Japan’s Long-term Care Insurance Program: An Overview S S∗

Even compared with other developed countries, Japan’s population is aging at an exceptionally high rate and the proportion of those aged 65 and older already exceeds 20 percent of the total population. The rapid aging of the population is inevitably accompanied by a growing demand for long-term care, resulting in increased pressures on the current social insurance scheme. This abstract provides an overview of Japan’s long-term care (LTC) insurance program and the related empirical literature to evaluate how the program measures up to its goals. The LTC insurance scheme was introduced in April 2000 to supplement the mandatory national health care system established in 1961. According to Japan’s Ministry of Health, Labour and Welfare, the new scheme pursued three major goals. First, it aimed to address widespread concerns related to aging, in partic-ular the burden caring for the elderly imposes on families. In effect, the intro-duction of the scheme signals the recognition that the responsibility of care is shifting from the family to the government and the measure tries to address the supply shortage in the care for the elderly. Second, the reform sought to make more transparent the relationship between benefits received and premiums paid. Until 2000, under the “distribution system”, the provision of care for the elderly was part of the government’s tax-financed welfare policy and those eligible were assigned to nonprofit providers. As a result of the reform, there is now a clearer relationship between the financing of care services via premiums and eligibil-ity. A third aim of the new scheme was to integrate health, medical and welfare services, which in the past were vertically divided and operated independently. The objective of integration was to encourage the provision of comprehensiv