Global Aging Issues
Design and Impact of Public Long-Term Care Insurance in Japan
Opinion
September 2005
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By Naoki Ikegami
Professor & Chair, Dept. of Health Policy & Management,
Keio University School of Medicine, Tokyo, Japan
Making long-term care an entitlement
Japan implemented a mandatory long-term-care insurance (LTCI) system in April 1, 2000, as the third pillar of social security following health insurance and pensions. It is based on a consumer choice of services and providers for all persons 65 and over, who have been certified as eligible. Eligibility is determined by an objective assessment of physical and mental function, based on a computer program that classifies the applicant into six levels of eligibility or non-eligible. Neither the willingness and/or ability of family and friends to provide care, nor income is taken into consideration. The benefits are in the form of institutional or community-based services, not cash, with a 10 percent co-payment. In institutional care, the full costs of care except food is covered, and in community care, the entitled amounts range from US$ 500-3600 per month, according to the eligibility level. The fees for LTCI services are set by the government, with regional differences to reflect cost-of-living, and apply to all providers.
About 15 percent of persons 65+ have been certified as eligible in 2005. This ratio has grown from 10 percent when the program started. Expenditures have increased commensurately, from 3.7 billion yen (0.7 percent of GDP) in 2000 to 6.7 billion yen (1.3 percent) in 2005, which is greater than the original government’s projection of 5.5 billion yen. In an effort to contain costs, the government has made revisions in 2005 that consisted of levying modest hotel costs for institutional care (additional $300 per month on average, more for those in single rooms, less for those with low incomes), and restricting the provision of home-making services in the two lightest eligibility levels. For the latter, a new package of “preventative” service has been introduced that include exercise training, oral health and nutritional counseling. Whether these measures would succeed in containing costs remain doubtful but there has not been any demand to tighten the eligibility criteria or reduce the benefit amount. This may be due to the fact that the program has been popular with the public, perhaps more so than health insurance, because the benefits are more tangible and have been newly introduced.
The LTCI has also created new jobs when stagnation in the economy had led to a record high unemployment rate of 5 percent. The increase has been greatest for care givers who require only basic training for their license. Compared to the United States, they are relatively well paid, earning on average ten dollars an hour, and tend to be better educated. Strict emigration policies have effectively closed the labor market to immigrants; a recent agreement with the Philippines allowed for a quota of only one hundred nurses per year. Moreover, before being allowed to practice, they must pass the licensure examination for nurses in Japanese. The current restrictions may be questioned in the future as the society continues to age.
Bio:
Naoki Ikegami, MD, PhD, MA is Professor and Chair of the Department of Health Policy and Management at the Keio School of Medicine, 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.