“Reckoning with the growing demand for long-term care”


Reckoning with the growing demand for long-term care,” by Rainer Kotschy and David Bloom, VoxEU



“Existing healthcare structures are not designed to meet recipients’ long-term care needs and are ill-equipped for the looming surge in demand. Some countries have implemented social long-term care insurance to facilitate their citizens’ access to adequate care. However, even those systems face considerable challenges in light of population ageing, thus requiring extensive policy reform. Japan, for example, introduced a Long-term Care Insurance Program in 2000; by 2011, LTC expenditures had doubled from four to eight trillion yen, with government projections forecasting a continued increase to 20 trillion yen by 2025 (Shimizutani 2013). Addressing these challenges by reforming care policy is particularly tricky because measuring informal care has historically been difficult, and because previous reform attempts prove that informal care decisions are sensitive to government subsidies (Costa-i-Font 2018, Barczyk and Kredler 2018). Specifically, when formal care is subsidised but the policy does not anticipate citizens taking advantage of these subsidies, LTC markets will be overwhelmed while informal care converts to formal care.”


LTC Comment, Stephen A. Moses, President, Center for Long-Term Care Reform:

Well, I must say, we told you so. Here’s a short excerpt from our 2005 report on the state of the then-new Japanese public LTC insurance system. For the full report, see “LTC Bullet: How Japan Escapes ‘LTC Hell’,” Friday, November 18, 2005.

“– Overall program costs are growing at an alarming rate according to several analysts and a member of the Japanese Diet’s upper house (House of Councillors) interviewed for this article. For 2005, 5.5 trillion [yen] projected, 6.8 trillion [yen] actual.
— A major factor driving cost increases is much heavier utilization than expected of the lowest levels of care provided by the system. ‘Government views with alarm: too many people without much need are getting services.’
— Premiums that were only expected to average $27 per month by 2010 have already reached $30 on average and are expected to increase seven percent a year from now on. Because premiums are based on income, ‘many citizens are now paying closer to $50 per month.’
— Demand for nursing home services has increased despite the system’s emphasis on home care because the eligibility screening role of municipalities was decreased at the same time that the system paid ‘hotel costs’ in nursing homes but not for home care. This has led to a high demand for and a shortage of nursing facility beds.”