Care for an Ageing Population: Lessons from Japan?
I would like to considercare for older people in Japan.
(Slide2)This is important for two reasons. First, Japan, with the world’s fastest rate of population ageing, and the highest proportionof older people (currently 24%) arguably faces the greatest challenge in this area. Secondly,despite prolonged economic problems and strong traditions of family care, in 2000, the Japanesegovernment introduced ambitious care reforms forits older population.Significantly, this universal, collectivist scheme is needs-led and open-ended, not means-tested and budget-driven,like England’s. Crucially, the scheme has so far achieved both financial sustainability and great popularity.
(Slide3)The outline. First,I will consider the situation before the 2000 reforms and the drivers behind reform. This reveals some uncomfortable truths about Japan’s‘care’.I will thenexplain the new long-term care insurance system or LTCI, itsinitial impactandadjustmentsmade since 2005. Finally, I will assess the scheme’smajor achievements, challenges and possible lessons for England.
(Slide4)First, the situation before 2000.Social change since the 1980s createdunprecedented demand for long-term care for older people. Traditionally, it was assumed that the family would look after older relatives. Reinforcing this view was the dominant Confucian ethic of filial piety, underlining the duties expected of children. It is important to stress that until the 1960s Japan’s nationalhealth care system was underdeveloped, and this affected people’s chances of surviving into old age. In the immediate post-war years, less than half of Japanese people reached their 65th birthday. Frail older people usually lived withtheir children, but they received only minimum care.Only after 1973, when Japan’s ‘economic miracle’ permitted expanded health care, did most older people qualify for free medical treatment.Improved health care, together with social changes,notably the rise of the nuclear family and increasing female labour participation,exposed growing pressures on family carers, especially the need for longer-term and more demanding care, shared by fewer carers.
Increasingly apparent were instances of abuse, even the murder of older relatives, so-called‘care-giving hell’. Some critics attribute this problem to limited and stigmatised public social care, which wastax-funded andmeans-tested, targeting the poorest with no family support.
(Slide5)In contrast, public health care was social insurance-based, universal and, above all, free for most older people.Ironically, accessible health care highlighted the problem of so-called ‘social hospitalisation’, in which over-stretched and unsupported families abandoned elderly relativesrequiring social, not medical care, to hospitals where they became long-term residents.As well as fuelling soaring public expenditure, this could subject residents to abuse in shockingly inadequate facilities, involving routine over-sedation and physical restraint. Attempts to control budgets tended only to aggravate the problem as resources shrank, but ‘social admissions’ to hospitals continued, reflecting the on-going problem of care-giving hell. Seen as profoundly shameful in Japan, this pattern continued well into the 1990s.
(Slide6,7)These images convey something of the shameful conditions evident in Japan at that time.
(Slide8)The need for government intervention to addressthese problems was increasingly clear. Despite the financial recession of the early 1990s, and responding to the pressure of public expectations, the government remained committed toits aim of introducing comprehensive long-term care, particularly community-based care, as a universal and explicit right for every older person in need.
(Slide9)Accordingly, in 2000, Japan introduced its new compulsory long-term care insurance systemor LTCI. The motto was not only ‘from care by the family to care by society’ but also effectively to the State. Many even thought that LTCI would eventually replace family care entirely.
(Slide10)LTCI is half funded from general taxation, half through insurance premiums. Why LTCI include an insurance component, and not simply more taxation? One answer is that a combined financing and social insurance formula is familiar from other Japanese schemes, like pensions and health care. The insurance approach is central towhat is seen as a new ‘social contract’, andsocial justice dictates that ‘everybody contributes’. In practice, everyone aged over 40 pays into the scheme, including older people receiving the basic state pension. Significantly, thisimplies equity between the generations,along with collective risk-sharing. It also enhancesa notion of entitlement, further eroding any stigma surrounding means-tested public care and reinforcing popular approval of LTCI.
(Slide11)As noted, the system is mix-funded - 50% from taxation, 30% from insurance premiums from the 40-64 age group, and 20% from people over 65. In addition, service users pay a flat-rate 10% user-fee. Crucially, the funding structure is open-ended and pay-as-you-go, based on a forecast every three years.
(Slide12)LTCIguarantees anexplicit, nationally standardisedand generousentitlement for everybody aged over 65, along with some people over 40 with age-related disabilities.Assessment is based only on clinical need, disregarding personal, social or financial circumstances.
(Slide13)LTCI benefitsaregenerous, intended to cover the full costs of various care services provided at home, in the community and residential settings. But no cash alternative is available. The aim is to replaceinformal family care rather than to complement it, let alone to further encourage it.
(Slide14)LTCI stresses the relevance of market principles to service delivery, introducing choice and competition intendedto improveservice quality and efficiency.Many new providers have emerged, including the private and voluntary sectors.
(Slide15)But central government’s funding and regulatory rolesremain essential, whilelocal government, which insures LTCI, remains responsible for part funding, planning and administering services to agreed national standards.
(Slide16)What immediate impact did LTCI have?Generous eligibility criteria prompted a dramatic expansion in service use, and reducedthe burden on many family carers. A sense of entitlement developed and users became more vocal about their care, helping to enhance service quality and increase popular support for LTCI and the idea of paying premiums.
(Slide17)But these achievements increased expenditure, requiring increased funding through both taxation and insurance premiums. Moreover, removing means-testing and relaxing eligibility criteria revealed latent demand and even encouraged abuses, particularly the exploitation of cheap home care by less needy but more affluent older people.
(Slide18)Accordingly, in 2005, the governmentintroduced measures to ensure LTCI’s sustainability. These included means-tested accommodation fees in nursing homes and clearly defined and reduced services for less needy groups, emphasising‘no frills’, rehabilitation-led services, rather thanconventional domestic help. This slowed the growth of eligible users and service use, permitting expenditure to stabilise.
(Slide19)Significantly,the2005 reforms were also intendedto make LTCI more comprehensive and prevention-led,thereby extendingits scope to include a wider older population. Local authorities became responsible for low-level, preventative support with ring-fenced LTCI funding. This involvedpromoting active public participation. Older people, particularly, were encouraged to remain active by offering voluntary support to their frail peers. In some areas, volunteers earn credits towards their own insurance premiums. This initiative has potential as a cost-effective alternative to public support by paid workers.
I would like to conclude by summarising LTCI’s overall achievements, its challenges and possible lessons.
(Slide20)First, the achievements.Above all, Japan’s system, among the most generous in the world, has achieved financial sustainability with controlled and stable increases in expenditure. Secondly, the system’s generous, inclusive approach, embracing a large clientele, fosters high service quality and user expectations, and promotes prevention and active ageing. Its universalism and popularity triggered a profound shift in attitudes towards responsibilities for the care of older people. Overwhelmingly, the Japanese, unlike many English commentators, acknowledge the shameful record and limitations of family care, and would choose public services, even with increased insurance premiums. Care has effectively come to be seen as a collective, social responsibility, bringing long-term peace of mind and a sense of security in old age.
(Slide21)But some challenges remain, particularly finance.By 2025, care expenditure must double simply to match the doubling of the population over 75. This will require higher premiums, increased taxation, larger user-fees, reduced services or a combination of these. All these options could prove to be controversial, and currently discussions are heated. Accepting the need for adjustments, however, it isimportant to stress that both government and the public seem anxious toretain LTCI as a collective, universal care system. Secondly, service distribution remains unequal, producing acute shortages of nursing homes and intensive community care, leaving a continuing heavy burden on family carerswho look after those most disabled. Finally, there is an acute shortage of care workers. Therefore, Japan may need to relax its immigration policy, but this is politically very sensitive.
(Slide22)Finally, what can we learn from Japan’s experience?First and foremost, Japan’sexperience suggests that cost control is possible, even within a needs-led, universal pay-as-you-go approach. Arguably this contrasts with tax-funded, budget-driven systems like England’s. Yet, this requires careful negotiation and consensusamong all those involved, particularly because people are contributing directly through premiums and might have to contribute more. Japan’s case suggests that this too ispossible, provided that the mechanisms are equitable and clearly understood. Japan’s system involves every pensioner as well as workers paying premiums, ensuring intergenerational equity.Premiums are also set on a progressive sliding scale according to financial means to ensure equity between generations. We’ve also learnt that universal entitlement, including a large, diverse clientele,not only the most needy, tends to push up quality.This contrasts with England’s system which increasingly targets the most needy. A developing ‘consumerism’ among Japanese users helps consolidate LTCI, while England’s approach to quality assurance tends to emphasise rigorous inspection. However, such consumerist attitudes may fosterunrealistic expectations or service abuse. Therefore,clarity concerning eligibility and service content are crucial, which is the fourth point. Early, exaggerated expectations and variations in service content antagonised both users and providers. This problem is magnified in a regime, like England’s, which increasingly highlightspersonalisation, choice and flexibility.Significantly, precisely because of early experiences, there is little discussion in Japan about these issues, which is so prominent in English discourse.Equally, there must be realism about the appropriate role of the family providing care. Japan’s experience suggests the need for caution here. Finally,cost awareness assumes strong central government control, along with a clear role and some autonomy for local authorities. Local authorities determine their own care budgets and set insurance premiums according to local needs. This contrasts with England, where local authorities rely mainly on central government funding.
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