Future of Japan's Long-term Care Insurance Program

The debate on social security system reform in Japan is now entering a crucial stage. On August 6, 2013, the government's National Council on Social Security Reform delivered its final report calling for creating a "21st (Year 2025) model" of social security, proposing a shift from the current age-based burden sharing to the capacity-based one.

The report sets a direction for reforming the public Long-term Care Insurance Program introduced in April 2000. Japan's long-term care expenditures (including expenses paid out of pocket by users) more than doubled within the decade, and are forecasted to continue to rise to about 20 trillion yen, or 3% to 4% of gross domestic product (GDP), in fiscal 2025. A sharp increase in demand for long-term care services against the backdrop of a rapidly aging population is a major factor behind this. In the August issue of the RIETI Report, we present Consulting Fellow Satoshi Shimizutani's column "Future of Japan's Long-term Care Insurance Program."

Shimizutani introduces the three assumptions underlying the policy debate, which have been implicitly made in discussing the reform of the Long-term Care Insurance Program and require a change of thinking. He argues that an empirical analysis of the program, which has yet to be achieved in Japan, is essential and can be accomplished using globally comparable relevant datasets. Finally, Shimizutani addresses the impact of RIETI's own dataset from the Japanese Study of Aging and Retirement (JSTAR) and its implications on accumulating evidence that can establish and set a direction for reform.