Analysis of Regional Variation in the Scope of Eligibility Defined by Ages in Children's Medical Expense Subsidy Program in Japan

Takuma Sugahara

Children's medical expense subsidy programs are programs run by local governments that use public monies to reduce or eliminate the copayments for children's medical treatment including pharmaceutical cost (typically 20% for preschoolers and 30% thereafter). Currently, all prefectures and municipalities in Japan provide subsidies for infants' and children's medical expenses, but scope on ages of eligibility, income limits, and copayment requirements vary. The fact that these programs are run by local governments has given rise to differences in the costs borne by households with children, depending on the jurisdiction in which they live. Therefore, although it would be desirable to gain society's understanding of such variation, the factors have not been fully studied. This analysis investigates what factors could impact such variation. In it, we looked at 219 municipalities in the prefectures in the Kanto region, focusing on the gap from the average age eligibility of municipalities, which reflects the scope of eligibility. Neither a regression analysis using the instrumental variable method to account for simultaneous decision bias nor an ordered logit analysis with rank of coverage as an order variable revealed that differences in copayments by locale had any impact on the scope of age eligibility. Residents' income and the number of children tended to narrow scope of eligibility for subsidies, but the strength of local government finances were not a significant factor of influence. In designing these programs, local government bodies take into account the local population's ability to pay and the number of eligible people, but their awareness of the local government's financial condition seems to be scant. Local governments are currently moving to expand their children's medical expense subsidy programs, but in the future they will need to pay more attention to balancing an expanded scope of eligibility by ages with the maintenance of local government fiscal discipline. In addition, copayments have not been adequately linked to the expansion of eligibility, so it would be advisable to clearly demonstrate the reason for this limit in order to eliminate perceptions of unfairness.