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When the issue of LTC
hit the political agenda in early 1990s, policy makers in the Ministry of Health &
Welfare (MHW, now Ministry of Health, Labor and Welfare, MHLW) were convinced that the LTC
should be instituted as an entirely new system rather than simply expanding the existing
health insurance system. However a lingering question was on how the new LTC system should
be financed, i.e. general revenue financed by tax or social insurance system financed
mainly by premium contribution. In view of the inherent drawbacks of welfare system,
some economists advocated introducing a social insurance program to the LTC since as
dating back as late 80s. Also some pioneering health insurance societies of major
corporations voluntarily introduced non-medical services for the LTC into the benefit.
However there were strong preference to tax financed welfare system especially from the
people who favor the Nordic country style welfare system.
In early 1994, then prime minister Hosokawa surprised the nation by abruptly announcing
that he would introduce a new indirect tax ear-marked for welfare services, which was to
be called "National Welfare Tax". His sudden announcement not only surprised the
nation but, worse, inadvertently provoked resentment against ubiquitous indirect tax which
had been introduced only four years earlier. His proposal was aborted and he eventually
resigned. |