Has the Social Insurance Scheme Now Reached Its Limits ?

 : The Burden of Tax and Social Security Contributions and Non―payment of the National Pension

Abstract

In this paper, we estimate the differences in household payments of social security contributions and taxes across income groups, and show the rate of non―payment of the National Pension in order to evaluate Japan’s social insurance system. Our results indicate that the incidence of the contributions to the social insurance scheme remains nearly flat relative to household income. With regard to co―payments by patients, the incidence even becomes regressive. Nevertheless, the impact of income tax and social security contributions on income inequality showed that the contributions had increased rather than narrowed inequality in recent years, a period in which income gaps have been expanding.As for National Pension payments, we could observe that exempting payments for low―income persons worked well. However the rate of non―payments does not increase even if household income or personal income increases. The government should be aware of the limitations of the existing social insurance scheme if the low income population increases further due to casualised employment.Finally, this study lastly suggests a need to achieve universal coverage through an employment―based social insurance system.