Global Aging Issues
Long-Term Care Insurance in Japan
AARP Global Aging Program Idea Exchange with Dr. Naoki Ikegami / Event
May 2006
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AARP Global Aging Program Idea Exchange Series
Washington, D.C.
On Wednesday, April 19, 2006, Naoki Ikegami, Professor and Chair of the Department of Health Policy & Management, Keio University School of Medicine in Japan, spoke at the AARP Global Program’s Idea Exchange. Dr. Ikegami, who serves as President of the Japanese Society on Hospital Administration and sits on various national and state government committees, including being the Chair of the Investigative Specialist Sub-committee on Case-mix Based Reimbursement for Chronic Inpatient Care, discussed the challenges faced by the Long-Term Care system in Japan and share best policies and practices from the Japanese experience of dealing with the public Long-Term Care Insurance.
Long-term care insurance became the third pillar of the Japanese social security system in 2000, complimenting universal health care and pension coverage. The factors that led to implementation of the long-term care insurance were the aging of the population, a significant decline in the birth-rate, and a changing role for women in the country from homemaker to worker. Currently, over 20 percent of the population is made up by the 65+ population. However, in less than 25 years, that number is expected to climb to well over 30 percent. Older Japanese became concerned that there would be no one to take care of them and that they could become a burden on the family. In addition, the waiving of the co-payment for older persons in 1973 led to a de facto coverage of long-term care by the health insurance which came to be generally regarded as inappropriate and expensive.
By implementing long-term care insurance, the Japanese also streamlined a very patchwork system into one benefit. Benefits of the system include a health and social component, which covers physical therapy services, day care, intermediate care facilities, some long-term care hospitals, home-helpers, day care, nursing homes, loan of wheelchairs, and home improvement. All of the long-term care benefit is for either social welfare or health care. Housing costs are not covered by the insurance and are generally paid for by personal savings or the universal pension which averages about $1,700 a month. In addition, there is a10 percent co-pay for all services, with a ceiling for those with low incomes.
In order to obtain the long-term care insurance benefit, individuals must apply to a local municipal office and be assessed by a nurse or social worker. The assessment consists of 79 questions the responses of which are fed into a computer. The computer places the individual into one of six care levels. Secondary and final categorization is made following an assessment by professionals: physicians, nurses and social workers etc. Finally, a care-plan is developed for the applicant by a care manager. If an individual is not happy with the care plan that is developed, they may go to another care manager agency.
The long-term care insurance program has seen a significant increase in the number of people joining the benefit since it began. The majority of the increase has been among users requiring “light care”. However, of those certified as eligible, only 45 percent of their entitled amount is actually used, partly because of the co-pay and partly because they may not wish for that amount of services. Most users have responded positively to the program.
Since the program began in 2000, the government has witnessed a significant increase in program expenditures. The government responded in 2005 with legislation that was intended to curb the costs of the long-term care insurance program by placing more financial responsibility and redesigning the benefits. There will be a “hotel cost” of $300 per month attached to individuals living in a nursing home setting. Those in the light care levels would have their benefits limited to preventive care services such as physical training and nutrition consultation.
There may be a need to decrease the amount of services or more stringent requirements to take advantage of the benefit in the future. Another issue that must be resolved is extending the program’s benefits to all Japanese in need of long-term care and not just older persons. However, in general, the future of the long-term care insurance program is bright.
As for lessons for the United States, Dr. Ikegami stressed that long-term care insurance is an affordable option that should be considered. He noted that, in Japan, health care is 8 percent of GDP, while long-term care insurance is only 1 percent GDP. Dr. Ikegami also believes that long-term care insurance is also more efficient than providing services through health insurance because need is determined upfront and additional services can be purchased if desired.
Dr. Ikegami warned that long-term care insurance should not be seen as a panacea to the problems ailing the US health and long-term care systems and it should definitely not be seen as a way to get people out of nursing homes. Rather, it is a way for older people to have a role in managing their own care and to take proactive steps to increase their physical and cognitive function well into older age, which may have the desired effect of containing health expenditures.
Regardless of what changes happen in the US, Dr. Ikegami warns that America should focus its resources on the most vulnerable population first and expand over time to include the less vulnerable that needs to receive care and services. It should also focus on delivering services and not a cash benefit, like many countries are opting for now.
BioNaoki Ikegami, MD, PhD, MA is Professor and Chair of the Department of Health Policy and Management at the Keio School of Medicine in Japan, from which he received his MD and PhD. He also received a Master of Arts degree in health services studies with Distinction from Leeds University (United Kingdom). During 1990-1991, he was a visiting professor at the University of Pennsylvania's Wharton School and Medical School, and has continued to be a Senior Fellow at the Wharton. He is a board member of interRAI (a non-profit international consortium of researchers and clinicians focused on care planning instruments), Priorities in Health Care, and the Japanese Society on Hospital Administration. He has served as consultant to the WHO and the World Bank, and has also sat on various national and state government committees. His research areas are health policy, long-term care and pharmacoeconomics. His publications include "The Art of Balance in Health Policy - Maintaining Japan's Low-Cost Egalitarian System" (Cambridge University Press, 1998) with John C. Campbell, "Quality Life Evaluation Handbook for Clinicians" (Igakushoin, 2001) in Japanese with Shunichi Fukuhara et al, "Measuring the quality of long-term care in institutional and community settings" in "Measuring Up - Improving Health Care Performance in OECD Countries" (OECD, 2002) with John Hirdes and Iain Carpenter.