Occasional LTC Policy Paper Series
© 1997 Duke LTC Resources
Publicly-Mandated Long Term Care Insurance
Programs: Japan Chooses a Modified German Model
Yoko Crume, Ph.D., M.S.W.
The Question
American policy makers and citizens have shown little
interest in Japanese and German LTC policy developments.
Evidence suggests some useful lessons are being missed.
|
At a press conference during the G-7 Lyon
Summit in the summer of 1996, Japanese Prime Minister Ryutaro
Hashimoto declared that Japan is ready to take the initiative
to build "a sustainable social security system (jizokusuru shakai
hosho seido)," with special attention to the world's rapidly
aging population. Further, Hashimoto said, he is willing to
freely share with others the successes and failures of the 30-year
experiment with aging programs in Japan.
As this goes to press, Japan is close to adopting a publicly-
mandated LTC insurance bill. This newest Japanese
experimental aging program is patterned after the German
LTC insurance program, a la Japanese style. The bill passed
the Lower House of the Diet (i.e., Parliament) on May 22,
1997, and is expected to pass the Upper House when the
House resumes its session this fall.
The on-going high profile of aging issues in Japan
(especially LTC) generates a set of interesting questions:
- Why is Japan adopting a publicly-mandated LTC insurance
bill at this time?
- Why is Japan adopting a modified German model?
- Why are American policy makers and the public not more
interested in Japanese and German LTC developments?
- Are there some lessons in recent German and Japanese experience
which may be useful in America's search for its evidence-based
LTC policy?
Methodology
Long term care in Japan including the pending LTC insurance
bill was studied through review of literature, interviews
in Japan, and observations.
An abundance of information on LTC is available in Japan,
reflecting wide ranging interest towards the issue. |
In the summer of 1996, as a graduate student
in social work at the University of North Carolina at Chapel
Hill (UNC-CH), the author received support from Duke University's
Leadership in Aging Internship Program to visit Japan to learn
about the then-emerging LTC insurance bill. The timing of this
visit appeared excellent due to the imminent introduction of
the bill to the Diet. (Ultimately, the bill's introduction was
delayed until the spring of 1997.)
Long term care commands national attention in Japan. This attention
has generated an abundance of information from wide ranging
sources, including governmental reports and publications,
scholarly journal articles, newspaper articles, articles in
popular periodicals, TV talk shows, and even a best-selling
novel. The public also displays great interest in other nations'
aging programs. In particular, Germany's publicly-mandated LTC
insurance program has been reviewed extensively by Japanese
policy makers and gerontologists.
During her visit to Japan, the author collected information on
the LTC Insurance bill through review of the literature in both
scholarly and popular articles. A contextual understanding of
the bill was gained through numerous interviews with
experts, practitioners in aging services, and representative
elderly members of society and their caregivers. For this
article, information available in both Japanese and English
publications was reviewed.
Findings
Popular novels depict public's anxiety over LTC. |
A Sense of Urgency Increases as The Older
Population Explodes
In 1995, a very popular novel titled Kouraku (Yellow
Fall) hit the bookstores all over Japan. This novel depicted
the struggles of a middle-aged man and his reluctant wife in
their efforts to care for the man's demented and frail parents.
In many ways, the story is a testimony to the changing social
conditions in Japan since publication of the epoch-making Kokotsu
no Hito (Man in Euphoria) twenty-three years earlier. The latter
was a huge bestseller and brought the public's attention to
the plight of a daughter-in-law, the designated caregiver in
the traditional Japanese family, in caring for her demented
father-in-law in a society where little public support existed.
However, Kouraku caught the attention of the reading public
by demonstrating how little really has changed. It was easy
for Japanese readers to relate the continuing difficulties of
the caregivers in the story to their own life experiences and/or
expectations. More than anything, the popularity of the book
reflected the deepening awareness and concern of the public
over LTC in Japan.
| 10 million Japanese will be at least
80 years old in 2020, producing the world's longest average
life expectancy. |
The public's concern is well founded. In
1994, a little over 14 percent of the 124 million Japanese,
or one in seven, was 65 years old or older. By 2020, 25.5 percent
of the Japanese, or one in four, is projected to belong to this
age group. At this rate, societal aging in Japan is expected
to be growing faster than in any other industrialized
nation in the world, including the U.S. Of particular concern
is the projected explosion of the 80-plus year old age group,
the major consumer of LTC resources. By 2020, almost 10 million
Japanese will be at least 80 years old.
LTC Policy Development Has Become A Priority
| Japan has made good progress over
the past 30 years in developing LTC policy and resources.
|
Traditionally, Japan has viewed care for
the elderly as the family's responsibility. Thus, programs for
the aged were mostly designed for the poor elderly without family
support. In fact, in 1963, only one publicly-managed skilled-care
nursing home for the aged existed in the entire country.
Then, in the midst of the heady economic boom of the late- 1960's
and early-1970's, the Japanese government launched several ambitious
programs for the aged. The nation was eager to upgrade its human
services to match its economic prowess. Most notable was the
nearly free Medical Care Program for the Aged, adopted nationwide
in 1972. This program guaranteed nearly free medical care coverage
for most people 70 years old or older. Because there was little
LTC infrastructure in place at the time, the program was used
liberally to care for the elderly with LTC needs in a hospital
setting.
| However, expanding LTC costs threatened
Japan's economic health in the late 1970's. |
However, as early as in the late 1970's,
the Japanese government began to re-think its aging programs
in response to growing concerns about LTC costs covered by health
care. These expanding costs threatened the nation's economic
health and, in particular, its National Health Insurance
(NHI) system. New legislation and policies emerged, involving:
- separating LTC from other health care programs for the aged,
- developing LTC resources for the aged,
- transferring administrative responsibilities for LTC to local governments, and
- promoting the concept of personal and/or shared LTC responsibilities.
Implementation was achieved through:
- passage of the Health Care for the Aged Law of 1980,
- creation of "old people's hospitals" in 1982, and
- development of the Gold Plan of 1990 and the New Gold Plan of 1994.
Combined, these programs resulted in:
- over 300,000 institutional care beds available for the
elderly in 1994,
- home-based care programs with 70,000 home-based care aides,
22,000 respite care beds, and 3,500 adult day care facilities
in 1993,
- enhancement of a capitated reimbursement system and sliding
scale user fees for LTC for the aged in institutional settings,
and
- introduction of a nominal co-payment in the Health Care
Program for the Aged
| Despite progress, Japan will still
fall short of meeting the LTC needs of 2.8 million elders
in year 2000. |
It is fair to say that the Japanese government
has made good progress in developing an LTC infrastructure over
the past 30 years. Still, the current level of service falls
far short of meeting the expected LTC needs of an estimated
2.8 million older people who will require some level of LTC
by the year 2000. And, by the year 2010, 4 million elders
are projected to require some level of LTC.
Financing LTC through A Nationwide Insurance Program Is Proposed
| The 1994 German LTC insurance legislation
opened a new avenue for Japanese LTC policy. |
Today, the Japanese government has a clear
mandate: to further expand LTC programs while containing their
impact on the national economy and the health care system. It
is much harder today to raise new taxes to pay for LTC needs.
Therefore, Japanese government officials and LTC experts took
great interest when Germany passed its LTC Insurance
Law (Pflege-Versicherungsgesetz) in May, 1994. The passage of
this legislation attracted a great deal of attention in Japan
because:
- The German program provides a new financing mechanism for the expansion
of its LTC program and, at the same time, limits the financial burden
on the government.
- The German program is publicly managed, and with its strong public-sector
orientation, is compatible with existing Japanese LTC structure.
- Because the two countries are similar in population size, economic
scale, and social insurance structure, the German program may be
directly applicable to Japanese society.
Japan was strongly attracted to the German program, one of
a very few publicly-mandated LTC insurance programs in the
world, and spent the next two years developing its own
publicly-mandated LTC insurance program, modeled after
the German experience.
Publicly-Mandated LTC Insurance Program in Germany in Brief
Virtually everyone in Germany is
covered by LTC insurance.
The German LTC insurance program focuses on development
of home-based care.
Recipients can choose services or cash. Eighty percent
of approved claimants choose cash. |
Germany's LTC Insurance Act went into effect
in January 1995, as the nation's fifth publicly-mandated insurance
program, following those previously mandated for health, accident,
pension, and unemployment. The features of the German LTC insurance
program are summarized below from the published articles by
Japanese LTC scholars who visited Germany.
Coverage
Participants in the publicly-mandated health care insurance
programs (over 90 percent of the population) are required to
enroll also in the LTC insurance program. Similarly, participants
in personally-financed health care insurance programs are required
to join personally-financed LTC insurance programs.
Administration
Existing health insurance funds administer the LTC insurance
programs.
Funding Source
LTC services are financed by insurance premium contributions.
Premium
All enrollees are required to contribute to one or another LTC
insurance fund. The premium amount, initially 1.0 percent of
the enrollee's annual income, was raised to 1.7 percent in July,
1996. The funding provisions include:
- employers contributing half of an employee's premium,
- self-employed paying in full, and
- pension providers paying half of pensioner's premium.
An exemption for dependents (i.e., non-working spouses and
children) is available, and continuing premium payment is
required for LTC service recipients.
Benefits
The current focus of the German LTC insurance program is to
develop home-based care assistance in the areas of Activities
of Daily Living (ADLs) and Instrumental Activities of Daily
Living (IADLs). Depending on the types of assistance needed
and hours involved, each applicant is classified into one of
three classes (I, II, or III), with Class I requiring the least
assistance and Class III requiring the most. (The institutional-care
coverage is also available for those with extensive LTC needs.)
Under the home-based care program, the service recipient can
choose service or cash payment. The amount of the cash payment
is set at about half the cost of the equivalent service. The
family caregiver (who is defined as an individual spending more
than 14 hours weekly providing care) is enrolled in the pension
and accident insurance plans, with premiums paid by the LTC
fund and the local government, respectively.
Between January and October 1995, 1.52 million claims
were processed in Germany. Approximately 70 percent of
these claims were approved. Eighty percent of the approved
claimants chose cash payment rather than direct service. A
major issue raised during this period was inconsistent
admission criteria used by different German states. The
German government is cautiously optimistic about the
program's financial future.
Japan at Final Stage of LTC Insurance
Bill Passage
| Japan's LTC insurance program is
on a fast track. |
Unlike the 20-year effort in Germany to develop
its LTC insurance program, Japan drafted its version of the
publicly-mandated LTC insurance bill in just two years. The
bill was ready for submission to the Diet for discussion
and vote, by the summer of 1996. However, due to the presence
of other more politically "volatile" issues, the bill did not
reach the floor of the Lower House until the spring of 1997.
The bill passed the Lower House on May 22, 1997, and is expected
to clear the Upper House in the fall of 1997.
Japanese LTC insurance will cover
people 40 years old and older.
Benefits rise with the number of ADL impairments.
The Japanese LTC insurance program will not offer cash
payment. |
The main features of the Japanese LTC insurance
bill include:
Coverage
The insurance is designed to cover people 40 years old and older.
However, those aged between 40 and 65 are eligible for benefits
only if their LTC needs are "age-related (e.g., cerebral conditions
caused by strokes, etc.; early-onset dementia; osteoporosis,
etc.)."
Administration
Local governments administer the LTC insurance programs.
Funding Sources
The estimated cost during the year 2000, the first year of planned
implementation, is 4.16 trillion yen ($36 billion, based on
the currency exchange rate of $1 = 114.65 yen on 7/1/97). This
amount will be financed through:
- user co-payments (10 percent of the fixed service cost),
- premium contributions (projected to be half of the total cost after co-payment), and
- government contributions (the remaining costs, divided among the national,
prefectural, and local governments on a 2 : 1 : 1 ratio).
Premium
All people 40 years old and older (estimated to be 65 million
in 2000) will pay LTC insurance premiums. The premium amount
will differ by age (i.e., the 40-65 age group vs. the over-65
age group) and income level. For the younger age group, the
amount each enrollee pays will vary depending upon the types
of health insurance coverage. On the average, the monthly payment
in the year 2000 is projected to be 2,500 yen (about $22) per
person, or 5,000 yen (about $44) per couple. Half of these amounts
will be contributed by employers (if employed) or the government
(if self- employed). Thus, the out-of-pocket expenditures for
the younger members will be about 1,300 yen (about $11) per
person, or 2,600 yen (about $23) per couple. For the older age
group (i.e., 65 years old and older), the premium will differ
among five categories based on each enrollee's income level
and will be deducted directly from the enrollee's pension. No
employer or governmental subsidy is available for the retirees
or their spouses. On the average, members of the older group
pay about 2,500 yen (about $22) per person or 5,000 yen (about
$44) per couple per month. However, this amount can vary from
1,250 yen (about $11) to 3,750 yen (about $33) per person or
2,500 yen (about $22) to 7,500 yen (about $66) per couple per
month, depending on the income level.
Benefits
Japanese LTC Insurance, according to the current bill, will
cover both home-based and institutional care. In the case of
home-based care, the levels of assistance are grouped into six
categories based on the functional levels of ADLs. Home- based
care benefits range from 60,000 yen (about $523) per month for
the minimum level of assistance (e.g., up to 2 housekeeping
visits per week, one nursing visit per week, up to 2 adult day-care
attendance per week, and up to 2 one- week respite care stays
per year) to 300,000 yen ($2,616) per month for the maximum
level care (7 housekeeping/personal care visits per week, 2
nursing visits per week, 3 day-care attendance per week, and
a one-week respite care stay every month). The service users
are responsible for 10 percent of the fixed cost as co-payment.
Unlike the German program, there is no cash payment option available
for home-based care. The institutional care benefits are applicable
towards stays at skilled care nursing homes (i.e., the Special
Care Nursing Homes for the Aged and the Health Care Facilities
for the Aged) and LTC hospitals. As with home-based care, institutional
care users will be required to pay 10 percent of the cost as
co-payment. Under this program, the user co-pay is estimated
to be about 24,000 yen ($209) per month for a stay at a skilled-care
nursing home. Additionally, the user is responsible for 23,000
yen ($200) per month for meals. Combined, out-of-pocket expenses
for staying at a skilled care nursing home under the LTC insurance
bill will be about 47,000 yen ($410) per month.
How Will This Program Affect Elders and Their Families?
The LTC insurance program will firmly
establish older people's right to publicly-supported LTC
services.
The program will benefit the middle class the most. |
The pending LTC insurance program will firmly
establish older people's right to publicly-supported LTC services.
Further, with a new infusion of financial resources, it will
boost the supply of home-based LTC services in Japan. This is
good news for Japanese society, where the inadequacy of LTC
preparedness has been a national preoccupation for the past
few decades. In particular, the new legislation will be beneficial
to middle class elders and their families. For the first time,
they will become eligible for a substantial home-based
care assistance program, with their cost of services contained
(i.e., 10 percent of the fixed service cost). Also, the middle
class user's institutional care cost may be further reduced
with introduction of the uniform charge system (i.e., 10 percent
of the capitated cost) in place of the sliding fee scale in
use under the current system.
The benefits for low income elders are mixed. The good
news is that low income elders will also benefit from the
expansion of existing LTC services, with less likelihood of
being on a waiting list for a long period of time. The bad
news is that their payment obligation will increase under the
new program. No longer will they be eligible for free
placement at a skilled care nursing home while receiving the
full amount of old age pension. Under the new system, all
residents will be charged the uniform contribution, which will
be automatically deducted from their pension. Further, all
users, without respect to their income levels, are required to
make co-payment.
What's Old and What's New
| The new LTC insurance program is
a combination of old and new concepts: public sector leadership,
local initiative, cost burden sharing, and personal responsibility. |
The pending LTC insurance bill points to
a new direction in Japanese LTC policies. What remains constant
is the public sector leadership in LTC. Under the new program,
three levels of government will finance close to half of the
total cost and maintain public sector leadership.
New or enhanced under the program are local initiatives and
the concepts of shared burden and personal responsibility.
The program brings local initiative to the forefront by assigning
responsibility for program administration to local government.
Understandably, many local governments have expressed their
reluctance to assume this huge responsibility. Their reluctance
was one reason behind the delayed introduction of the bill to
the Diet in 1996.
The new concept of shared burden is expressed through the
requirement that everyone over age 40 enroll in the program.
Personal responsibility will be stressed under the new
program through the requirement of full premium payment
for all senior enrollees and co-payment for services.
A Comparison: German Program vs. Japanese Plan
| The German and Japanese plans differ
in some important ways. |
The similarities and differences between
the German LTC insurance program and the modified Japanese LTC
insurance plan can be summarized as follows:
Coverage
The German program covers the entire population, regardless
of age. The Japanese plan is age-based, with benefits primarily
limited to those over 65 years of age.
Focus
Both the German and the Japanese programs cover home- based
and institutional care.
Benefits
The German program offers a choice of services or cash payment.
The Japanese plan offers only services.
Financing
LTC services in Germany are financed by premiums through a consortium
of the social insurance funds. In Japan, the combination of
user co-payment, premium contribution by enrollees and their
employers, and governmental funds will be used to finance LTC
services.
Private Sector Participation
Both Germany and Japan are expanding private sector participation
in home-based care. The development of the private sector service
providers is important to the successful development of home-based
care programs under these LTC insurance programs.
Japan: Implementation Challenges Ahead
| At this point, it is difficult to
predict how successful the program will be if implemented
in the year 2000. |
The new LTC insurance program in Japan, if
adopted as expected, will be implemented in the year 2000, just
three years from now. With such a massive new program, its future
is hard to predict. Some of the major questions to be answered
include:
- Is the projected number of older people eligible for LTC
services under the new program accurate?
- Can local governments perform the eligibility assessment
task with reasonable consistency, rigor, and fairness?
- Can local governments deliver the home care services described
in the program effectively?
- How will the added cost burden (premium and co-payment)
affect older people in general and those with lower income
in particular?
- What are the provisions for monitoring and evaluating
implementation?
Recommendations
for consideration in the United States
The notion of publicly-mandated LTC Insurance seems out-of-place
in today's American political climate.
But the Japanese experiment is worth careful study. |
American policy makers and gerontologists
rarely, if ever, look towards Germany or Japan for policy inspirations.
Possibly, suspicions about anything German (except for Mercedes,
of course) persist 50 years after WWII, while Japan remains
an upstart with a very different culture. At a minimum, the
seemingly monolithic zeal exhibited by these two nations from
time to time appears too incompatible with the American emphasis
on individual freedom.
This is unfortunate. In many ways, the issue of societal aging
in these two nations is similar to that of the U.S., in spite
of the obvious cultural and/or social differences. Perhaps it
would be worthwhile for the U.S. to give some thought to the
developments in these nations and ask:
- Why has Germany been successful in selling what appears to
be a big-government proposition to its people at this time,
and why is Japan close to doing the same, and
- Why hasn't the U.S. been able to focus on this crucial issue?
More urgent questions to ask, we recommend, are how
these two countries managed to bring LTC issues to the
forefront of the national conscience and political agenda;
and, what might American policy makers do to accomplish
the same? The Japanese experiment warrants careful study.
A Selection of Annotated Recommended Articles
Campbell, J. C. (1992). How Policies Change. Princeton, NJ: Princeton
University Press.
The evolution of the Japanese policies affecting the aging population in
the past 30 years is portrayed in this study of the Japanese political
decision-making process. The coverage of aging policies is
comprehensive, supported by the author's knowledge of Japanese
politics and his familiarity with both written materials and off-the-record
contextual background. In English.
Crume, Y. S. (1997). "Long Term Care in Japan" (Unpublished paper). An
overview of long-term care policies and programs in Japan. In English.
JARC-Japan Aging Research Center (1996). Statistical Abstracts of Aging
in Japan. Tokyo: JARC. A summary presentation of current aging
statistics. In English.
Maddox, G. L. (1992). "Long-term Care Policies in Comparative
Perspective," Ageing and Society, no.12, pp.355-368. A comparative
study of long-term care policy choices in the European Communities.
Particular attention is given to the major issues regarding aging and
welfare states including: balance of medical and social care for dependent
elderly people, the role of housing policy, and the issue of public and
private sector interaction. In English.
Miura, F. (1996). Zusetsu Korei-sha Hakusho [The Illustrated White Paper
on Advanced Aged Persons]. Tokyo: Zenkoku Fukushi Kyogikai. This
report profiles the living conditions of the older people in Japan. Numerous
statistics from official reports as well as private polls are incorporated to
provide a bird's eye view of the lives of older people in Japan. This
report, revised annually, may be the most accessible and current source
of information in Japan about the issues associated with aging. Also
included are three scholarly papers on current issues related to aging. In
Japanese.
Miyatake, G. (1997). Kaigo Hoken no Subete [All about LTC Insurance].
Tokyo: Hoken Dojin-sha. Detailed and comprehensive discussion of the
Japanese LTC insurance bill. Summary of the bill is attached. In
Japanese.
OECD (1992). The Reform of Health Care: A Comparative Analysis of
Seven OECD Countries. Paris: Organization of Economic Co-operation
and Development. Chapter 5 (pp.57-72) of this report provides the history
of the current arrangement which covers about 88% of the population.
Inclusion of LTC insurance is recent. Insured persons can choose among
a variety of "sickness funds" which compete for subscribers and for the
right to arrange for permission of care. The fund typically negotiate
prospective lump sum payments to both physician, hospital, and clinical
service providers. Self-government is an important principle in the German
health care system. The current system has had some success in
controlling health care inflation and providing equitable access to quality
care for the whole population. In English.
Sae, S. (1995). Koraku [Yellow Fall]. Tokyo: Shincho-Sha. This novel
depicts the struggles of a son caring for his demented and frail parents.
Together with Kokotsu no Hito [Man in Euphoria], a 1972 novel about the
plight of a daughter-in-law caring for her demented father-in-law, Kouraku
helped to focus the public's attention on the continuing shortage of
accessible LTC programs in Japan. In Japanese.
Schultz, B. (1996). "Social Protection for Dependence in Old Age: Case of
Germany." Development in Health Economics and Public Policy (vol. 5).
pp. 149-170. Discussion of the publicly-mandated LTC insurance in
Germany. In English.
Shinjuku Fukushi Kosha (1995). Fukushi Joho Guide [Welfare Information
Guidebook]. A guidebook distributed among all senior residents in
Shinjuku, Tokyo, by Shinjuku Fukushi Kosha, a non-profit agency founded
by the Shinjuku local government to promote home-based care programs
within its jurisdiction. An excellent source of information regarding locally
available aging services. In Japanese.
Tsuchida, T. (1996). "Doitsu Kaigohoken no Genjo [The Reality of German
LTC Insurance]." Zusetsu Korei-sha Hakush [The Illustrated White Paper
on Advanced Aged Persons]. Tokyo: Zenkoku Fukushi Kyogikai.
Description and analysis of the German LTC insurance program. In
Japanese.
Acknowledgments
I wish to thank the Duke Leadership in Aging Internship Program for funding my visit to
Japan in 1996, with particular appreciation to Dr. George Maddox, Sandra Crawford
Leak, Stuart Bratesman, and Jennifer Hoffman for their ideas, advice, review and
support. Also, I thank Dr. Erdman Palmore for acting as my mentor throughout the
internship program. Dr. John Campbell of the University of Michigan generously shared
his expertise on aging politics in Japan. Additionally, Dr. Daisaku Maeda of Risshou
University, Japan, provided valuable guidance on aging programs in Japan.
Prof. Florence Soltys of University of North Carolina at Chapel Hill and Mrs. Ruth
Campbell of the University of Michigan Hospital, my role models as a social work
practitioner/researcher in the field of gerontology, supported me throughout this project
in the way only social workers know how (i.e., "as much as needed and as little as
necessary") . In Japan, numerous persons helped me increase my understanding of
aging in Japan, with my parents being the source of my inspiration.
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