Health care cheaters in Japan’s expat community out in force

I recently came upon this:

Free Choice Foundation of Japan

This is a protest group of expatriates in Japan, that was recently set up to organize against Japan enforcing the National Health Insurance law against resident expats here.

The fundamentals of this story are simple:

In Japan, everyone who is resident is either supposed to be enrolled in the National Health Insurance (kokumin kenko hoken) or a company plan that is highly regulated by the government, through Social Insurance (shakai hoken).

Apparently, for many years, the prior government used to look the other way as to whether non-Japanese resident in Japan were enrolled in one or the other. As so as a result, a market developed where explicit “gap insurers” (companies offering on-its-face coverage for a certain amount of medical bills) could sell to the expat community without incurring any questioning by the regulators.

The expat insurers maintained that their insurance was only “gap”. (This means it was only meant to cover the 30% or so that the Japanese progam doesn’t cover.) But they never wrote the kind of contract like you see in America where the insurance company insists that the other purported coverages pay before they themselves will pay!

For example, in America, if Aetna knows that Cigna is required to pay first, then Aetna will not pay anything until it finds out that Cigna paid its share!

But the expat Japanese gap insurers play a little game. And that is, they don’t care if the government paid or not, they simply price the gap insurance as if the government isn’t expected to pay. They say, 2,000,000 yen of coverage for “x” amount. Whether the government program pays or not is irrelevant in that equation. (And when I say government program, I include shakai hoken employer-based programs because they are under the similar regulation.)

You can be a valid Japanese insurance company for gap insurance, as I understand it. This means, you can write a policy to pay on the 30% that the government won’t insure for health care. But the assumption is that everyone who is resident here is in a program of government-regulated health insurance.

So the loophole that is exploited, is that the prior government never questioned the costs and actual coverage of the gap policies written by Viva Vida, InterGlobal, Global Health, etc.

If the gap insurers were required to be secondary coverage in the presence of primary coverage by a government system, the game would end.

Fact is, as I explain at Debito.org, is that the gap insurers have been conspiring (not sure if it’s criminal in Japan or not, maybe a civil penalty) to entice resident expats to evade their duty to enroll in National Health Insurance. Plain English. Bottom line.

[The Japanese health insurance system is based on payment by a progressive income scale. It is part premium, part progressive tax. So anyone coming along paying a lower price than what the Japanese have to pay at the same income level is in effect a cheater.]

They say things like, “well there are many reeeeeee-asons why expats in Japan arennnnnnn’t enrolled in National Health Insurance!” But the reasons are all illegal.

Maybe an example will suffice: suppose bank robbery were a little more common in Japan. Not the rarity like now. And the loss to the banks was not big enough to be a crisis. Maybe shareholders, workers, interest-earners had to take a little more of a hit. But not a crisis.

Suppose also that bank robbers fail the most times because they don’t have a getaway car waiting out front. Without the getaway car, they usually end up paying a price for their criminal behavior.

So along comes a company. Let’s call it Vroom Vroom. And what Vroom Vroom says is that they will by chance provide a car for rent to anyone who needs to get out of a location fast! They say, “there are many reasons why you might want to get away from some place fast! Let Vroom Vroom offer you the car you need for just that special occasion.”

And so the bank robbers—who in their mind really aren’t doing anything wrong, since the bank system seems to be working just fine even if they take a little every now and then—catch on that they can make it much easier for themselves if they pay for the service charged by Vroom Vroom company.

After a while, maybe, it becomes clear that the only people who want Vroom Vroom’s rental cars are those who are looking to flee the scene of a bank robbery that they committed! But Vroom Vroom says, “no one should rob banks! We are just a service for people who want to get away from a location fast!”

How far off is the current health insurance payment evasion in Japan from that example? Hum????

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15 comments

  1. hoofin · September 22, 2009

    The most compelling argument of the “Free Choicers” is the one most easily argued around, by the way.

    These folks point to the number of international medical practitioners around who do not accept National Health Insurance. There, you have to pay in full.

    There is nothing to say that people can[‘t] enroll in the required Japanese insurance, and then buy the gap policy for the times they want to use the other doctors.

    After all, the gap policy is billed as cheap—about $500 a year. The game has been paying only the $500 versus several thousand in NHI. (We all know that was the game. Especially those now screaming about “how they didn’t realize!”)

    I think it’s fair to require the legal coverage and anyone who has gap issues can buy a fairly priced gap policy.

  2. Ryan · September 23, 2009

    The above article ignores the fact that a very large portion of Japanese nationals are not enrolled in the social insurance schemes as well as the fact that the GOJ specifically states that the payments are not a tax. The biggest problem with the new guideline is that it is discriminatory; it specifically targets non-paying foreigners while continuing to let non-paying Japanese nationals off the hook.

  3. hoofin · September 23, 2009

    Ryan, a few points:

    the overwhelming number of Japanese are covered by either Kokumin Kenko Hoken or the health insurance portion of the Shakai Hoken.

    The Japanese government knows who the nonpayers are, and in many communities it’s a serious issue. In most cases, the nonpayers are not paying because they can’t AFFORD it. (They would pay if they had the money to.)

    There are slightly more who don’t pay the national pension, and that varies by age group. But the hit is more direct, because it means they don’t get pension coverage.

    In both cases, just because you and Ron Kessler can point to people who don’t follow the rule (whether it’s called “guidance” or whatnot), is a weak reed to support a policy of letting people who came to Japan from somewhere else get off.

    Also, the pension payments here can be rebated up to 3 years for foreigners who leave. That doesn’t happen in any other country, unless you know of one. And still some foreigners in Japan flout the law — explain that one!

    Is a mandatory contribution a tax? This is a 70 year old argument with U.S. social security. If the government starts collecting a “contribution” in the same style as it were a tax, then social security contributions are taxes. All the talk on that site about “guidance” versus “statute” is more dog chasing tail about whether people should be let slide on the rule.

    If foreign people felt they were being overcharged on health coverage by the Japanese government (being asked to subsidize someone other than themselves), I see no reason why Ron Kessler’s petitioners can’t ask for some rebate of health care premiums to go along with the pension refund.

    But that approach isn’t even floated!

    And why?

    Because the whole thing is about getting over, not paying like everyone else if they can swing it.

    And the LDP used to let them do it. Strong indications are the DPJ WON’T.

  4. Dave · September 23, 2009

    @Hoofin

    Hoofin, posting this to your site as well because I’m not sure why but my reply to the question you asked me wasn’t posted by debito aru[dou]. Strange because I didn’t say anything innapropriate or controversial in it. Anyway, Hoofin, maybe Debito will allow this reply to be posted.

    To answer your question, I did not intend to imply that I was required to make payment for everything all at once. I was permitted to have a “payment plan” as it were for the back-payments. However, this option was only extended when I politely pointed out to the prefectural employee that the payment coupon itself allowed for payment up to 2 years later. Interestingly, when I initially requested the payment plan option it was denied and I was told that I would have to pay everything at once.

    Hope that clears things up
    Dave

  5. Ryan · September 23, 2009

    I think the Japanese nationals who don’t enroll in national insurance and pension do so for about the same reasons as foreign nationals. (According to the Social Insurance Agency only 62.1% of Japanese nationals pay into the pension program while 45.6% are paying the full amount they owe each month. No details are apparently available for health insurance.) One difference is that many foreign nationals do enroll in insurance packages that better meet their needs, so they at least are not leeching off the system.

    As for the tax issue, the GOJ specifically set up the system to NOT be a tax, which is one reason there is no enforcement–except for against foreigners beginning in April–and they are having the problems they have. The US Social Security system is a tax, in that there is a penalty for not paying.

    I personally think the insurance and pension should become a tax that is taken directly out of the paychecks of every worker. Such a system would be fair and non-discriminatory, but that is not the case at the moment. My problem with the article above is not that I believe foreigners should not be enrolled in the system; my problem is that the article is full of half-truths and misrepresentations for the sole purpose of making its point. I believe such a writing style weakens an argument rather than strengthens it.

  6. hoofin · September 23, 2009

    @Dave

    I am sure at Debito’s site it is probably that he is on the go and sometimes has a delay at getting back to the blog. Alternately, I think he has to review a spam filter.

    Sorry if I caused any misunderstanding over on his blog with whatever you had posted. If I myself go to respond “to the above” there, as it is, I can never be sure that some other comments come in between what I posted. So I better just tie it back directly.

    Over at firedoglake.com, which is a political site I like, I notice that the responders can pin their responses directly to earlier comments. That’s nice.

    It’s good that your local municipality gives you some time to catch up. That I feel is really fair. I know on the nenkin coupon it says something nihongo de (“in Japanese” for my at home readers) that the payment cannot be made after a two-year date. (So the September 2009 one says about paying by Heisei 23 ku-gatsu, which is Sept. 2011.)

    My deeper feeling on this big issue, is that enrollment should be one standard, and paying up the other. Everyone who is supposed to be, should be enrolled. For whatever reason if they can’t pay up, they should have the right to make arrangements.

  7. hoofin · September 23, 2009

    @Ryan

    Speaking of 1/2 truths —-> You say in your first comment post that:

    “the GOJ [Japanese government] specifically states that the payments are not a tax” and what you mean there is that it is not mandatory to enroll and pay into the kokumin nenkin, the kenko hoken, or a shakai hoken equivalent.

    But you don’t mean to tell me that the social insurance programs are voluntary, do you?

    So which is it?

    In the later post, you give statistics. You say that only 62.1% of Japanese citizens are paying into kokumin nenkin. (I assume this is including people who pay the shakai hoken equivalent.) Further, you report that only 45.6% of Japanese citizens are current on their nenkin. (So about 16.5% of those enrolled are in arrears.)

    I happen to know that the nonpayers and people in arrears tend toward the young here. For people in their 20’s, the number is pathetically low. Part of that is the freeter economy, and part is youth.

    So now you are saying that if you can’t slide on this, then you (and all the other like-situated visa holders) are being “discriminated against”.

    But this is kind of silly. Because if you don’t pay the pension, then you are 62.1% cheating, right? How come you get to claim the situation of the 37.9% of Japanese who don’t pay? And if they are forced to pay in the future, do you pay up, too?

    Isn’t your more credible argument one where you show up at immigration having 62.1% paid into kokumin nenkin? (Which means you have to have enrolled.)

    Ryan, fewer and fewer people are buying the notion that foreigners here can live in shades of gray, and that is somehow just fine. Myself, shades of gray just make my life more difficult. Because if you know Japan at all, you know that when it starts going to shades of gray, and you are foreigner underdog, you will be a net loser. For sure.

    So I recommend you do join what you are required to by law here, call it a tax or not, and pay your proportionate 62.1%, and take that argument to immigration the next time. Good luck.

    At least 62.1% is higher than 50%–what you said my posting was for accuracy. And it’s higher than the near zero that’s coming out of the expat pension cheater community.

  8. hoofin · September 23, 2009

    @Ryan,

    On your other point, it’s a point well taken.

    Why shouldn’t just be that the “contributions” come out of peoples’ payroll checks, like in most every other country?

    You’re right on that one. This is what Japan should be doing.

    And by treaty with many other countries, if the Japanese at the company are supposed to be in shakai hoken, then the treaty nation citizen better damn well be in as well.

    This is what I am saying about shades of gray.

    Japan agreed over the last several years with a number of countries that citizens of those countries here would get the same benefit as the Japanese provide by law to their own.

    I know that’s in the U.S. social security treaty, it’s in the Canada one, and probably the Australian, too.

    Yet you see the dead hand of prior practice laying flat over any written order to insist on that equal treatment. Hopefully, once DPJ warms their chairs, they will move on the issue.

    By the way, you know that Americans who are not covered by Japanese pension are supposed to be paying self-employment tax on any money they earn independently here? Self employment tax is 15.3%. I bet there are quite a few people in that situation. The foreign earned income exclusion does not cover self-employment tax.

  9. Dave · September 23, 2009

    I share the same sentiment as you. I think that everyone who is legally obligated to be enrolled in the system should follow the law and do so.

    That said, I also know that there are more than a few Japanese employers that flat out lied to their NJ employees and told them that they were not qualified to join the system specifically because they weren’t Japanese. The reason as I’m sure you know is so the employers can avoid paying the required 50%.

    As you said the system is well regulated once you[‘re] in it, but in the past there has been little to no government regulation of the employers who have failed to sign-up their NJ employees.

    Moreover, the prefectural offices themselves didn’t follow the law. 2 years ago when my then employer refused to sign me up for Shakai hoken I went to my ward office and attempted to join the national system myself. I was told by the official that I could not join because my employer was required to fill out the paperwork … but my employer was refusing to do so. Time warp to 2 months ago when I was told by that same exact official that I should have joined the national system earlier and I would now have to make all the back payments.

    When did this become the NJ’s fault? Where is the government oversight of Japanese companies, or for that matter, of it’s own prefectural offices?

    Are there NJ that cheated the system… of course let’s not be niave, but did Japan do anything to ensure that NJ were enrolled into the system? Very little to nothing, I mean in my case they pushed me away from it. This whole thing could have been largely avoided by a simple 2 step process at the local ward office the day a NJ first gets their gaijin card.

    Step 1 – get gaijin card, receive instructions to go to office 2.
    Step 2 – at office 2 receive instructions regarding Employees and National Systems.

    Are these FC people correct? No way. The law is the law is the law, follow it. Is their argument silly and without support … absolutely? But I don’t condone the Japanese government’s actions, or actually lack thereof, either.

  10. Ryan · September 23, 2009

    Hoofin, you make the wild and misplaced assumption that I am not enrolled in kokumin hoken and nenkin. Please be careful with the assumptions you make; my disagreeing with you does not mean I am not enrolled. I simply see the article as having many inaccuracies, unsupported assumptions, and prejudices.

    As for the new government guideline, my problem is that I see foreigners being made a scapegoat again. If the GOJ wants to make social insurance a tax–as we both agree they should–then that’s fine, but to single out ONLY foreigners with consequences for not paying is discriminatory and wrong. Period.

    As for your comment on most of the Japanese nationals not paying being young, I seriously doubt that’s the case. Essentially, 37.9% of Japanese nationals who should be are not paying a dime into the national pension. (Over half aren’t paying as much as they are supposed to, but we’ll forget about them for the purposes here.) According to the Japanese Statistics Bureau (http://www.stat.go.jp/english/data/handbook/c02cont.htm), 64.5% of Japan’s population of 127,692,000 were between the ages of 15 and 64 in 2008, for a total of 82,361,340 people. The graph the website shows for a breakdown from there is a little hard to read, but it appears slightly over 6 million of those are under 20, leaving about 76 million people who should be paying into the system–but 28.8 million aren’t paying a yen. The graph shows only about 15 million people between the ages of 20 and 30, so even if every single one of them is not paying, the non-payment rate for the rest of the population would still be a remarkably high 22.6%. I don’t think we can blame this problem on the youth. Discriminating against foreigners and using them as a scapegoat won’t help either.

  11. hoofin · September 23, 2009

    @Ryan,

    I somewhat feel like the wheels are coming off your wagon in this debate, but I will take the time to respond.

    1. Your link doesn’t work. But in its place, I offer the Japan Times article on the recent Social Insurance data releases:

    http://search.japantimes.co.jp/cgi-bin/ed20090807a1.html

    I assume this is where you are getting the 62.1% compliance rate from. The article says that compliance rate ranges from 75.1% (people in their late 50’s) to a low of 49.4% (people in their late 20’s).

    And yes, since 45.4% of payers are all paid up, it means the other 54.6% of a complete rectangle is only partly shaded in (30.6% shaded). We have no way of knowing who is two or three months behind, and who isn’t paying at all. But mathematically, we can indeed say that 62.1% of the average Japanese is paid up on the pension, and 37.9% isn’t.

    So I again say to you, when the pension dodger shows up at the visa office, their minimum moral argument is that they are 62.1% paid up. Which means they still better enroll.

    If you yourself are above board, then that is quite an emotional argument about alleged “discriminaton” in favor of overseas people who come here and cheat the rule. (By the way, you never pointed out where the pension system here in Japan is voluntary. Nor where the government expressly says that the pension contributions aren’t a tax, or aren’t a mandatory contribution. Which is it? Voluntary or no?)

    If foreigner visa holders don’t pay pension premiums and get away with it, doesn’t that discriminate against the Japanese who pay up? They just can’t leave and go back to their home country. They don’t have a system in another country where the rules will bail them out if they fail to pay in to the system for a number of years.

    So your boo-hooing is for foreigners who don’t pay up (but not yourself—you say you are in). But you think it’s OK for foreigners to skirt because the stats says that a large fraction of Japanese do.

    Hope those wheels stay on long enough.

  12. hoofin · September 23, 2009

    @Dave,

    I 100% agree with you that workers in local offices complicate the matter with their own shades of gray.

    I remember my early days here when I went to enroll in Koto-ku. This was shortly after I learned that my employer, who had a clause about enrollment in social insurance right in the employment contract, had no intention of enrolling me.

    One or two of the workers in the office ran around like the Black Ships had just arrived in Edo Bay. One of them suggested that I need not enroll in the health insurance (using the same argument that “your employer takes care of this for you!”) But I explained that he didn’t and I wanted to be in until the time that I was sure that my employer put me in a program.

    At the nenkin desk, it was a similar shock. I was told that the administrative clerk had to call the main Social Insurance Office to determine whether my name should appear as romaji or katakana in the Nenkin Techo (pension book). I really didn’t care if it was in Pig Latin, I just expected to be enrolled.

    As I always tell the desk worker as I leave, “zyaaa, mata 2030 nen” (until the year2030, then!).

    I have had less problems getting into shakai hoken after the initial experience.

    Now, where does my money go? Yeah, I only see it if I am around in 2030. The actual cash flow is going to some old lady in Akita or Kagoshima who needs it.

    Dave, you are so right that many Japanese players in the thing are reading out of different play books. And then when something blows up, they start blaming the foreigner sitting at the plastic padded chair in front of them.

    I totally agree with your Step 1 and Step 2. Maybe as Step 3 a visit to an Embassy Ombudsman (I want to blog about this) if steps 1 and 2 aren’t satisfactory.

  13. Ryan · September 24, 2009

    Hello Hoofin,

    I think we need to step back a little bit, because it appears you think I am arguing something I am not. I’ll get to that next.

    As for the link to the Statistics Bureau link, it’s not working properly because WordPress included the final parenthesis in the hyperlink. If you delete the parenthesis at the end it should come up. If you’re still having problems, Google “Statistical Handbook of Japan Chapter 2 Population” and it should come to the top of the list. Even outside of this discussion I suggest you take a look, as it’s filled with considerable useful data.

    As for the discussion at hand, I appreciate the time you’ve obviously spent on your responses, but the vast majority of what you’ve written has been based on fallacious assumptions about me and my opinions. As I stated before: be careful what you assume. It’s easy for the wheels to come off an argument that’s never been made.

    You’ve made the following two assumptions:
    1) I am not enrolled in national health and insurance.
    2) I believe that foreign nationals should be exempt from paying into the health and pension systems even though Japanese are required to do so.
    Both assumptions are mistaken.

    As for the first assumption, you seem to have doubts. That’s fine, as only you can decide whether or not to believe me.

    As for the second assumption, a quick reread of my posts so far should have made the answer clear. As I wrote, “My problem with the article above is not that I believe foreigners should not be enrolled in the system…” (September 23, 2009 8:26 am). I have not signed the petition at the Free Choice Foundation of Japan for this reason.

    As I stated before, I have problems with the above article because: 1) it is inaccurate in many respects and 2) it ignores the discriminative nature of the new visa guideline.

    The article’s description of the history and nature of the different health insurance plans available to expats contains many inaccuracies, for example. The article and your subsequent posts also classify Japanese citizen non-payers as people who can’t afford to pay while foreign national non-payers are labeled as cheats.

    As I’ve stated before, my real problem with the guideline is that it is discriminatory and makes foreigners a scapegoat. You seem to acknowledge this somewhat in your statement to Dave that reads, “And then when something blows up, they start blaming the foreigner sitting at the plastic padded chair in front of them.” I believe this guideline is essentially the same thing as questioning of foreigners on the street about crime.

    Do I think all foreign nationals in Japan should follow the law? Yes. Do I think all foreign nationals in Japan should be here legally? Yes. Do I think foreign nationals should be stopped and questioned to ensure they are following the law when the same does not happen to Japanese nationals? No.

    Do I think all foreign nationals who should be enrolled in an approved insurance and pension scheme when such a requirement exists? Yes. Do I think foreign nationals should be singled out as the ONLY group to have enforcement imposed upon? No.

    The GOJ purposely decided not to include an enforcement mechanism for national health and pension because they wanted to be able to insist it isn’t a tax–a decision made for political purposes. Japanese nationals of all ages have chosen not to participate for various reasons with no consequences. To decide that foreign nationals are the ONLY ones who should be forced to pay (and essentially fined) is wrong, especially when so many of them are in situations similar to Dave’s. What we as a foreign national support community should be doing is working with the government to find a way to enable everyone–foreign national AND Japanese national–to join an approved insurance and pension plan in a way that does not incur such a harsh and unfair financial penalty on those who were not enrolled as a result of poor national policy planning.

    On a separate note, what I would like to see is a separate insurance and pension plan made available to non-citizens or workers in the English education industry. While the focus in many of these discussions has been on shakai hoken/nenkin and kokumin hoken/nenkin, many other plans exist in Japan for people in special circumstances or specific industries and that better meet the needs of the people in those groups. For example, when I worked at a private high school I was enrolled in a special insurance and pension plan for teachers and staff of private schools. This plan actually continued to pay 80% of medical costs long after the national plans reduced compensation to 70% , and possibly still does. (They often trumpeted that as one of the benefits for their members over the national plans.) It’s records and payments are completely separate from those of the national plans (the national pension office is unable to access the records either), but they are officially approved by the GOJ. I’ve seen the expat insurers as trying to fill a similar niche by providing services to a specific group of persons that meets their needs better than the national plans. Since such plans already exist for other groups, it would be nice to establish one for foreign nationals or English teachers as well. I doubt that’s likely to happen, though.

  14. hoofin · September 24, 2009

    Ryan, I’ll maybe try to say more about this later.

    In the end, the Japanese Government has many effective tools to compel enforcement by Japanese citizen noncompliers/nonpayers in the various social insurances.

    The only practical tool it has with visa holders is to put the visa in jeopardy. People can always not pay, and leave.

    This is not discrimination, and your whole line of reasoning after that I think is tied to whether it is fair for the foreign residents to have to put their visas at risk when the Japanese (who are citizens) don’t. Japan isn’t going to expel nonpaying citizens, right?

    On the pension, the government gives everyone two years to make the coupon payment. So practically, the only “cost” to the visa renewer is to be enrolled in the system, and then manage the two-year window. If someone only intends to be in Japan for one or two years, I guess there is the math on that, then.

    For the health program, the first year is effectively at a bargain rate, because Japan counts prior year income at $0. After that, it’s the rate all non-Shakai Hoken residents pay in the ward/prefecture, depending on taxable income. So there is no discrimination in price.

    And like I said, as far as enforcement, since the foreigner can always leave, the enforcement is going to be a little different.

    You are right there should be a health cooperative for English teachers. I think the General Union in Osaka put out information recently about one such one, but I never had a chance to review it in depth.

    Gap insurance as provided by Viva Vida!, Interglobal and Global Health does not meet the standard of National Health Insurance here. It is not an acceptable employer insurance either. So getting back to my original blog post (which I’ve been told is actually VERY accurate), the people who use the gap insurers in place of enrolling in the legitimate system are cheaters.

  15. Ryan · September 24, 2009

    Hoofin, it’s nice to know we agree on some areas. I think we’ll just have to agree to disagree about some other areas, including your statement that “the Japanese Government has many effective tools to compel enforcement by Japanese citizen noncompliers/nonpayers in the various social insurances.” I know many Japanese national non-payers of different ages and income brackets. There are really no tools the government has to compel payment, especially for those who are financially secure–who also happen to be the ones who would pay the most if truly compelled. No such tools will exist until the law changes. For there to be real teeth, national health and pension payments will probably need to become a tax. Until such a change occurs, I believe using much stronger tools on the foreign national community is discriminatory and becomes a scapegoating tool.

    Best wishes.

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