Japan's Long-Term Care Insurance Programs


In Japan where the aging of the population has been advancing at a rate which is unprecedented in world historyA the issue of long-term care for the elderly is one of the most important issues facing citizens, along with the issues of medical care and pensions. The spouses or children of elderly people have traditionally provided long-term care. However, the conventional approach to long-term care, namely care given by family members, cannot cope with 'the dramatic changes in the social structure, such as an increase in the number of people in need of care and changes in people's perspective of  this issue. Under these circumstances, the Japanese Government has been sharply increasing the number of care facilities and manpower as the Gold Plan's 1999 target  year (The Ten-Year Strategy to Promote Health Care and Welfare for the Elderly which was formulated in 1989 and was renamed the New Gold Plan in 1994 by revising the numerical targets). Furthermore, in December of 1997, a Public Long-Term Care Insurance Law, which was designed to cover the growing long-term care expenses, was passed by the National Diet. This law will be enforced in April of the year 2000. It will reimburse expenses for facility services and home care services to senior citizens who are in need of care.

Japan is now in the same position as the Netherlands and Germany in terms of adopting a social insurance system for long-term care. This public long-term care insurance is the fifth social insurance program in Japan after medical care insurance, pension insurance, protective insurance against unemployment and occupational accident compensation insurance. As the population ages, all of the developed countries will be forced to deal with the issue of long-term care. Our country's attempt, including such measures as the Gold Plan and the long-term care insurance, will offer a variety of lessons to other developed countries.


The Status on Long-Term Care for the Elderly

The first point to examine is that the aging of population and the increase in elderly people in need of care have had a great impact on long-term care in Japan. According to data for 19961, the average life expectancy was 77.01 years for  Japanese men and 83.59 years for Japanese women, giving the people of Japan the world's greatest longevity. On the other hand, the live birthrate in our country continues to decline at the same time. The total fertility rate, which indicates the average number of children a woman gives birth to in her lifetime, was just 1.43 in 1996. This rate is much smaller than the rate of 2.i which is needed to maintain@the current population2. 

As a result of these two trends (the increase in the average life expectancy and the decline in the live birthrate), population aging in Japan has been progressing rapidly. The ratio of age 65 and over, which was 10.3 in 1985, is expected to reach 17.2 by 2000 and 27.4 by 2025. As Table 1 shows, the rate of population aging in Japan is much greater than that in other developed countries. Therefore, the various systems which are affected by these changes, such as pensions, medical care and long-term care, need to be rebuilt.

Along with these changes, we expect that the number of elderly people who are bedridden, have dementia or have other difficulties and are in need of support in their daily life will sharply increase. This number is expected to increase from two million in 1993 to 2.8 million by 2000 and 5.2 million by 2025. (Table 2) Several causes for the rapidly increasing number of elderly people in need of  care have been pointed out. One cause is an increase in the number of older elderly people due to the increase in average life expectancy. Another cause is an increase in the number of people whose lives have been saved (particularly stroke victims) thanks to advances in medical care.

Table 3 shows the incidence of those in need of care by age group. According


1 Statistics and Information Department, Minister's Secretariat. Ministry of Health and Welfare. Abridged Life Table (1 996) .

2National Institute of Population and social security Research, Ministry of Health and Welfare, Latest Demographic Statistics (1997), Research series No. 292.


to this Table, the risk of becoming bedridden (including those people who are bedridden and have dementia) is 10%, and the risk of having dementia is 1.5% for those in the age group of 80\84. The risk is 20.5% and 3.5% respectively for those in the 85 and older age group. The risk of at least one spouse having a condition which requires care reaches about 50% over a person's lifetime in Japan, where the average life expectancy has reached into the eighties.

Back in the 1950s, the main cause of death was cerebrovascular strokes. In those days, many of the aggressive treatment methods which are being used today were unavailable. As a result, many people died relatively soon after suffering a stroke. In these circumstances, even if family members cared for the sick, it is fair to say that the duration of care was relatively short -- at most, several weeks3. We were able to cope with the situation by conventional means of family care giving in those days, because of the short care giving period and the greater number children per family than is the case today. However, as public medical care insurance has spread among all the citizens, access to medical care has improved4. Also, as critical medical care has advanced substantially, such progress makes it possible to increase the number of patients, including stroke victims, whose lives are saved and who then receive rehabilitation and survive for quite a long time.

The second point is that the conventional means of care giving, which is through the families of these elderly people, has begun to encounter difficulty as a result of various factors.

As you all know, it has been common in Japan for family members, especially a daughter or a daughter-in-law, to care for elderly family members.  The common belief has been that it is the woman's responsibility to take care of her parents or her husband's parents in their old age. It has been considered a shame to place parents in nursing homes or make use of external services to care for them at home because it is akin to abandoning their responsibility as children.


3 Yuzo Okamoto (1996), Medical Care and Social Service for the Elderly (pp.29-33). Tokyo. Japan :

lwanami Syoten.

4 Universal coverage of medical care insurance in Japan was realized in the year of 1961.



However, there is a sharply increasing number of cases where it is difficult to maintain the well-being of elderly people predominantly through care given by family members.

One of the reasons for this is the aging of the family care givers themselves. The majority of elderly people in need of care are over 80 years old and their care givers (who may be their spouses or children) are, in many cases, over 60 years of age5. When a care giver himself or herself is advanced in age, it is difficult for him or her to provide physically demanding personal care, such as helping a family member bathe, go to the bathroom or change posture day and night. We often see that elderly people who regularly go to hospitals for outpatient care are those who are, in turn, taking care of their elderly parents. In such cases there Is the constant concern that they may "fall together." The second reason that makes family care giving difficult is the declining ratio of elderly people who live with their children. It is well-known that Japan's cohabitation ratio (the number of adults living with their elderly parents) is higher than in other developed countries. With changing perspectives among both parents and children, however, this ratio has quickly fallen in recent years -- especially in the cities. In Tokyo, the city with the highest population, in particular, the cohabitation ratio has dipped below 50%6,thus, the number of cases where children and their parents who need care are living separately is on the increase.

There are other reasons that have made family care giving difficult in addition to those mentioned above. These include the rapid increase in the number of women in the labor force and the weakening of the feudalistic belief that a daughter-in-law should take care of her parents-in-law:

We will no longer be able to solve problems through the conventional approach by which family members, particularly women, provide most of the care needed by the


5 According to the Comprehensive Survey of Living Conditions of the People on Health and Welfare by

Ministry of Health and Welfare(1997), every other caregiver is 60 years old or older.

6 Statistics and Information Department. Minister's Secretariat, Ministry of Health and Welfare.

Comprehensive Survey of Living Conditions of the People on Health and Welfare (1997).


elderly. Furthermore, we no longer believe such an approach is appropriate.

The third point in this subject is the shortage of nursing homes and care workers who provide services to the elderly in need of care.

In Japan, as in other countries, care for the elderly is provided at special nursing homes and other institutions and through various home care services in addition to care which is provided by family members. Up until the late 1980s, however, Japan's national policies reflected the basic belief that children should take care of their elderly parents. As such the government did not make active efforts to increase the number of these institutions nor workers.

On the other hand, the medical care insurance system covered hospitalization of the elderly relatively generously. Partly as a result of this, there were often cases in which elderly people in need of care were neither cared for by their family members at home nor were admitted to nursing homes (due to the long waiting lists). Instead, these people stayed in general hospitals for long periods of time.

General hospitals are, however, designed for the purpose of providing medical treatments. They do not have proper or sufficient facilities for providing long-term care, such as private or semi-private rooms, dining rooms and bathtubs. Also, they do not have enough staff engaged in providing personal care to the patients who need long-term care. It has been said that elderly patients in general hospitals do not improve their activities of daily living (ADL) and that those who are bedridden deteriorate because of a lack of adequate care provided to them.

It was not until 1989 that the Gold Plan was formulated with the objective of promoting the development of facilities and manpower. Later in 1994, the target levels were raised. With 1999 as the target year, efforts are rapidly being made to develop institutions and train workers, but these efforts still lag behind the actual needs created by the rapid aging of the population and the increase in elderly people in need of care. A new fund which will be created under the long-term care insurance system after the year 2000 is intended to encourage the entry of the private sector into this market and dramatically expand the service volume (On the other hand, some governmental officers and economists are concerned about the possibility that the spending on the long-term care insurance will be substantially larger than expected.).


History of the Policies on Long-Term Care for the Elderly : From the Welfare Law for the Elderly to the Long-Term Care Insurance Law


The Welfare Law for the Elderly

Homes for the elderly, home care aid services, respite care which is called "short stay program" and other similar services have been covered by the funds from the taxes of the central and local governments under the Welfare Law for the Elderly which was enacted in 1963.

When this law was enacted, it was designed for the low-income elderly who had  no relatives to care for them. This policy went along with the prevailing belief of the times that family members should take care of their elderly relatives. However, since then, as the demand for long-term care has been increasing, the coverage has gradually been expanded, too. Today, any elderly person, as long as he or she needs long-term care, can basically receive services based on the Welfare Law for the Elderly.

Nevertheless, partly due to the fact that taxes are used to fund these services as a "welfare" system, the fees borne by users are divided into many levels depending on their income level.  The fees range from free of charge to almost 100% of the cost.

In addition, the municipal governments decide who is eligible (whether applicants are qualified for benefits or not) and set the content of the benefits, taking into account both the income of the elderly person and their family members and family relationships, among other factors. In actual practice, there still appears to be a strong tendency to provide  services to low income earners and people without relatives, while people with middle income are given a lower priority.


The Health Service System for the Elderly

Facility services in special nursing 'homes and home care aid services, among other services, which are provided under the Welfare Law for the Elderly, have been placed under strict budgetary restraints each year as a result of rigorous pressure from the Ministry of Finance. The reason for this is because those services have been funded by taxes. As a result, the volume of services provided has not been sufficient to meet the rapid increase in demand as the aging of the population progresses.

Under these circumstances, hospitals stepped forward to virtually offer living space to elderly people in need of care, in place of special nursing homes. In Japan, all of the citizens are covered by an insurance plan for medical services. Thus, people can have access to the hospital of their choice regardless of their income status. Elderly people in particular can receive medical services with a lower copayment  than the working generation under a special system for the elderly which is called the "Health Service System for the Elderly" (Though there was no copayment, a copayment system was later introduced, with the current percentage of copayment being about 5% of the total expenses.).

Therefore, many elderly people in need of care and their family members have continued to choose admission to readily accessible hospitals, instead of the "welfare" system which involves complex procedures and a check of income and details of the family situation. 

As a result, the average length of stay in Japanese general hospitals is much longer than in other developed countries. It was 33.7 days in 19957 despite a gradual shortening in recent years.

Table 4 shows a comparison between Japan and the United States in terms of the number of hospital beds and beds in homes for the elderly per 100,000 elderly population. You will notice that there are many hospital beds in Japan and many nursing home beds in the US. It is still fair to say that hospitals are the main facilities offering long-term care in Japan, though the situation has been improving since long-term care facilities have been developed according to the Gold Plan described below.

The Health Service System for the Elderly, which was institutionalized in 1982, covers all of the medical services necessary for the elderly, including admission to hospitals. Services such as health services facilities for the elderly (which are a kind of


7 Statistics and Information Department, Minister's Secretariat, Ministry of Health and Welfare, Hospital

Reports (1995).   


long-term care facility and primarily provide rehabilitation), home-visit nursing care and home-visit rehabilitation have been gradually added as new additional benefits. It is because long-term care, which can be regarded as a part of medical treatment for illnesses, is encompassed in these medical services.

Long-term care services for the elderly have thus far been provided in Japan, as mentioned above, based on two different systems: the welfare system for the elderly and the Health Service System for the Elderly.


The Gold Plan

Recognizing that family care giving for those elderly people in need of care was becoming increasingly difficult, the Japanese government developed and implemented the Gold Plan in 1989 which defined specific goals to be achieved over a ten-year period ending in 1999. These goals included numerical targets for facilities and workers in the field of long-term care for the elderly.

In implementing the Gold Plan, each of the municipal governments conducted fact-finding survey on the elderly people living within its jurisdiction, and formulated a specific action plan for the development of a service infrastructure based on the results of the survey. Prefectural governments also drew their action plans based on the action plans of the municipalities within their prefectures. Making these plans at these prefectural and municipal levels increased public interest for the issue of long-term care for the elderly. This served as an opportunity to raise the policy priority of this issue, which used to be at a relatively low level, to a higher level both in the national and local political scenes.

Subsequently, however, while in the process of creating action plans at local levels, it became apparent that the target levels specified in the Gold Plan were not sufficient to meet the needs of the people. So in 1994, the Japanese Government revised the Gold Plan and formulated the New Gold Plan by raising the numerical targets. The New Gold Plan is designed to achieve the goals shown below by 1999.


* Home care aides                            170,000 people

* Respite care (short stay) service facilities       60,000 beds

* Day care centers                            1 7,000 locations

* Home-visit nursing care stations                5,000 locations

* Special nursing homes for the elderly          290,000 beds

* Health service facilities for the elderly         280,000 beds

* Assisted living facilities (Care houses)         100,000 people


With the long-lasting depression in the Japanese economy, however, the fiscal ituation of national and local governments is deteriorating. Despite this setback, the status of progress under the New Gold Plan has been relatively smooth, except in the case of assisted living facilities (care houses). As far as the number of special nursing homes is concerned, the numerical target set in the Plan will be achieved by the end of fiscal year 1998, and it is expected to surpass the target in fiscal year 1999.

Nevertheless, many localities have experienced more growth in demand than expected since the launch of the New Gold Plan. The supply of home care services and facility services has not kept up with demand, and in spite of the recent rapid increases of these services. It is anticipated that the demand will further expand due to the enforcement of the public long-term care insurance system in April of 2000. The development of a service infrastructure beyond the New Gold  Plan is now an important challenge.

Under the public long-term care insurance system, the national government is expected to set forth basic guidelines on the development of the service infrastructure in order to systematically promote the continued development of care facilities and the training of manpower. Then, all the municipal and prefectural governments will draw up their specific development plans accordingly.


Public  Long -Term Care Insurance System

While the development of the service infrastructure progressed based on the Gold Plan, we had to face the challenge of deciding how to share the burden of the rapidly increasing long-term care expenses in the society. The answer to this challenge is the public long-term care insurance system. The following three points are the major factors in the background of the introduction of the public long-term care insurance system.

One of the factors was the need to ensure a stable revenue source. Since the launch of the Gold Plan, general tax revenue has been used to fund the infrastructure development for "welfare-" related long-term care services under the welfare system for the elderly, and insurance funds have been used to fund the infrastructure development for "medical care-" related long-term care services under the medical care insurance system. However, it was expected that ensuring the necessary financial sources in response to the future rapid aging of the population would be difficult, because each of these systems does not focus on long-term care. People became more aware that a stable financial source should be secured for the future, while the issue of elder care was one of the most worrisome factors in post-retirement life8.

Another aspect to consider is the criticism raised against the conventional allocation system. Today, home care services, such as home care aid and day care services, and facility services, such as nursing homes, are provided by municipal governments as a part of the "welfare" system. When an application for the use of a service is filed by an elderly person in need of care, the municipal government determines not only the necessity of providing the benefit, but the content of the service and designating the provider which will offer the service, after taking into consideration the income and family condition of the elderly among other factors.

Today when the majority of the public has begun to perceive the issue of long-term care as a relevant issue to their lives, they criticize the current allocation system on the basis that it makes services psychologically difficult to use because it stigmatizes people. They also dislike the fact that the opinions of users are neglected as municipalities unilaterally determine the contents and providers of services.

The third aspect is the deterioration in the fiscal situation of medical care insurance caused by the long-term hospitalization of elderly patients in need of care. Many elderly people in need of care avoid using the welfare system because of various


8 According to the survey conducted by the Prime Minister's Office in 1995, more than 80% of the

respondents supported the establishment of the public long-term care insurance system, though the system

will be predicted to increase their burdens. The results of surveys by others also show the similar

response and present people's high expectation to the improvement of long-term care.



restrictions on the use of services as well as the restricted quantity of services. Instead, they often use the more readily accessible medical care insurance system (the Health Service System for the Elderly) where they opt for a long stay in hospitals. In short, elderly people who should be in special nursing homes, which are less costly, or who should receive services at home, are staying in more costly hospitals9.

With this as the background, the decision was made to integrate, as shown in Table 4, the two existing systems that covered the long-term care for the elderly -- the welfare system financed by general tax and the Health Service System for the Elderly predominantly funded by premiums -- to create a new long-term care insurance system funded by both premiums and general tax. Though people often think that the long-term care insurance system was created from scratch, it is indeed a product of reorganizing and integrating the existing two systems.


The Contents of the Long-Term Care Insurance System


Basic Principles

The first is respect for the choice of the elderly themselves. Specifically, elderly people should be entitled to utilize home care services and facility services in accordance with their own needs and desires without feeling a sense of reluctance, regardless of their income level and family situation.

The second is to integrate the two existing systems for the elderly, the welfare system and the Health Service System for the Elderly, removing the wasteful overlap between these systems.

The third is to encourage diverse private-sector businesses to enter this market so as to respond to the rapidly increasing demand for long-term care services. Under the conventional welfare system, there has been a mechanism in which municipal governments choose service providers and contract with them to deliver services.


9 The average cost of a stay in hospital (about $3,800 a month) is 1 .8 times more than that of a stay in special nursing home(about $2,100 a month) . All dollar values in this article are based on January 1, 1998 exchange rate of 130.62 yen to the dollar.


Therefore, the municipalities have tended to preferentially choose service providers run either by the municipalities themselves or organizations which are funded by the municipalities, instead of private-sector service providers which the municipalities are not familiar with .

The long-term care insurance system, however, will abolish the system of contracting by the municipalities in order to have the same conditions for public- and private-sector service providers for competition. This will enable elderly people and their families to choose freely from among service providers, regardless of whether they are public or private, and private businesses can enter into the market without hesitation.

The fourth is to introduce the concept of "care management" in order to provide a variety of services in conjunction with one another to meet the desires of the elderly. Many elderly people and their families tend to remain isolated at home and they are extremely in short of information as to what type of care to receive and what type of service providers are available. Even if they know the existence of such providers, much negotiation with them and formulation of programs are needed to actually receive services from them. This task requires a great deal of time and patience.

As a result, in the new system as shown in Table 6, the elderly in need of care and their families can have their care plan formulated by the professional of their choice and have him or her coordinate the services based on the plan. The system will reimburse the cost incurred for this work.



The insurers are the municipalities. In Japan, the medical care insurance system is uniform in principle throughout the country. The needs for long-term care services, however, vary greatly according to the ratio of cohabitation with elderly parents and the perspective of local residents on family care giving. Thus, the long-term care insurance system must reflect the characteristics of local communities in its benefit design and the level of premium payment to some extent.

Municipal governments alone will not take responsibility for this new system, but the national and prefectural governments, which have been conventionally sharing the costs under the welfare system for the elderly and the Health Service System for the Elderly, will bear a part of the total expenses. Insurers of medical care insurance and insurers of pension insurance will collect long-term care insurance premiums on behalf of the municipalities.


The Insured

All people age 40 and older will be required to participate.  For people under 40 years of age, who need long-term care, care services will be provided through the existing welfare system designed for people with disabilities.

Those who are insured will be divided into two categories, using 65 years of age as the demarcation line. Those senior citizens age 65 and older will be allowed to receive insurance benefits, if they have a condition requiring long-term care regardless of the cause. They will pay premiums through the municipalities in which they live. Those whose age is between 40 and 65 will be allowed to receive insurance benefits only if their conditions are caused by illnesses associated with aging (e.g. cerebrovascular strokes and early-onset dementia) despite the fact that their condition will require long-term care10. These people will pay premiums through the medical care insurance system in which they are enrolled.


Insurance Benefits

Insurance benefits cover both home care services and facility services as shown in Table 7. In addition, the cost of so-called care management services (i.e. the cost of designing care plans and coordinating services by a care manager) will be reimbursed. To receive insurance benefits, the insured person must be assessed by the municipalities first concerning his or her need to receive insurance benefits.


10 The reason the long-term care insurance system covers only those age 40 and older and uses 65 years

of age as the demarcation line is that this system was designed to reorganize and integrate the welfare

system for the elderly and the Health Service System for the Elderly from the perspective of long-term care

for senior citizens. There were people who believed that it would be technically difficult and inappropriate

to classify the risk of a condition requiring care by age. However, for the reason mentioned above, it was

decided for the time being to cover long-term care for the elderly under the new system. Whether we

should lower the age limit of those covered or not will be an important issue after this system is



This determination is solely based on the insured person's physical and mental conditions. Different from the conventional system, neither the family situation nor the income of the elderly person and his/her family is reviewed for this purpose.

Insured persons who are entitled to receive insurance benefits through this process are classified into five to six categories according to their needs for care or the severity of their condition. The level of insurance benefits varies among these categories. At present, we are considering benefit levels of about 2,300 dollars per month for the most severe category and about 500 dollars for the mildest category. Within this range, the insured can freely combine different types of home care services, such as home care aid services and home-visit nursing care, and may be eligible to receive reimbursement.

Table 8 shows the benefit model example of the new system11

This case is a person who cannot turn over in bed by himself or herself, and needs help for some activities of daily living. He or she also needs home-visit personal care late at night and medical management. The person is living with his or her child. In this model, the  insured can use some services almost every day.  All of these services will be covered by the benefits of the public long-term care insurance. One characteristic of this model example is that it has incorporated multiple short (10 to 30 minutes) visits per day around the clock. A conventional home care aid typically visits a patient two to three times a week, staying for two to three hours each time to do household work such as making meals for two days and cleaning the house. These services have not been very useful for the elderly who need physical assistance. The new system aims to provide truly useful services to those who are in need of care by focusing on the provision of physical assistance such as diaper changes and position changes.

The level of services illustrated in the model example is expected to be covered by the public long-term care insurance. When the insured desire more frequent visits or additional services such as meal delivery, they can purchase them out of pocket or have


implemented. 11 This model example is shown in the 1998 Annual Report on Health and Welfare, p. 240    their expenses covered by a private long-term care insurance policy that they buy.



Concerning users' copayment, the insured will be reimbursed for 90% of the expenses for the services that are covered by insurance benefits; in other words, the users' copayment is 10% of expenses.  If the insured person is admitted to a facility, he or she will be responsible to provide the copayment for meal expenses in addition.


Financial Scale

Using 1995 prices for the purpose of this estimate, the total expenses of welfare and Health Service System for the Elderly spent for long-term care of the elderly was 16.1 billion dollars in 1995. By 2000 when the infrastructure development by the New Gold Plan ends and the long-term care insurance system starts, this amount is expected to grow to 32.2 billion dollars12. Since elderly people in need of care will continue to increase in number, this amount is expected to reach 52.8 billion dollars by 201012 (See Table 9). The long-term care insurance system will cover these expenses excluding the users' copayment. The system will be funded 50% by premiums and the remaining 50%by tax. The national, prefectural and municipal governments will share the expenses with at a ratio of 2:1 :1 .


Insurance Premium

Though the average insurance premium will vary depending on the income of the insured, it is estimated to be 19 dollars per month in 2000 and 27 dollars per month in 2010, as shown in Table 9. The actual premium charged to the insured will be divided into one for the elderly and another for those age between 40 and 65 as follows:

In the case of an elderly insured person: The municipal governments will set approximately five premium levels, depending on the income level of the elderly and deduct the relevant premium from the person's pension at the source.


12 These flgures are calculated based on the price index of 1995 without making adjustments for inflation.


In the case of an insured person age between 40 and 65: The premium level will be slightly different, depending on medical care insurance plan in which the insured person is enrolled. In the case of medical care insurance for employees, one-half of the long-term care insurance premium will be borne by the employer and in the case of the National Health Insurance, the same will be borne by the national government. Thus, in reality, the amount of the long-term care insurance premium to be borne by the insured will be about one-half that of the elderly. All of the premium collected by medical insurers will be pooled into the Social Insurance Medical Fee Payment Fund, which, in turn, will distribute the funds to municipalities. The amount of funds distributed to each municipality will be set so that each municipality receives approximately an equal percentage of the total cost of benefits for that municipality. This way, the gap in funding, which would be inappropriate to place on the shoulders of the insurers (such as the aging ratio), will be corrected (See Table 10).


Significance and Challenges of Recent Policies on Long-Term Care for the Elderly


The long-term care insurance system has not yet been implemented, and therefore, it is impossible to evaluate its results at this moment. However, the very fact that the two policies (namely the Gold Plan and the public long-term care insurance system) have been adopted since the late 1980s indicates the change in people's perspective about long-term care for the elderly from the issue which should (can) be solved within the family to the issue which needs solution through the entire society's efforts. It seems anachronistic to launch such a new entitlement program as the public long-term care insurance system, when budget cuts of social security programs are one of the prominent issues arising from the aging of the population. However, this has become possible because of changes in people's perspectives.

The examples in which these changes are typically reflected in the long-term care insurance system are the abolishment of the conventional allocation system, the adoption of respect for choices made by the elderly as a basic principle, and rejection to introduce the cash benefits systeml3 .

The following questions have been frequently raised by foreign researchers: Why didn't Japan introduce the cash benefits system under the public long-term care insurance system? Shouldn't we appreciate family members' care giving as long as people pay premiums? Don't we expect swelling expenses, because if family members' care giving is not appreciated, every one uses non-family care services?

These questions appear at the first glance to be reasonable from the viewpoint of maintaining fairness between people receiving family care and people receiving non-family care or from the viewpoint of being afraid that expenses may increase beyond control. These opinions indeed were expressed to some extent in the course of discussions about creation of the long-term care insurance system. However back then, most of the people who were in favor of the cash benefits system did not base their opinions on the reasons mentioned above, but rather on the idea that the long-term care should be ethically given by family members (especially daughters and daughters-in-law) and that such care should be properly appreciated in order to avoid losing such ethics. These opinions were primarily advocated by the elderly age group and rural residents. Nevertheless, these traditional opinions faced strong criticism from the people supporting feminism, who stated that those opinions would compel only women to give long-term care. Women's organizations asserted that the current situation is that people who try to use non-family care services suffer severe criticism from their relatives and neighbors as misdirected people who do not take care of their parents and parents-in-law. Those organizations further expressed their concern that under these circumstances, the conventional concept of family care could persistently remain if the cash benefits system would be created.

In the end the establishment of the cash benefits system was shelved. The reason for this is that the people who thought the cash benefits system would be the opposite of the trend toward burden-sharing of long-term care in the society as a whole, cash benefits system for other reasonsl5


13 A beneficiary or family member receives cash as a benefit, when the beneficiary chooses care given by

the family instead of services provided by non-family service providers.


considering the present status in Japan, became dominant14  along with the people who opposed to the

Another significance of recent Japanese policies on long-term care for the elderly is the impact on national economy. On one hand, the introduction of the public long-term care insurance brings about a negative effect of increasing public burden mainly shouldered by the working generation. On the other hand, it generates substantial growth of the long-term care service industry through the process of externalizing family labor. The most important factor regarding anxiety about post-retirement life among Japanese people is the issue of who will care for them when they are in a condition requiring care. Senior citizens have saved considerably high amounts of money, which are said to be the world's highest level, because of such worry. Long-term care insurance is hoped to play a role in eliminating anxiety about post-retirement life. It isexpected that long-term care insurance will improve consumption propensity of the elderly, leading to the expansion of domestic demand.

According to Professor Ohmori of Osaka University, the overall economic effect achieved by the creation of public long-term care insurance is expected .to be an increase of GDP by 1.3% by offsetting the negative effect caused by expanded publicburden through the expansion of the long-term care service industry and consumption by the elderly among other effectsl6

However, it seems there is a certain prerequisite for realizing such an economic expansion effect; the benefit levels of public long-term care insurance are fairly high so that senior citizens can rely on the insurance and thus spend money free from worries.


14  The trend toward the burden-sharing of, long-term care in society as a who[e has been rapidly becoming

dominant, as the quantity of long-term care services has been increasing. It is predicted that within a short

period after the launch of the public long-term care insurance, prerequisites which deny the cash benefits

system will change, and that the negative effects of not having the cash benefits system will gradually .

expand, as was pointed out by foreign researchers. The issue of having the cash benefits system will be

debated again at that time.

15  Other oppositions include an opinion that providing the cash benefits system would only end up with

becoming a mere means of lavishing money without any guarantee of improving the care level for the

elderly and an opinion that the financial scale of the system would further expand, resulting in a heavier cost burden.

16  Takashi Ohmori, The Impacts of Long-term Care Insurance on Japanese Economy, Nippon Keizai

Shimbun, October 17, 1997.                     




As the aging of the population is in motion, inevitably, the burdens for taxes, pension, public medical care insurance and the like have been rapidly increasing especially among the current working generation. Therefore, it is impossible to maintain the considerably high benefit levels of public long-term care insurance, if public funds, including taxes and premiums, are continuously distributed in the traditional manner.

A considerable amount of public funds have been spent for public infrastructure programs, such as the construction of roads and ports. These programs, however, are no longer expected to have a greater impact on the Japanese economy than in the past, and the government has been criticized for funding the programs that primarily benefit vested interests and are thought to be useless. It is now the time to start investing the funds in new industries, such as health care, to reflect the aging of the society.

It is also important to determine the priority among social security programs, such as those for pension, medical care and long-term care.

In the process of prioritization, the alleviation of more serious risks such as disabilities and illnesses should be recognized as being more important than the mere income increase in terms of relieving the worries of the elderly and effect on the national economy. These approaches will make it possible to maintain the benefit levels at which people do not have to feel worries about public long-term care insurance and medical care insurance.

Final discussion of this paper is the challenges in implementing the long-term care insurance systeml7 Currently, various preparatory activities are underway toward  the implementation of the system in April of 2000. They include preparation of standards for assessment for the eligibility status, training of manpower who will be involved in assessment, and identification of needs for the purpose of calculating insurance premiums, in addition to the development of long-term care service infrastructure based on the New Gold Plan. One of the present concerns is whether the sufficient quantity of long-term care


17 Other challenges which aren't discussed in this article are explained in the following article : Naoki

lkegami, MD, Public Long-term Care Insurance in Japan, JAMA, 1 997; 16: 1 31 0-1 314.          



services in response to the demand will be provided or not, once the insurance system is implemented. Though the infrastructure is being developed at a rate faster than that for the New Gold Plan, there are wide variations in the level of infrastructure developed among different geographical areas. It is expected that it is unavoidable to have some shortages in some localities initially after the implementation. However, it seems shortages will disappear in the medium term as seen in Germany, because the fund pool of long-term care insurance is anticipated to promote the entry of private-sector businesses into this market.

Another concern is whether or not assessments for the eligibility status will be done accurately and speedily. In Germany, there were cases where people could not receive insurance benefits for a long time due to the delay in the assessment process partly because of the short preparation period up to the implementation of the system. In addition, many of German people who are insured submitted requests to review their eligibility status partly because it was said that the decisions were greatly different depending on the assessors. In Japan as well, there are many preparatory activities needed for such a short lead time as two years, leading to potential danger of experiencing similar situations. Since the preparation period is limited, it is impossible to expect the flawless start of the system in the year 2000. What is important is to establish standards which will serve as the basis for assessing the condition requiring care through transparent procedures, and to energetically train assessors.

Another concern is how to assure the quality of long-term care services. Long-term care services are offered to people who are in a tense condition as an elderly in need of care and his or her care giver. How to assure the quality of care is an important issue.

While it is expected to see the entry of many businesses into this market in the future, the risk that vicious businesses will cause troubles, such as abuse, scammed work and fraudulent reimbursement claims will increase. It is necessary to seriously consider how to prevent or minimize these problems and to improve the quality ofservices provided by businesses.

It will be possible to assure a certain level of quality through care management and regulations of prefectural governments. However, it seems necessary to develop and introduce superior and more effective methods, including the ombudsman and an approach to evaluate the quality of long-term care services by third parties as seen in the US.




It is not a long time ago when the issue of long-term care began to be the society's serious interest in developed countries. In Japan, we are now indeed facingthis historically new challenge through the establishment of such policies as the Gold Plan and the public long-term care insurance system. This is a challenge under the harsh conditions, including the progress in the aging of the population and absence of the hope for dynamic economic growth. Thus, the future prospect of this challenge is unclear. However, as long as there is no panacea for the social security system in the aged society, the policies our country is currently adopting seem to be one of the influential approaches to the long-term care issue which is difficult to be solved by the elderly and their family members alone.

A variety of trial and error will be repeated in the future in implementing these policies. However, Japan will be able to give various lessons to other countries through such experiences.