcal Leves Osaka Tokyo (11.7) ( ) ( ) (16.5) ( ) ( ) Hyogo Kanagawa (7.5) ( ) ( ) (11.8) ( ) ( ) Nara Satama (9.2) ( ) ( ) (8.9) ( ) ( ) Kyoto Chba (10.7) ( ) ( ) (9.2) ( ) ( ) Total Total (9.9) ( ) ( ) (12.0) ( ) Note: Standard devatons are shown n the parentheses. ( ) Data of the central two regons of the Japanese Natonal Health Insurance n 2005 were extracted. The total number of muncpaltes n the central Kansa was 149 (Osaka 43, Hyogo 41, Nara 39, and Kyoto 26) and the total populaton was about mllon (Osaka 8.82, Hyogo 5.59, Nara 1.42, and Kyoto 2.65). Ther share of muncpaltes was about 8.2 percent and ther share of populaton was about 14.5 percent n the end of FY2005. The total number of muncpaltes n the central Kanto was 223 (Tokyo 62, Kanagawa 35, Satama 70, and Chba 56) and the total populaton was about mllon (Tokyo 12.57, Kanagawa 8.79, Satama 7.05, and Chba 6.06). Ther share of muncpaltes was about 12.3 percent and ther share of populaton was about 27.0 percent n the end of FY2005. Table 2 summarzes both mean and standard devaton of health varables n the central two regons. We can read the dfference n male Standardzed Mortalty 8 If a porton of health care costs were leved as medcal nsurance, the burden of medcal nsurance would be regressve to lower ncome people. Ths requres a reducton of the per capta levy. 9 By 2008, about 21% of households that were covered by NHI faled to pay the premum. It s mportant to reduce ths share by mprovng complance

8 Ratos (SMRs) among prefectures and must doubt that wealther s healther because a hgher ncome does not necessarly mply lower need for health care. It s noted that the standard devaton of medcal leves n Nara prefecture was the largest and the magntude was about 18.9 percent of the mean. Medcal leves n Nara prefecture have a heavy-taled dstrbuton. Income per household (actual taxable ncome per household) was used as the lvng standards varable and male SMRs as the representatve ndcator of the need for health care of the elderly. The varance of male SMRs s larger than that of female SMRs. Actual taxable ncome per household s derved from Equaton 1. Ths calculaton s bascally after the procedure of Kadota et al. (1989). It s noted that medcal levy per household n Equaton 1 ncludes the unpad rate of contrbuton to NHI n each muncpalty. The exstence of ths varable dffers from Kadota et al. (1989). The medcal levy per household s the product of the assessment based on ncome per household and the nverse of (1-unpad rate). The multpler of ncome levy s the rato of assessment based on ncome to total assessment. Income per household =medcal levy per household the multpler of ncome levy /ncome tax rate the number of households (1) Unpad rate= the amount of unpad leves / total medcal leves n the prevous perod Each nsurer operates dfferent schemes and has a dfferent ncome tax rate. However, some of the seres of ncome tax rates are rectfed when muncpaltes merged and a proxy varable does not exst. Therefore, ncome tax rate n all muncpaltes s 0.1, whch s consdered to be n the neghborhood of the mean ncome tax rate. For the muncpaltes merged n 2005, we cannot make weghted seres of the multpler of ncome leves because the seres of the number of households n prevous muncpaltes are not publcly reported. We used the multpler of ncome levy of the muncpalty wth the largest nsured households n the prevous regon as the representatve varable of the muncpalty merged Geographc Decomposton of the Concentraton Index Lower ncome groups generally have poorer health status and therefore hgher needs for health care. We expect medcal leves are concentrated more among the poor households. These nequaltes can be measured usng the concentraton ndex, equal to twce the area between the lne of equalty and the concentraton curve (See Fgure 3, L(s)). A concentraton curve plots the cumulatve proporton of the health varable n queston aganst the cumulatve proporton of the populaton (from low ncome to hgh ncome). The health concentraton ndex s defned as twce the area between the concentraton curve and the dagonal, and s bounded by -1 and 1. The larger the ndex s n the absolute sze, the greater the degree of nequalty. When t s negatve, t ndcates that health varable n queston s concentrated more among the poor (pro-poor nequalty). When t s postve, t ndcates pro-rch nequalty. We examne the regonal dspartes n medcal leves to health nsurers contrbutng to ncome-related nequaltes n health care fnancng. Followng - 8 -

9 Wagstaff (2005), we can wrte Equaton 2 by analogy wth the geographc decomposton. N C = CB + α C + R (2) =1 where C s the concentraton ndex calculated on the full sample, C B s the between-areas concentraton ndex. α s the th area s populaton share, C s the concentraton ndex of the th area, and R s a rerankng term. 10 C B s computed by assgnng all households n a gven area the mean value of health varable n that area, lnng up areas by ther mean per household ncome, and computng the correspondng concentraton ndex for health varable. C ndcates the extent of ncome-related nequalty n health varable n th area. The weghted sum of these N concentraton ndces captures the fact that wthn areas the poor systematcally have smaller or larger values of health varable. Because the magntude of R depends on both the extent of rerankng n the move from wthn-area concentraton curve to the concentraton curve of health varable n queston and the sze of the covarance between ncome and heath varable, R s a mxture of wthn-area and between-area ncome-related nequalty n health varable. Fgure 3. Concentraton Curve Both h and nequalty n health care fnancng. When b n Equaton 3 are varables concerned when we analyze the h s medcal levy per household and s ncome per household, the OLS estmate of β n Equaton 3 represents the extent of nequalty n health care fnancng. b h h b b 2 2 σ R[ ] * * = δ + βr + u (3) 10 We do not take nto account the share of health varable such as the th area s physcan share

10 where 2 R the fractonal rank by ncome per household, σ R ts varance, δ the constant term, u error term, * h the mean of h and * b the mean of Table 3 summarzes the results of geographc decomposton of the health concentraton ndex. Table 4 shows the estmates of wthn-area nequalty n health and health care fnancng. They are Newey-West estmates that modfed the seral correlaton n Equaton 3 (Wagstaff and Doorslaer 2000). The value of C of n Table 3 ndcates that there were subject to a pro-poor dstrbuton of health care fnancng n the central Kansa. In the central Kanto, there were subject to a pro-poor dstrbuton of health care fnancng, too. Table 3 mples that the wthn-area nequalty n medcal leves manly accounted for geographc nequalty n medcal leves per household (0.837=0.072/0.086, 1.253=0.089/0.071). For both regons, the hypothess that there was no between-area nequalty n medcal leves was not rejected. The dfference n sgn of R was caused by the extent of the nequalty n the prefecture wth the largest proporton of households. By comparson between the estmates of Osaka prefecture and that of Tokyo metropols, we can confrm t (See Table 4, Ins-I). Table 3. Geographc Decomposton of the Health Concentraton Index Kansa Needs-I Ins-I Kanto Needs-I Ins-I C C (-16.28) (-23.90) (-14.71) (-11.32) α C α C C B C B (1.36) (0.98) (-4.82) (1.08) R R Note: T-values are n the parentheses. Ins means medcal leves per household. b. Table 4. Wthn-Area Inequalty n Health and Health Care Fnancng Household Proporton Needs-I Ins-I Kansa Osaka Hyogo Nara Kyoto Kanto Tokyo Kanagawa Satama Chba Note: Ins means medcal leves per household. All estmates are statstcally sgnfcant

11 We can fnd the value of of the dfferences n the wthn-area nequalty n medcal leves n the central Kanto. 11 On the contrary, there were lttle dfferences n the wthn-area nequalty n medcal leves n the central Kansa although there were large dfferences n the wthn-area nequalty n health (See Table4, Needs-I). It can be consdered that the followng two factors caused the dfferences n the wthn-area nequalty n health care fnancng. Frst, there are large dfferences n nequalty n ncome per household among prefectures. Table 5 shows that the nequalty n ncome per household n Tokyo metropols was the largest. 12 Second, the multpler of ncome leves n the central Kanto s relatvely hgher than that of the central Kansa. The weghted average of the multpler of ncome leves n the central Kanto and that n the central Kansa are and 0.578, respectvely. The number of households was used as the weght varable. Table 5 also presents that the regonal dfferences n the nequalty n medcal leves per household were manly derved from ncome-related nequalty per household. However, we should notce that the proporton of the nequalty n the nverse of the multpler of ncome leves to the nequalty n medcal leves per household (B/A). We can see that the proporton n Nara prefecture was the smallest among the eght prefectures. It may ndcate that the nequalty n the multpler of ncome leves n Nara prefecture was the largest. Nara prefecture does not have large cty and the proporton of households whose payment of premum was reduced n Nara prefecture s hgher than that of the other prefectures. Increasng ths proporton tends to decrease the multpler of ncome levy. Table 5. Inequalty n Medcal Leves Osaka Hyogo Nara Kyoto Medcal leves per household (A) Income per household The nverse of the multpler of ncome leves (B) B/A Tokyo Kanagawa Satama Chba Medcal leves per household (A) Income per household The nverse of the multpler of ncome leves (B) B/A When we examne the nequalty n the multpler of ncome leves, land prce should be taken nto consderaton. Because the coeffcents of correlaton between 11 There were regonal dfferences n medcal leves to health nsurers from the vew pont of geographc nequalty. Ths means such proportonalty was not bult nto the NHI system through near constant contrbuton rates across the dstrbuton of lvng standards. 12 Followng the procedure of Cheng and L (2006), a decomposton of medcal leves was conducted. We obtan the followng relatonshp; Inequalty n medcal leves = Inequalty n ncome per household + Inequalty n the nverse of the multpler of ncome leves + Resdual. Thel s crteron s composed of n weght of the regon, µ mean of medcal leves and z medcal leves of th regon. Democratc weght ( 1 N ) was used. = N µ T ( Z) n ln( ) z = 1

12 the multpler of the asset leves and the multpler of ncome leves were negatve except Chba prefecture, we use the data of the standard land prce of resdental dstrcts n each regon to analyze the determnants of the multpler of ncome leves. 13 The standard land prces of resdental dstrcts were not publcly reported n some muncpaltes n We can use the data of 288 dstrcts from the Survey of Land Prce by Mnstry of Land, Infrastructure and Transport. 14 By Weghted Least Squares regresson for correctng the heteroscedastcty, we estmated three regresson equatons. The results of estmaton are summarzed n Table 6. As the results of Breusch-Pagan-Godfrey test, we could not reject the null hypothess of no heteroscedastcty at the 5 percent sgnfcance level. Ths mples that the standard errors of the parameter estmates were correct. 15 For type A and type B equatons, the natural logarthm of the number of the households was used as the weght varable. For type C equaton, the natural logarthm of the number of the enrolment rate of NHI was used as the weght varable. Dependent varable s the natural logarthm of the multpler of ncome leves. Table 6. Determnants of the Multpler of Income leves ln(multpler of Income Leves) A B C Intercept (-15.84) (-17.11) (-14.36) ln(enrolment rateof NHI) 0.15 (3.72) ln(age65/pop) 0.09 (2.65) 1/ln(Land Prce) (-12.85) (-12.26) (-8.07) ln(income) (19.97) (19.39) (21.16) ln(number of Households) (-4.45) ln(number of Households) (5.00) Adjusted R Probablty F-statstc [BPG] Note) Weght: ln(number of Households) [A][B], ln(enrolment rate of NHI) [C] BPG: Breusch-Pagan-Godfrey test (Heteroscedastcty test) Table 6 shows that the elastcty of ncome per household was almost the same among three equatons and the ftness of type C equaton s slghtly better than the other equatons. Usng the quadratc term of the number of households, type C equaton explaned the effect of the ncrease n the number of households. We therefore gve an economc nterpretaton on type C equaton. The quadratc 13 The coeffcents of correlaton between the two varables were less than -0.7 n prefectures wth large populaton (Tokyo -0.72, Osaka -0.75). 14 We could not obtan the data of all 43 muncpaltes n Osaka prefecture. 15 We reject the hypothess of no heteroscedastcty f the ndependent varables are jontly sgnfcant

13 functon of the number of households took the mnmum value where the natural logarthm of the number of households was 8.455, whch locates n the lower 30 percent of the dstrbuton of 288 dstrcts. 16 It suggests that the expanson of nsurer s sze ncreases the multpler of ncome leves n most of dstrcts. The seres of the multpler of ncome leves were nverse proportonal to the standard land prces of resdental dstrcts. The elastcty of the nverse of the standard land prce s less than -7. The estmate ndcates that the hgher land prce tends to greater the multpler of ncome leves. It was found that the sze of an nsurer and the standard land prce of resdental dstrcts are major determnants of the multpler of ncome leves. In a prefecture where the nequalty n the multpler of ncome leves s large, what local governments should do? If local governments rase per-household levy n proporton to the sze of an nsurer and lower the multpler of ncome levy, the nequalty n the multpler of ncome leves wll reduce. On the contrary, f local governments am to reduce the regonal dfferences n contrbuton rates of the nsured, they should ntroduce the transfer system from the hgh-ncome low-rsk schemes to the low-ncome hgh-rsk schemes. 4 Conclusons Ths paper nvestgated whether the regonal dspartes n medcal leves per household made a contrbuton to ncome-related geographc nequaltes n health care fnancng. Data of the central two regons of the Japanese Natonal Health Insurance n 2005 were extracted. Ther share of muncpaltes was about 20.5 percent and ther share of populaton was about 41.5 percent n the end of FY2005. Retred employees and self-employed ndvduals are covered by ths nsurance system. We conducted the geographc decomposton usng the concentraton ndex. The wthn-area nequalty n medcal leves manly accounted for geographc nequalty n medcal leves per household. For both regons, the hypothess that there was no between-area nequalty n medcal leves was not rejected. We revealed the dfferences n the wthn-area nequalty n medcal leves n the central Kanto. Ths means such proportonalty was not bult nto the NHI system through near constant contrbuton rates across the dstrbuton of lvng standards. It can be consdered that the dfferences n the wthn-area nequalty were caused by the nequalty n ncome per household and the multpler of ncome leves. Because the coeffcents of correlaton between the multpler of the asset leves and the multpler of ncome leves were negatve except Chba prefecture, we used the data of the standard land prce of resdental dstrcts n each regon. As the results of the estmaton by Weghted Least Squares regresson, we found that the standard land prce of resdental dstrcts and the sze of an nsurer are major determnants of the multpler of ncome leves. The hgher land prce tends to greater the multpler of ncome leves. The expanson of nsurer s sze ncreases the multpler of ncome leves n most of dstrcts. The nequalty n the multpler of ncome leves wll reduce f local governments rase per-household levy n proporton to the sze of an nsurer and lower the multpler of ncome levy. 16 Exp (ln8.455) =4697. Mean and medan of the number of households were and 11337, respectvely

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