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I Social Security Systems Throughout the World

1. Social Security Systems in European Countries

(1) France

(Population: 58.93 million; Total area: 552,000 km2; Aging rate: 20.4%; Total fertility rate: 1.75; 1 franc = 20 yen)

* The population is estimate as of 1998, the aging rate and total fertility rate are as of 1998, and the exchange rate is as of the end of March 1999.

1. An Overview of the Social Security System

The social security system in France is mainly divided into two categories: the social insurance system (assurance sociale) and the social assistance system (aide sociale).

The social insurance system, which is funded through premiums, is divided into several areas including: sickness insurance, old-age insurance and family allowance. Further, the social insurance system is very complicated since it is divided into many subsystems according to the workplace. The general system for employed workers in the private sector has the highest number of participants and is a typical system. Because the subsystems are independent from each other, financial adjustments have been made for sickness insurance, old-age insurance and family allowance across the subsystems since 1975 to correct the demographic imbalance among the subsystems. Coverage of the social insurance system has been expanding for dissemination after the World War II. Especially, a bill for sickness insurance was submitted to the Congress in March 1999 to apply universally the insurance to the French or foreign people constantly living in France.

An Overview of the French Social Security System

An Overview of the French Social Security System

On the other hand, the social assistance system is a complementary system to relieve the elderly, people with disabilities, and children that are not subject to be covered by social insurance system. The social assistance system consists of medical aid, aid for the elderly, disabled, and family and children. There is restriction imposed on the maximum income to be qualified for receiving the benefits because the system is funded through tax.

(1) Sickness Insurance System

Benefits are usually paid as reimbursement to the out-of-pocket payments by the patient, but are paid directly to medical institutions in the case of hospitalization, etc. The rate of reimbursement differs depending on the medical treatment, but is usually 70% for outpatient visits (65% for common drugs).

Various measures have been taken to reduce the health expenditure, such as the introduction of the global budget system (1984) and a reduction in the rate of reimbursement.

(2) Old-Age (Pension) Insurance System

In the case of the general system, the amount of the full pension is 50% of the average of the highest sixteen years' wages (as of 1999: this is to be increased to twenty-five years' wages by 2008), of which maximum limit is 50% of the maximum contributions. When supplementary pension is added to this amount, the pension is about 50 to 70% of the wage prior to the retirement. Though the pensionable age used to be 65, it was lowered to 60 as a measure for young unemployed workers in 1983.

(3) Welfare Policy for Children

A variety of family allowances are established as one of social insurance benefits in the social security system. They are mainly classified into two categories; family and maternity allowance (within the Family Allowance National Treasury (CNAF)'s jurisdiction), and social assistance system for the people who do not participate to or the poor who are not subject to any social insurance.

The most important cash benefits in the family and maternity insurance system is the family allowance (les allocations familiales). It is paid to all households with two or more dependent children (687 francs per month for two children and 1,557 francs per month for three children, as of 1998. In the case of households with three or more children, an additional allowance is paid for children of eleven years of age and older). Backed up by continual deficit of CNAF, the Jospin Administration established in 1997 restricted the maximum income limit for families to be subject to the said family allowance in 1998. Nevertheless, in 1999, this policy was strongly criticized by public opinion and the allowance was again supplied regardless of the amount of income.

The Labor Code provides maternity leave as follows: sixteen weeks in total for the first and second child (six weeks prior to the expected delivery date and ten weeks after delivery); twenty-six weeks in total for the third child or thereafter (eight weeks prior to the expected delivery date and eighteen weeks after delivery); and some exceptions are admitted for twins.

Nursery care services, such as nurseries for children under three and nurseries for children under six, are available. Various forms of child care services are approved especially for nurseries, such as mini-nurseries, parents' joint nurseries and day mothers.

(4) Welfare Policy for the Elderly

Establishment of the Law of Long-term Care Allowance for the Elderly in January 1997 resulted in payment of special benefits for the care for the elderly. These benefits are, in principle, only for the French or foreign people constantly living in France of the age 60 and older with low income and suffering from serious symptoms that need care. These benefits are given as remuneration responding to an application to the care providers (except spouses and partners living with the said suffers). The costs for this social assistance system are paid by prefectural governments.

(5) Public Health Policies

Public health administration is managed by central government. The Ministry of Health, which centrally controls three divisions for health care activities, hospitals and pharmaceuticals, provides guidance to regional health service bureaus and medical care agencies in areas such as infectious disease prevention, care for pregnant women and infants, and medical care. Local governments have public medical institutions, as well as many health care centers dealing with medical and dental treatment. Some of these centers offer services including long-term care and day care for the elderly and coordination for in-home care.

(6) Sources of Revenue

The social insurance system is basically funded by premiums from workers and employers, with the latter paying more than the former. It was not supported by the National Treasury until 1991, when general social contribution was introduced to provide for an increase in the social security spending to meet the needs of an aging society. The general social contribution is a special-purpose tax based on the majority of personal income including employment income and income from assets (The contribution rate is 7.5% as of 1999.).

In January 1998, this contribution rate was increased to 7.5% (4.1% increase). However, the sickness insurance premiums were decreased to 0.75% (4.75% decrease).

Social Insurance Premium Rates in France @@@The Financial Status of Social Security (General system)

Social Insurance Premium Rates in France      The Financial Status of Social Security (General system)

2. Summary of Public Assistance System

In France, diverse policies to relieve the poor were developing based on the idea of solidarity. Major policies include the minimum livelihood assistance (RMI), consolidated elderly pension, and consolidated unemployment allowance (ASS). These are funded by the National Treasury.

(1) Minimum Livelihood Assistance (RMI)

RMI was established in 1988 for the people from the age 25 to 64 constantly living in France, suffering from poor livelihood and having willingness to work (it is necessary to register descriptions of social service activities). About one million people receive the RMI managed by CNAF.

As of 1999, the supplied amounts are 2,502.30 francs per month for single persons and 3,753.45 francs per month for married couples. In case of having dependents such as children, some additional amounts are supplied in proportion to the number of such dependents. If the applicant has any income, the amount of RMI is decreased pursuant to a certain conditions.

(2) Consolidated Elderly Pension (Minimum vieillesse)

It was established in 1984 for the people of the age 65 and older living in France having the income within the maximum annual income limit. They are not qualified to receive the pension when their income exceeds this maximum amount. In case of having any annual income, the amount of the income will be reduced from the supplied amount. About one million people receive this pension.

As of 1999, the maximum limit is 43,512 francs for single people, and 76,515 franc for married couples. The maximum supplied amount is 42,485 francs, and 76,215 francs for married couples.

(3) Consolidated Unemployment Allowance (ASS)

ASS was established in 1984 for the people having the experience of working at least five years for the past ten years and whose supply period of unemployment insurance has already passed. About 500 thousand people receive this allowance managed by the Unemployment Insurance Association (ASSEDIC).

As of 1999, the maximum limit for monthly supplied amount is 2,473 francs both for single people and married couples. Within the maximum income limit (5,769 francs for single persons, and 9,066 francs for married couple, per month, respectively), the balance of any other income is paid to receivers. If the receiver is the age 55 and older and has the working experience of at least twenty years, or the age 57.5 and older and has the working experience of at least ten years, or has the pension income for forty years, additional allowance of 1,079 francs is supplied.

3. Challenges of the Social Security System

In France, due to increase in social security expenditures, the social security reform is emerging to be an important political issue for the Administrations. Chronic cumulative deficit is getting improved as shown in the table 1 (6). The Jospin Administration maintains financial retrenchment for the social security system aiming at solving the deficit, while submitting a universal insurance bill to the Congress in order to expand the coverage of sickness insurance. Furthermore, the Jospin Administration also takes measures to promote computerization in medical care system including introduction of IC card system for certificates for insured persons.

As regards insurance system, baby boomers are going to receive pension at the beginning of the 21st century. Accordingly, it should be considered how to engage in reform, maintaining the imposition method most appropriate for inter-generation solidarity.

(2) Germany

(Population: 82.06 million; Total area: 357,000 km2; Aging rate: 15.7%; Total fertility rate: 1.30;DM 1 = 66 yen)

* The population is as of 1997, aging rate is as of 1996, the total fertility rate is as of 1996, and the exchange rate is as of the end of March 1999.

1. An Overview of the Social Security System

The social security system in Germany originates from the Bismarck's Sickness Insurance Law of 1883. Currently there are five social insurance programs, namely: pension insurance, medical insurance, workmen's accident compensation insurance, unemployment insurance and long-term care insurance, as well as child allowance and social assistance, etc.

(1) Pension Insurance

In the case of employees, factory workers (blue-collar workers) and office workers (white-collar workers) are basically obliged to join the factory workers' pension insurance and the office workers' pension insurance, respectively. The insurance premiums (19.5% from April 1999) are split equally between employers and employees in principle. Self-employed people who are not obliged to join such insurance plans may voluntarily join them.

An old-age pension is paid to those who are 65 and older in principle. As exceptions, there is a system to begin paying pension benefits earlier to those who contribute to the insurance for a long time, people with severe disabilities, women who meet certain requirements, and unemployed workers among other people. However, these exceptions are decided to be partially eliminated after 2000 (earlier than the schedule). The amount of pension has been revised according to the increase in the disposable income of all insured people. The ratio of pension to disposable income is about 70%. The gap in the pension level between the former West Germany and the former East Germany has been shrinking every year. The ratio in 1998 was about 10:8.6 for the standard pension.

(2) Medical Insurance

Public medical insurance programs are mainly divided into two programs, that is, the general program for factory workers, office workers, pension beneficiaries and students among others, and the farmers' sickness insurance program for self-employed farmers. The application of the general program is not mandatory for people whose income is over a certain level and for public service employees. So, unlike Japan, not everybody is covered by insurance. As of 1995, participants to the public medical insurance and their families accounted for about 90% of the total population.

Benefits include medical treatment benefits, preventive care benefits, medical rehabilitation benefits, and in-home nursing care benefits. Those benefits are in principle supplied in kind as well as cash benefits including injury allowance and maternity allowance. As for medical treatment benefits, the insurance generally provides 100% benefit in kind for both insured people and their families. In the case of hospitalization and medication, the insured may pay a part of these costs.

Public medical insurance programs are run under the principle of autonomy, and their insurers are sickness funds, which are public corporations. There are a total of 441 sickness funds including community sickness funds and corporate sickness funds (as of April 1998). Premium rates differ among sickness funds. The average premium rate of all the sickness funds as of October 1998 is 13.61%, which is equally divided by employers and employees.

(3) Long-Term Care Insurance

With the establishment of the long-term care insurance system in 1994, care benefits have been offered for in-home care services since April of 1995 and facility care services since July of 1996. The insurance premium is 1.7% after July of 1996, and these are split equally between employers and employees. The participants in public medical insurance are obliged to join long-term care funds in their sickness funds. Those who are not required to participate in public medical insurance and purchase private medical insurance are obliged to purchase private long-term care insurance. One can choose among benefits in kind, cash benefits, or a combination for the in-home care benefit. The benefit amount is determined depending on care needs. Care benefits are paid for facility care according to the care needs, but lodging expenses and food expenses are to be borne by the insured.

(4) Public Health Policies

Public health services are province-oriented in general. County and city health centers provide the following services: 1) prevention of infectious diseases, 2) monitoring of water and air quality, 3) monitoring of hospitals, pharmacies, etc. 4) monitoring of distribution of food, pharmaceuticals, etc., and 5) health management.

Medical institutions are classified into practitioners and hospitals. Practitioners correspond to clinics in Japan, consisting of general practitioners, specialized practitioners, and dental practitioners. Hospitals are classified into three types: 1) public hospitals managed by municipalities or provinces, 2) public welfare hospitals managed by non-profit corporations and religious organizations, and 3) private hospitals.

(5) Policies for Children and Families

To adjust the difference in burdens between families with children and those without children, people in Germany can choose between a child allowance (given, in principle, as a tax credit from the withholding of income tax) and a dependent children deduction system (deduction from taxable income). As a part of the overall improvement of policies for families started in January of 1996, drastic improvements in both systems were implemented, including raising the amount, age limit and income limit. Child allowances are provided for children under 18 regardless the income amount. In case of working less than nineteen hours a week to raise children, those people are qualified to receive the child care allowance during the period from the time the child is born to when the child reaches two years old (there are restrictions on income).

In case of calculating pension amount, a child care period is considered for evaluation. That is, a person raising children is obliged to participate to any public pension programs for three years after the child is born without paying premiums. Then, the person is regarded and evaluated as having paid the premiums in the amount equivalent to 75% of the average remuneration for the said three years.

(6) Sources of Revenue

With regard to pension insurance, the National Treasury pays 17.1% (as of 1997, in the former West Germany) of the revenues of factory workers' pension insurance and office workers' pension insurance, and the rest is paid by insurance premiums. Since the pension reform in 1992, the support from the National Treasury has been automatically revised according to the rates of increase of wages and premiums, and then from April 1998, additional subsidy due to the increase of value-added tax was offered for the National Treasury. Medical insurance is run under the principle of autonomy, and there is no support from the National Treasury in principle. The same is applied to the long-term care insurance.

2. Summary of Public Assistance System

Social assistance system was established pursuant to the Federal Social Assistance Law (enacted in 1961). It aims at enabling public assistance beneficiaries to spend lives with dignity and live independent of assistance programs as much as possible. The people, who are able to 1) live independently, or 2) receive necessary assistance from others, especially their relatives or other organizations giving social benefits, are not qualified for this system. Types, form, or standards of social assistance are decided by types of a person as a beneficiary and his/her demand, as well as regional conditions.

Social assistance system is enforced by counties or cities that do not belong to counties. However, in some special cases (e.g. admittance of a patient suffering from mental diseases to institutions), social assistance organizations covering wider areas than cities or counties are responsible for them.

Public assistance is mainly classified into two: namely, livelihood assistance and other assistance for special situations (special assistance). Expenses necessary for assistance are primarily paid by local governments. Payment by federal government is exceptional.

(1) Livelihood Assistance

It is for the people who cannot sufficiently raise the money for indispensable livelihood expenses from their abilities or funds. In case of married couples living together, income and assets of both husbands and wives are subject to qualification for receiving the assistance. Indispensable livelihood expenses include food, rent, clothing, health care, household effects, heating, and other necessities of life.

Benefits may be given at one time only or continuously. Standards for continuous benefits are provided by provinces pursuant to the federal standards. However, descriptions and coverage of one-time benefits are provided by the federal government. The amount paid for the assistance is the balance of the "demand" calculated pursuant to the standards provided by provinces minus expected income. As of July 1998, average amount per province paid for single persons is DM 539 for the former West Germany and DM 520 for the former East Germany. Some additional amount may be supplied for the elderly, pregnant women, single parents, and the disabled.

(2) Special Assistance

Special assistance are for the elderly, and the people that suffer from sickness or visual disabilities, and need long-term care or any other special assistance when those people cannot afford necessary expenses. Benefits are paid for a variety of assistance programs: namely, 1) assistance for establishing and securing livelihood basis, 2) preventive health care assistance, 3) sickness assistance, 4) family planning assistance, 5) assistance for pregnant women, 6) integrated assistance for the disabled, 7) assistance for people with visual disabilities, 8) long-term care assistance, 9) assistance for the elderly.

3. Challenges of the Social Security System

A recent serious problem in Germany is rapid growth of the number of the unemployed due to economic depression from the late 1992. The Kohl Administration of the time began to carry out diverse social security reforms in rapid succession with recognition that high-cost bearing German economy resulted in lack of international competitiveness. Regarding medical insurance, the premium rate was reduced under the "Medical Insurance Premium Reduction Act" that went into force in September 1996, at the same time increasing cost-sharing by the insured. Furthermore, in July 1997, with introduction of the "Third Medical Insurance Reform," the Administration aimed at securing abilities to give public medical insurance with enhanced self-control and self-responsibility, as well as strengthening financial basis for public medical insurance with stable premium rates. It also engaged in restraining increase of the premium rate with linkage between the increase of premium rate and cost-sharing by the insured. Other measures included increase of cost-sharing by patients, and promotion of expansive and competitive autonomy in sickness funds.

Public pension system was also reformed that included earlier commencement of raising the age when the old-age pension began to be offered and reduction of some certain periods such as that school education being given to calculate pension amount. The 1999 Pension Reform Law was established in December 1997 to be put into effect in full scale in January 1999, stipulating the reduced pension amount taking the prolonged life expectancy, disability pension reform, and improvement in evaluation of child care period.

As a result that the Social Democratic Party (SPD), which was an opposing party, won the Federal Congress election in September 1998, the coalition government consisting of SPD and Green Party (Bundnis 90 die Grunen) with a new chancellor, Gerhard Schroder from SPD, was born. Based on the coalition agreement, SPD and Green Party introduced policies including reform of old-age security and insurance system as well as improvement of stability of long-term care insurance. Other policies included future reduction in cost-sharing for social security from 42.3% to 40% of total wages at maximum, replenished by the revenue obtained from environment-oriented tax reform (raise in gasoline tax).

Specifically, for medical insurance, most of reforms including increase of patients' cost-sharing that was executed under the old Kohl Administration were first abolished by the "Public Medical Insurance Solidarity Enhancement Law". At the same time, this new coalition government decided to work on drastic structural reform by January 2000. On the other hand, The Schroder Administration presented "2000 Health Reform" in July 2000, with the recognition that a reform for stabilizing health insurance finance is necessary. Embodily, the reform plans to obligate a health insurer to control the expense, to introduce "positive list", to enhance cleaness of hospitals management, and so on. However, the consideration of the reform draft in the House of Councilors faces difficulty.

For pension insurance, premium rate is reduced from 20.3% to 19.5% by the revenue obtained from environment-oriented tax reform. Furthermore, the Schroder Administration will present his structural reform draft in 2000.

Right after the long-term care system was established, people made a wild rush for application for benefits, and some problems, including delay in approval for benefits and high denial rate, broke out. Such chaotic situation gradually settled down subsequently, and the whole system is stable now with favorable financial status. It is estimated, however, that financial status will turn to the red figures after 2000. There exists about 9.7 billion reserve fund, and the Administration aspect the financial status will turn to the black again.

Thus, the Schroder Administration unraveled the social security reform conducted by the Kohl Administration that offended the people. The Schroder Administration recognizes, nevertheless, that a structural reform is necessary for stabilizing social security system in the future. Subsequent discussion may attract people's attention

(3) Sweden

(Population: 8.85 million; Total area: 450,000 km2; Aging rate: 17.4%; Total fertility rate: 1.52;1 krona = 15 yen)

* Population and aging rate are as of the end of 1997, total fertility rate is as of 1997, and the exchange rate is as of March 1999.

1. An Overview of the Social Security System

In Sweden, a general social security system has been developing since early times mainly by public sectors. Income security programs are run by a central-government administrative agency, and include an old-age pension, child allowance, and sickness and injury benefits and so on. Health care and medical services are provided by wide-area-covering local governments primarily engaging in providing health care and medical services (landsting). Social services include services for the elderly and disabled and nursery care services, and are run by local governments (corresponding to municipalities in Japan).

The Ministry of Social Affairs is responsible for preparation of the bills for laws and policies in the national scale. However, actual administration of social security services is conducted by diverse kinds of Health Care and Welfare Agencies.

(1) Pension System

There are many kinds of pension besides public pension, including collective pension (based on agreements between employers' organizations and labor unions: quite a few workers participate to this pension) and private personal pension.

Public pension system has a two-tier structure consisting of the i) national basic pension that offers pension payment of a fixed amount to those who reached the age 65, and ii) national supplementary pension that offers pension payment according to previous income. In July 1998, a new pension system, aiming at stable management for a long time and fair balance between cost-sharing and benefits, was established to be put into effect in 1999 (benefits for this new system will be given from January 2001). Accordingly, benefits for old-age pension is paid depending on contributions calculated pursuant to lifetime income, and it is up to participants to decide when to start receiving benefits from the age 61 and older.

(2) Medical Insurance System

As medical insurance, the National board of Health and Welfare (a central government authority) provides an income security program to compensate a specific rate (80%) of income that an applicant loses due to injuries or diseases. (See (3) about expenditure on medical practice.)

(3) Current Situation of Public Health; Descriptions, Organization, and Sources of Revenue of Health Care Services

For the purpose of promoting health care and preventing diseases, the National Institute of Public Health (a central government authority established in 1992) cooperates with universities and landstings for nationwide promotion to improve public health. Landstings or other entities that are comprehensively responsible for regional public health engage in health risk surveys, health education, and preventive measures through regional health care centers or child health care centers.

In principle, landstings directly provide medical services besides health care services (i.e. most of doctors and nurses are the staff of landstings). Financially, 77.5% (1997) of expenditures occurred in landstings are paid by their own tax revenues. The maximum cost-sharing limit for medical services is restricted by the national government; that is, 900 krona for out-patient examination and 1,300 krona for medication for twelve months from the first examination, respectively.

(4) Health and Welfare Policies for the Elderly and Disabled
(Policies for Long-Term Care for the Elderly)

As the services for the elderly, "Edel Reform," aiming at services being uniformly provided by kommuns, came into effect in 1992. Accordingly, long-term medical care facilities was transferred from landstings to kommuns. In 1994, the "Act concerning Support and Services for Persons with Certain Functional Impairment (LSS)" was enforced for social services for persons with functional Impairment. In principle, langstings are responsible also for this area in lieu of kommuns. Furthermore, the disability ombudsman was established for the purpose of protect the right of persons with disabilities and let them participate in social activities.

In June 1998, an "national action plan on Policy for the Elderly" was adopted at the Parliament including the measure of allocation of grants to nurture and secure the personnel engaging in the elderly care, and enhanced monitoring on the elderly care, etc.

(5) Welfare Policy for Children

In Sweden, women can compete with men in labor force rate (74.5%: 1987). 78.4% of the women, who have children of the age seven or younger are in the labor force. In order to support these double-income families, kommuns provide diverse child care services, while Social Insurance Office supplies the parents' allowance for 450 days at maximum as an income security during child-care leave. As regards a child allowance system for economic assistance to families having children, the government resumed to give some additional allowances in case of the number of children exceeding a certain number in 1998, as well as increasing the amount of allowance in 1999.

In 1993, the government established a child ombudsman system to protect children's rights.

2. Summary of Public Assistance System

In Sweden, a public assistance system is enforced pursuant to the Social Service Act (established in 1980 and put into effect in 1982). Social allowances are provided as "economic assistance" in this Law. Basic requirements to receive benefits are that "they cannot satisfy their own needs by themselves or other measures." Examination is made on the families about their needs for benefits.

Kommuns take all the responsibilities on social services including public assistance. National Board of Health and Welfare is in charge of monitoring and giving general advices over the country. 21 lane agencies (national organizations) engage in monitoring law enforcement. All necessary expenditures are paid by kommuns. However, the national government supplies kommuns general grant and special grants for refugees.

Benefits are mainly classified into maintenance allowances (objection can be proposed against decisions) and economic assistance for other purposes or without emergency (e.g. travel expenses or non-acute dental care). National common portions of maintenance allowance, consisting of the expenses for food, clothing, and shoes, are decided pursuant to government ordinances based on the government's public price surveys (2,884 krona for an adult living alone, or 4,853 krona for married couples without children (1998)). Kommuns set appropriate standards for the expenses for residence, public utility, and medical care.

403,000 families (as of 1997: the same standards as the previous year) or 749,000 persons (753,000 in 1996) receive benefits; accounting for 8.5% for the population (1997) with differences among kommuns (2% in Dandelude [the minimum] and 16% in Malmo [the maximum]). Single persons without children occupy 60% of beneficiaries, while 36% of single women having children receive public assistance. Most of beneficiaries are occupied by young people, that is, 20% of the people of the age 20 to 24 receive public assistance.

As regards benefit amount in 1997, total amount is about 12.4 billion krona (increased by 4% compared to the previous year). Giving breakdowns of this figure, 5.9 billion krona is supplied to multi-national families (out of this amount, 2.6 billion krona for refugee families). Annual amount per family is 307,000 krona: average annual amount for Swedish families is 22,700 krona, while 42,600 krona for multi-national families (except refugee families) and 66,700 krona for refugee families.

Although benefit is supplied for a rather short period (5.6 months), this period was increasing from 1990, and 24% of beneficiary families receives benefits for ten months at least.

As characteristic of beneficiary families, in Sweden, public assistance system has a close relationship with countermeasures against unemployment (especially for the youth) and those against immigrants and refugees. Other social security or education systems such as reduced cost-sharing medical care and housing allowance act important roles on social security for the people with low income.

3. Challenges of the Social Security System

The government of Sweden aims at re-distribution of income with some measures including an income security system. Internationally, despite the percentage of tax and social insurance expenses to GDP is high (53.3%, 1996: OECD), people still strongly insist on increasing a cost-sharing rate for improved social security or education. National economy, which people call as "the source of welfare," is relatively favorable, and GDP growth is 2.8% (the governmental estimate as of 1998) with the surplus in its fiscal balance, despite of continuously high unemployment rate. Although the aging rate already reached 17.4% as of 1997, it is relatively stable in a medium-term forecast. The current focus of social security discussion is mainly concerned with quality of care programs and provision systems.

(4) The United Kingdom

(Population: 58.80 million; Total area: 242,000 km2; Aging rate: 15.7%; Total fertility rate: 1.72; 1 pound = 196 yen)

* Population, aging rate, and total fertility rate are as of the end of 1996, and the exchange rate is as of March 1999.

1. An Overview of the Social Security System and Recent Trends

The social insurance system was established by National Insurance Act of 1911 under the tradition of a friendly society, which is a mutual-aid organization for workers, in England. A blueprint of the social security system was drawn in the "Beveridge Report" published during World War II, and the system was built after the war.

Income security is classified into three: 1 contributory benefits, of which resources are from insurance premiums paid by everybody, 2 non-contributory benefits, of which resources are from tax revenues, supplied regardless of income, and 3 income-related benefits, of which resources are from tax revenues, for the people with low income. National Health Service (NHS) is peculiar to the United Kingdom. Through NHS, medical care services are provided free of charge, in principle, with tax revenues.

(1) Retirement Pension Plan

All working people (except those whose income is under a certain limit or none) who are over the age for completing the compulsory education are obliged to participate in the retirement basic pension. In addition to the basic pension, the employed choose as a second-tier portion among the several programs, including: the SERPS: State earning-related pension, or an occupational pension or personal pension that meets certain standards. Participation rate (1995) are as follows: 35% for SERPS, 39% for occupational pension, and 26% for personal pension. Payment of the retirement basic pension starts at the age 65 without regard to whether the person actually has retired or not (the age is currently 60 for women, but it will be in stages raised to 65 between 2010 and 2020). The retirement basic pension, which is the first-tier portion of the pension, is 64.70 pounds per week for participants and 38.70 pounds per week for their dependent wives. Certain amounts are added for those who are age 80 and older and those with dependent children (1998).

Since establishment of the Labor Party Administration in May 1997, pension system reform was one of agenda for the social security system. In December 1998, the future concept for the pension system was announced. Maintaining the basic pension system, this concept proposed revisions as follows: that is, 1 to institutionalize the stakeholder pension (a personal pension with reduced premiums by decreasing administration cost) as a new option for the second-tier portion, and 2 establish a "second national pension" with higher benefits for the people with low income than SERPS to replace SERPS.

(2) Health Care Services

In the United Kingdom, the National Health Service (NHS), established in 1948, publicly provides all people with comprehensive medical services, including disease prevention and rehabilitation services free of charge, in principle. Citizens choose general practitioners (GP) and register beforehand, and GPs refer patients to specialists in hospitals when necessary.

In 1991, under the Conservation Party Administration, for the purpose of promoting more efficient operation of NHS, the NHS Reform (establishment of "internal market") was put into effect. It included 1 the GP fund holder system (covering more than a half of the whole population, even for GPs only at their requests) and 2 turn hospitals into self-financing corporations (hospital trust system). The Labor Party criticized these approaches that; 1 there was a difference or inequality in the period until patients receive services whether they register to the GP fund holder system or not, and 2 establishment of "internal market" caused increase of clerical staff and decrease of medical staff including nurses. In December 1997, the Labor Party announced the white paper on the NHS reform stipulating 1 to abandon the GP fund holder system to transfer to the primary care group system in which the GPs in regions (with the population of about 100 thousand people) jointly manage their budgets, and 2 to establish an organization to set specific standards for treatment or medication. Such reform is to be carried out sequentially from April 1999.

(3) Health and Welfare Policies for the Elderly

In the United Kingdom, health and welfare services for the elderly are mainly classified into two, namely, medical service provided by government-managed National Health Service (NHS) and social welfare service provided by local authority. In-home care services include health care guidance, home-visit service by nurse provided as a part of NHS, home help service, meal service, and day service provided by local authorities. Facility care services include hospitals, nursing homes, and residential homes that patients can be admitted when they can move about in the facility with some assistance.

Since 1993, community care reform has been carried out for the purpose of focusing on in-home care policies and providing more efficient welfare services. According to this reform, the government changed its system from direct provision of services by local governments after judgment on needs of respective service (e.g. day service or home help service) and decisions on each services, to the purchase of services from outside service providers such as companies or non-profit organizations after care managers of local authorities comprehensively judge demands of the people who need care and prepare the care plan.

(4) Policies for Children and Families

The central issue in policies for welfare for children and families is how to deal with single parents reaching about 1.7 million families. Besides increase in the number of single-parent families (about 600 thousand families 25 years ago), it is pointed out that most of those families are beneficiaries of social security benefits. The Labor Party Administration develops the policies named "Welfare to Work," putting emphasis upon enhancement of occupational training and employment services. The Administration regards that those families' acceptance of occupational opportunities may enable to secure income and result in solving problems deriving from excessive dependence on social security benefits.

Income security benefits for children include the child benefits supplied to every child, and the Family Credit for low-income families having jobs and taking care of children. As of 1997, the child benefits are supplied in 11.45 pounds per week for the first child of families taking care of children less than the age 16 (less than the age 19 in case of receiving all-day education), 9.30 pounds per week for the second child and younger. In April 1999, the amount for the first child was decided to be increased by 2.50 pounds per week. It is furthermore to be examined to impose tax on the child benefits for high-income families.

(5) Sources of Revenue

In case of the employed, employees and employers share the insurance premiums for the national insurance. The premium rate depends on the income of employees. Those who participate in an occupational pension or personal pension that meets certain standards are not obliged to participate in the state earning-related pension system, and are exempt from insurance premiums corresponding to it. Self-employed people whose income is over a certain level are charged for the insurance premium at a certain rate in proportion to income, in addition to the insurance premium of a fixed amount. A part of the insurance premium collected for the national insurance is spent for the National Health Service (NHS).

Most of funds for NHS are paid by the National Treasury in principle, except contributions from the national insurance. The child benefits, benefits for single parents, long-term care allowance for people with disabilities, and income support among others are exclusively paid from the National Treasury. Social welfare services are operated through local taxes and funds from the National Treasury among other sources.

2. Summary of Public Assistance System

Cash benefits are traditionally classified into contributory benefits (e.g. retirement pension), non-contributory benefits (e.g. child's benefits, workmen's accident compensation insurance, and disability allowances), and income-based benefits (e.g. income support). Among others, income-based benefits are regarded as public assistance. Income-based benefits are mainly classified as follows.

(1) Income Support

It acts the central role for public assistance. Different from the Japanese system, it is required in the United Kingdom that beneficiaries work or do not work less than 16 hours per week. From October 1996, people, who have no jobs despite of their abilities to work, are disqualified from receiving the income support, but they are subject to Jobseekers Allowance when satisfying some requirements (e.g. engaging in activities to seek jobs).

(2) Income-based Jobseekers Allowance

It is established in October 1996 as a result of integration of contributory unemployment benefits and income support. Jobseekers allowance is classified into contributory benefits and income based benefits (without any contributory requirements) under the same scheme and standards (even similar with the income support). However, income of the whole family members is examined for contributory benefits. Contributory benefits are supplied for 182 days at maximum. If the beneficiary is continuously unemployed even after the expiry of contributory benefits, he/she receives income-based benefits (no restriction is given for the period receiving benefits).

Application is usually made to Job centers, with a certain qualifications (e.g. continuous activities to seek jobs).

(3) Family Credit

This is the income support for families with children working at least 16 hours per week. Even in case of having any income more than standard amounts, only 70% of excess over the standard amounts (i.e. 30% is supplied). In case of working 30 hours a week, some additional amount is given. Beneficiaries are examined whether they satisfy the qualifications (e.g. income limit) every 26 weeks.

From October 1996, a pilot scheme of income support for the low-income people without any child is conducted in eight regions.

(4) Disability Working Allowance

It has a similar system to the Family Credit, but higher benefit standards.

3. Challenges of the Social Security System

Right after its establishment, the Blair Administration focuses on the social security reform as one of the most important agenda, with making remarks that the social security expenses do not function sufficiently (e.g. a raise in income difference, and increase in the number of people excessively depending on the system) despite of occupying an overwhelming portion and show the rapid increase in the governmental expenditures. The Administration advocated the basic policy to make the people that are able to work have any jobs as much as they can and assign higher priority to those that are really difficult to work due to severe disabilities, and have proposed and publicized some approaches including more moderate benefits for the employment-oriented system as well as positive employment promotion measures. Quite a few in the Labor Party bitterly opposed against reduction in the traditional system and has resulted in restricted proposals.

As regards the public assistance system, the Administration considers to deal with the low-income pension beneficiaries. From October 1999, the Working Family Tax Credit and Disability Working Allowance are to be replaced by Ireland Revenue benefits (i.e. Working Families Tax Credit and Disabled Person's Tax Credit, respectively).

It is expected that the social security reform is going to elicit considerable discussion (e.g. announcement of proposals for the pension reform as mentioned above). With a hint of depression in the economy of the United Kingdom, which made a steady growth in the recent several years, financial restriction is expected to expand. Now, it may attract public attention how the Blair Administration emphasizing practical and steady policies will handle this situation.

(5) The United States

(Population: 267.64 million; Total area: 96,290,000 km2; Aging rate: 12.7%;Total fertility rate: 2.06; 1 dollar = 119 yen)

* Population, aging rate, and total fertility rate are as of the end of 1997, and the exchange rate is as of March 1999.

1. An Overview of the Social Security System

In the United States, the spirit of self-support that assumes that the government should not interfere with private lives in general is strong, as is the authority of states that constitute the nation due to the federation system. This affects strongly the structure of social security in this country.

Major social security programs in the United States include Old-Age, Survivors and Disability Insurance (OASDI), which covers most paid workers; a public health insurance program called Medicare, which covers medical care of the aged and the disabled; the Medicaid, which provides a medical assistance program for people on a low income. Public assistance programs include Supplementary Security Income (SSI) and Temporary Assistance for Needy Families (TANF). Generally, in the field of social welfare, the private sector takes a very significant role, and the state governments often play a major role in implementation of the policies.

(1) Pension System

Pension System is largely divided into two categories, that is, a general program (OASDI), and separate programs for people of certain occupations, such as public service employees and railway workers. OASDI is a Federal program, and most employees and self-employed individuals are covered by this plan. The pensionable age is generally 65 for the old-age pension, but it is going to be raised to 67 gradually between 2003 and 2027. The major financial source of OASDI is the payroll-tax that is collected from employers, employees and self-employed (tax-rate is 12.4%, which is shared equally between employers and employees). The fund is managed as the Social Security Trust Fund separate from the general account of the Federal Government.

There are extensive private pension plans in the United States, and tax preferential treatment to encourage savings is offered to qualified private pension funds that meet certain requirements based on the Internal Revenue Code (IRC). The Employee Retirement Income Security Act (ERISA) defines the requirements that should be met for establishment, operation, and termination of the private pension plans, in order to protect participants and beneficiaries. In August 1996, the Code was revised to simplify qualification requirements for private pension taxation, to reduce the operating burden for private pension, and to encourage small employers to offer pension plans.

(2) Medical Security System

The United States is the only developed country that does not have a public medical security system that covers all citizens. Private health insurance programs take a major role in the health insurance system in the United States. Employers often purchase health insurance plans for their employees as a part of employee benefits and welfare packages at the workplace. Responding to the recent steep rise in health care expenditures, the number of participants of managed-care plans, such as HMO and PPO, has been rapidly increasing.

Public medical security programs include Medicare and Medicaid, a medical assistance program for low-income people (mentioned below). Medicare is a federal-governmental program that covers old-age pension beneficiaries, disability pension beneficiaries and patients with chronic kidney disease. Medicare consists of Part A (compulsory hospital insurance, which covers for inpatient hospital services, etc.) and Part B (supplementary medical insurance, which covers for outpatient hospital and other services such as physicians' examination). Part A is funded through the Social Security tax (tax rate is 2.9%, which is shared equally between employers and employees), and Part B is funded through insurance premiums (monthly premium amount is $43.80 in 1998) and general revenue.

In the meantime, the number of people not covered by any health insurance or public medical security program reached about 43.4 million (i.e. 16.1% of the population), and this fact becomes an important social issue. To solve this situation, the Government just took some countermeasures to expand and promote coverage by medical insurance programs. For instance, as part of the Balance Budge Act of 1997, the Children's Health Insurance Program (CHIP) was established led by state governments, for the purpose of reducing the number of uninsured children with promoted coverage by Medicaid. It is expected to raise the budget of $24 billion for five years. At present, CHIP is conducted in almost all the states and to expand public medical security coverage to more than 2.5 million children.

(3) Public Health Policies

In 1990 the Department of Health and Human Services announced the "Healthy People 2000," a health objective that stated what the U.S. Government aimed to achieve by 2000 (setting a top priority for 300 numerical goals in 22 areas). To achieve these goals, councils consisting of specialized organizations and volunteer groups, as well as the federal and state governments, have been promoting approaches for health education at home, schools, workplaces, and in communities, to prevent death, disabilities, and sickness.

Hospitals in the United States are established by diverse entities and provide various services. Focusing on the average number of days stayed, they are classified into two types: short-stay hospitals with a hospitalization period of less than 30 days, and long-stay hospitals with a hospitalization period of more than 30 days. Additionally, there are residential facilities for those elderly with chronic or other diseases (termed "nursing homes"), which have a significantly larger number of facilities and beds than hospitals.

(4) Health and Welfare Policy for the Elderly and Disabled

Federal government supports social welfare services for the elderly pursuant to the Older Americans Act, but the budget allocation is very small. Therefore, benefits are mainly supplied by Medicare and Medicaid for the expenses paid to nursing homes and home care services. Descriptions of and expenses necessary for those services vary according to area and income. In order to diffuse private insurance for long-term care, the law for medical insurance was revised in August 1996 that long-term care expenses is subject to tax deduction, like medical expenses.

By the way, people with disabilities can mainly receive the disability pension, supplementary security income (SSI), Medicare, and Medicaid.

(5) Child Welfare

Policies for child welfare and families include the Temporary Assistance for Needy Families (TANF) (explained in detail below), an assistance system for low-income families taking care of children, education and training programs for the TANF beneficiaries, and child care services for low-income people. These services are for low-income people, and more general child assistance systems (such as child allowance system) are not conducted now.

Standards for facilities and personnel of child care services are set by state governments, which are supported financially by the Federal government. The welfare reform in 1996 unified the "child-care program" that used to be divided into four according to the people subject to assistance into Child Care and Development Block Grant (CCDBG) program with the increased amount to be supplied. Working women with children use diverse measures to take care of their children, that is, asking their families or relatives to take care of their children, or using child-care services at individual homes. Only about 30% of children before going to elementary schools go to any child-care facilities.

Improvement in child-care services is one issue that the Clinton Administration especially dedicates to among others. The Administration have increased the assistance amount by nearly 70%, as well as enhancing the system with establishment of a division in charge in the Department of Health and Human Services. Pursuant to the Internal Revenue Code, workers can be subject to tax deduction by 30% at maximum of the amount necessary for child care. The Federal government provides programs such as the after-school care for elementary school students, and child care service for children under the age 13. Some measures are taken including extended school hours and community services for after-school child care programs.

2. Summary of Public Assistance System

There is no Federal general public assistance system in the United States like the public assistance system in Japan. The system is divided and developed as follows according to the characteristics of the beneficiaries, such as the elderly, people with disabilities, and children. Some of them are directly managed by the State governments. Reform of public assistance system is an important issue for the Federal government because it is related to financial affairs of the Federal government. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 was established for the purpose of promoting independence of the people receiving public assistance for a long time and reducing the relevant budget. Pursuant to the said law, long-term receipt of the assistance becomes restricted, working requirements gets stricter, and authorities of state governments are enhanced, with some revisions including establishment of the Temporary Assistance for Needy Families (TANF).

(1) Supplementary Security Income (SSI)

This is a cash benefits system provided by the Federal government to low-income people pursuant to the Social Security Act. Beneficiaries should be the elderly of the age 65 and older or the disabled, who satisfy the qualifications for assets and income. About 40% of beneficiaries are those receiving the Old-Age, Survivors and Disability Insurance (OASDI). Supplementary benefits are given in a number of states.

As of October 1997, the number of beneficiaries (including those of supplementary benefits provided by state governments authorized by the Federal government) is about 6.5 million, consisting of about 1.4 million for the elderly of the age 65 and older, and about 5.1 million for the disabled (including the aged disabled). The standard benefit amount provided by the Federal government as of 1997 is $484 for an individual or $726 for a couple, but these amounts are revised every year in proportion to the consumer price indexation.

(2) Medicaid

This is a medical assistance system jointly provided by the Federal and state governments for low-income people pursuant to the Social Security Act. States determine the qualifications and service range, pursuant to the Federal-government guidelines including the qualifications for beneficiaries. Each state has different programs to give. In 1996, about 36 million people receive medical services through Medicaid. Medicaid is managed in the form that a certain portion of the expenses necessary for the states is complemented by the Federal government. Total expenditures in 1996 are about $162 billion ($92 billion for the Federal government, and $70 billion for the state governments).

(3) Temporary Assistance for Needy Families (TANF)

As a part of welfare reform in August 1996, TANF was established replacing the existing Aid to Families with Dependent Children (AFDC). TANF (enacted in full scale in July 1997) is a fixed-amount assistance system provided from the Federal government to state governments pursuant to the Social Security Act for cash benefits given by the state governments to needy families with children or pregnant women. In order to promote independence of people receiving long-term aid and financial reform, discretion rights of state governments are enhanced to be more flexible, with the standards for beneficiaries, income limit, and benefit amounts being set by states, respectively. In 1996, some reforms were carried out including time limits on benefits, limitations on aid given to immigrants, and enhancement of working requirements.

As of 1996, the average number of beneficiaries of AFDC and TANF per month is about 4.6 million, making a downward trend. Assistance amounts from the Federal government to state governments are required to keep the level of 1995 in each state, with the annual total of $16.5 billion by FY2002.

(4) Food Stamps

This is a system to supply coupons for food purchase for low-income people, pursuant to the Food Stamp Program. Although the Department of Agriculture is responsible for this system with the Federal government paying the costs, the rights are transferred to state governments. Food stamps are usually provided to each family by the regional welfare offices, like TANF and Medicaid. Beneficiaries are required to have assets (except real estates) of $2,000 or less, gross income occupying 130% or less than the poverty line, as well as the amount of gross income minus medical expenses for the elderly among others being below the poverty standards. Supplied amount is decided according to the number of family members and family income pursuant to the national standards. Standard amount is annually revised in proportion to the rise in food price; that is, $122 for a single person or $408 for a four-person family, as of 1998. In 1996, the average number of beneficiaries per month is 26.9 million, the average amount supplied is $73.30 per person a month, and the annual total amount supplied is about $23.5 billion.

3. Challenges of the Social Security System

In August 1997, the Clinton Administration entered into the budget agreement to realize a well-balanced financial situation by 2002. Due to the revenue increase as a result of the recent favorable economy in the United States and the control of fiscal expenditure (e.g. health care expenses), the Administration achieved the well-balanced financial situation three years earlier than the year provided in the agreement. However, due to aging of baby boomers, it will be necessary to maintain income security after retirement, control fiscal expenditure for mandatory expenses including those for health care, as well as conduct reforms to ensure financial stability of the Social Security system.

As regards Old-Age, Survivors and Disability Insurance (OASDI), Social Security Trust Fund is estimated to be exhausted by 2032, caused by the increase in expenditures for aging population. In January 1997, the Advisory Council on Social Security established by the Executive Office of the President announced its final report. This consists of three proposals: 1) to maintain the basic structure of the current system and adjust benefits and contributions; 2) to create individual accounts held by the government; and 3) to create larger individual accounts managed privately and replace a portion of Social Security.

President Clinton strongly claims to bring up the social security pension reform as an important issue. In the State of the Union Address in January 1999, the President made proposals to obtain higher income with investing a part of the financial surplus to commercial markets so as to maintain the social security system, as well as establish individual accounts to secure income after retirement separate from OASDI system.

Pursuant to the Balance Budge Act of 1997, the expenditures for Medicare is to be controlled to $115 billion for the next five years into favorable financial situation by 2007, by declining the payment to medical service providers and raising the insurance premiums (for Part B). As it is necessary to conduct reforms from longer point of view, a bipartisan study committee was established in the Congress to hold discussions.

Recent rapid spread of managed-care plans, such as HMO, is evaluated to have contributed to restraining in health care expenses. However, others criticize that these managed-care plans prevent patients from having opportunities to receive appropriate health care services at specialized doctors or non-contracted medical care facilities, and from securing necessary care. Therefore, the Congress deliberates about establishment of the "Patients' Rights Bill" consisting of 1) attachment of option in care policies for patients, 2) security of emergency medical care, 3) information disclosure to patients, and 4) appropriate handling of complaints.

As regards public assistance policies, since establishment of The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, it has become an issue to secure the working opportunities for the public assistance beneficiaries. The Balance Budge Act of 1997 introduced an employment assistance system provided by the states or Federal government to welfare beneficiaries ($1.5 billion in FY1998 and FY1999, respectively). President Clinton proposed to raise subsidies for the purpose of further encouraging the public assistance beneficiaries to have jobs. After establishment of the welfare reform, as of June 1998, it was reported that the number of beneficiaries decreased by 3.8 million persons (accounting for more than 30% decrease). The Government gives a favorable evaluation as a whole for the policies to encourage the beneficiaries to have jobs, with most of the states achieving the goals set pursuant to the welfare reform.

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