Acting under the initiative of Prime Minister Junichiro Koizumi, the government and the ruling parties have agreed that salaried workers should pay 30 percent of their medical expenses, or 10 percent more than they do now, beginning in April 2003. But the agreement came at a heavy price: a bruising political battle between the prime minister and Liberal Democratic Party legislators with ties to medical interests.

Mr. Koizumi and his aides say the increase at the start of fiscal 2003 is necessary to establish a "sustainable" national health insurance system. They emphasize the need for an "equitable" sharing of medical costs, saying that people should be more "cost-conscious" about the services they receive. The sorry state of health insurance cannot be overly emphasized. But it isn't clear as yet what kinds of reform the Koizumi administration wants to put in place.

A combination of factors are contributing to the crisis in the nation's deficit-ridden health insurance system. Medical costs for elderly patients are soaring amid the falling birthrate and the rapidly increasing average age of the population, while premium revenues are leveling off as a result of continuing economic stagnation. Virtually every insurer is now either in the red or having difficulty making ends meet. Building a financially viable system is therefore an urgent necessity.