**GLOBAL AGING ROUNDTABLE**

**2005 WHITE HOUSE CONFERENCE ON AGING**

**Remarks By**

**Yusuke Kataoka**

**Executive Director**

**US Foundation for International Economic Policy, Japan**

　　　　　　Japan's Care Service Insurance Law(s) (System) as enacted in
1997(its implementation in April, 2000) and Revisions and Amendments to
the Original Law(s) enacted in May 2005; its Pros and Cons.

Japan's care services insurance law(s) as enacted in 1997 and its
implementation which embarked on in the year 2000 with the stipulation
attached to the original law(s) of 1979, by which the law(s) must be
reviewed in every 5 years to meet the needs of the time was one of the
major Social Security Policies that Japan has introduced in coping with
the issue of aging, in particular, on the system of providing care
services for the elderly. The fundamental philosophy and vision in the
creation of this system was designed, at the time of the law(s) enacted,
to make the system sustainable for years to come to cope with the
rapidly accelerating population of aging who require some type of care
services.

> 1\. Outline of the System and how the system is to be restructured:
>
> \* The original law(s) enacted in 1997 was a combination of "insurance
> scheme" and "taxes". The system is structured by co-sharing system
> whereby the Central Government is responsible for contributing 25% to
> the system, 12.5% by Prefectures, 12.5% by regional governments such
> as cities and towns, 32% by the future recipients of the care services
> (40 years old to 64 years old) and 18% by those who are eligible to
> receive the care services and who are being assessed as the one needed
> to receive level of care who's age is from 65 years old.
>
> \* In order to make the system carried out throughout the nation
> without discrepancies in terms of maintaining the quality of care to
> be as much as uniformly, the system has set up "Financial
> Stabilization Fund System" which is contributed one third each by the
> Central Government, Prefectures and Cities and Towns. The fund is
> designed to stabilize administrating and operating entities in terms
> of their financial condition due to some regional financial and
> economic condition, namely, due to changing fiscal budgetary
> conditions should change negatively.
>
> \* Under the original system, the level of care was classified into
> (5) level of care for the elderly depending on the level of care
> services required and plus "Supportive level of care." Thus, the total
> category of care services and supportive and assistance cares combined
> is (6). Depending on the level of care services required, the care
> fees are disbursed to the recipients of care services. However, 10 %
> of cost of care services the elderly receives must be paid out of
> their pockets.
>
> According to the Ministry of Health, Labor and Welfare, The total
> budget for the system in the fiscal budget in the year 2005 was \\ 6.7
> Trillion Yen.

Currently, those elderly who are being assessed as eligible recipients
of

> Care services both at institutional settings such as nursing homes,
> the
>
> various types of care services settings and in-home care services are
>
> said to be approximately 4 million persons.

２．In view of rapidly growing population of the aged, and those elderly
who require some type of care, services or supportive assistances are
growing more than the government had predicted at the time of the
implementation of the system in the year 2000. In particular, it is
noted that the growth of level of care which have grown more than double
is the level of care as classified under the original care level of
Level Care (1) and Level of Supportive and Assistance, which have
occupied the half of those elderly compared to those who are being
assessed as the one requiring care services (from care level of (1)
through (5). This category of growing population of relatively less
acute care services needed persons are those who have been receiving
care and supportive assistance at in-home services. The care services
and supportive assistance programs are considered not contributing to
improvement of their health condition of the elderly. It is pointed out
that some of services cost is used for other than direct care services
and needed supportive assistances. This has contributed to the increase
of care services fees

> It is pointed out that miscalculation on the part of the Central
> Government and Ministerial Commission on Social Security Commission
> and its sub-committees, which were held responsible to recommend to
> the Minister in charge of Japan's Care Services Insurance System, was
> blamed in their optimistic view that the system in question could be
> placed as a viable and sustainable one for the years to come. At the
> same time, the Japanese Government has been going through the
> restructuring plans to make the fiscal and budgetary condition of the
> nation to be healthy, for which major restructuring policies and plans
> are underway, which is focusing on the area of social security
> policies including the revisions of medical insurance, pension system
> and now care services insurance system has become one of the targets
> of the government restructuring policies.

3\. An Outline of Amendment of Law(s) for Japan Care Services Insurance
Law(s); System as Amendments and Revisions to the Original law(s) of
1997

-   With the growing population of the aged and the rapid increase of
    those elderly who are being assessed to require care services and
    supporting and assistances services under the system, the government
    initially wanted to included the following policies and programs so
    that the financial basis of the system would be enhanced as a
    sustainable and durable system to cope with deteriorating system in
    terms of its sustainability from financial point of view.

-   The government had a grand design to expand and broaden the
    population of the payee to the system. For this task, the government
    had submitted a few major policies and program services which were
    designed for the inclusion of the key programs such as the expansion
    of the payee of the premium of the care services insurance in the
    process of review, deliberation and discussion at the Ministerial
    Social Security Commission for their approval and recommendation as
    the consensus of the Commission which will pave the way for the
    approval and passage of the proposed amendments and revisions at the
    Welfare and Labor Committee of the Lower House and the Upper House
    of Japanese Diet in May of 2005.

> The government and the parties in power thought that some of the major
> policies, program services and some restructuring task of
> consolidating other laws such as the Disabled Support and Assistance
> Fees Law(s) could be in place, and lowering the starting age of the
> paying for the premium, all of which will enhance the financial basis
> of the system by the deployment of the expansion of the payee of the
> premium for the system. But, it did not succeed to bring about the
> strategies of the Ministry to included these proposed policies and
> services programs due to the fact that the nation was sharply divided,
> even among the members of the Ministerial Social Security Commission
> on "Revision and Amendments to Japan's Care Services Insurance Law(s)
> of 1997".
>
> The reasons for disapproval were voiced by business groups, regional
> governments, professional groups (providers of care services) and
> people at large due to:

1.  Change of starting age of paying for the premium from the originally
    set year of 40 years old to the proposed age ranging from 20 or 30
    years old would create negative factors which will affect on the
    mind of the youth who may be placed in financially difficult
    situation and that they are not psychologically in line with the
    philosophy of sharing the responsibility of the cost for the care
    services for the elderly.

2.  Secondly, business corporation and business associations decided
    against the proposal as their share of the burden will be increased
    because the employers must pick up the cost of 50% of the premium of
    their employees.

3.  Regional governments were also against the government proposal
    because of the enormous burden that will be imposed on them as the
    administrator of the care services insurance system. They asserted
    further that if the Disabled Supportive and Assistance Fees Law(s)
    were to be consolidated with Care Services Insurance Law(s), it
    would create confusion because the Disabled Supportive and Assistant
    Law(s) were different in nature in terms of the contents of care
    services unless the system must be structured to cope with the way
    to provide special mental and medical treatment services, which will
    be an additional burden on the payees of the premium.

4.  It is also said that the government proposal for the revisions and
    amendments are deviating from the vision and philosophy that the
    government pledged at the time of the creation of the system and
    there has been no unified and constant policies kept in the task of
    reviewing the original law(s) and that the government was trying to
    scale down the quality of care services for the elderly because of
    the fiscal difficulty by introducing some of new programs without
    revealing the details of services programs as well as how these
    programs are going to be established and consolidated with the
    existing system. It was also pointed out that no financial details
    are clearly defined for these new services programs.

> The government was forced to withdraw the policy of "expansion of
> population of the payee of the premium" for the inclusion in the task
> of revisions and amendments to the original law(s) of 1997, and
>
> Instead, the following policies and services programs are included in
> the proposal in the form of the large framework with the details of
> policies and programs yet to be developed in the revised and amended
> law(s) which was enacted in May this year.
>
> The followings are some of the major policies and programs that the
> amended and revised law(s) has included for the passage of the law(s):

(1) Changing to prevention-oriented system( original level of care I and
    supportive and assistance level are going to be grouped together for
    receiving "preventive care services" rather than a full care which
    was made available under the original law(s) ).

(2) Revision of Facility Services

(3) Establishment of new service system

(4) Quality control and improvement

(5) Revision of finance and management

(6) Extension of insured/beneficiary( additional clause)

> For the details of these (6) policies and programs, please see the
> attached materials.
>
> The government has decided to minimize the unproductive and wasted
> type of the various services programs and has placed more emphasis on
> "Preventive Care Services Programs" which will, in the eye of the
> government, reduce the cost of care services fees and that it will
> help the elderly become more independent. Community service programs
> are introduced in order to support the care services for the elderly
> which are designed not only for the elderly to participate in
> preventive care exercise to prevent them from the further progression
> of the health condition and frail
>
> In conjunction with the efforts of reducing the care services fees
> under the system, the government decided to introduce "Rental Room
> Fees and Meals fees" to be charged to the residents who are residing
> at institutional settings such as special nursing homes and other type
> of facilities. The contention that the government attempted to justify
> this change from the original system under which rooms and meals are
> covered is that those elderly who are getting care services at home
> under the original system are not enjoying the same benefits of rooms
> and meals which are covered by the care services insurance compared to
> those who are residing at a special nursing homes and other type of
> the facilities.
>
> In order that the system is to be maintained at least minimum level in
> order to provide appropriate care services programs, some innovative
> programs which are not yet implemented under the original system are
> going to be in place under the revised system. However, whether or not
> these service programs are going to improve the quality and quantity
> of care services are not clear in the eyes of the public.
>
> Another major issue is the attrition rate of care givers and some
> irrational way of uniformed care services fees applied without
> consideration of regional economic condition and the factors of cost
> of living between the major metropolitan cities and country region. In
> spite of the higher wages which are required to pay for the employees
> at institutional facilities located in the metropolitan areas, the
> care services fees for the providers of care services are more or less
> the same with the fees disbursed to the providers in country region
> where the cost of living is much lower. The law(s) dictates that the
> uniformed standard for care services fees without consideration of the
> factors of cost of living which makes it difficult for the providers
> of care services for the elderly who are located in the metropolitan
> areas. It is urged that the government must implement cost of living
> factors as added fees for the providers of care services for the
> elderly in metropolitan areas to keep the providers to be able to
> operate the facility with quality staff to extend the good care
> services. Otherwise, institutional facilities in major metropolitan
> areas will be facing with the difficulty of operating their care
> services adequately and that it may be the case that they may be out
> of the service operation.
>
> As it has been briefly described about Japan's Care Services Insurance
> System and the revised and amended law(s) to the original law(s) of
> 1997, it may be useful to summarize the pros and cons of the revised
> and amended law(s) to see how Japan's Care Services Insurance System
> will be shaping into more appropriate system by reviewing further on
> some of pros and cons sides to make the system to be healthy and
> sustainable one.
>
> PROS & CONS of the revised and amended law(s) of 2005.

-   Pros:

1.  Japan's Care Services Insurance System was designed to provide
    needed care services for the elderly which are supported by the
    combination of "tax and premium for the insurance" in the form of
    "co-sharing system".

> This system will be available to all when they reach the age of 65 and
> some special measures are implemented to make it less burdensome for
> less-well-to-do people by reducing the fees that they have to pay for
> the services they are receiving.
>
> 2\. By establishing institutional facilities for care services for the
> elderly through the financial subsidy that the government extended
> made number of facilities available that helped the families of the
> residents who are housed at facilities provided less burden in their
> daily lives. Particularly, those families who have less children or
> relatives to look after the elderly needed care services.

3\. Compared to private care services being operated by profit
organizations, the elderly and their families' financial burden as well
as their physical and psychological burden are reduced under this care
service insurance system.( Nursing homes, Health Center for Aged, Day
Care Center and other type of service units are available under the
system).

4\. If the enhanced financial condition are improved for the system by
allocating financial resources from the sales tax (consumption tax)
which are now being contemplated to increase from the current 5% to 10%,
it will make the system more flexible in terms of providing more various
type of care services and the system will be placed as a sustainable
one.

-   Cons:

1.  The philosophy and vision of the system have not been implemented in
    full due to the lack of financial support by the government which
    forced the government to fail to maintain and promote constant and
    irrevocable policies as pledged at the time of the enactment of the
    original law(s).

2.  Due to the failure of expanding and broadening of the population of
    the payees for the premium of insurance, some of the major services
    programs have been not included in the revised and amended law(s),
    which made it difficult to improve the system as originally
    envisioned.

3.  Because of fiscal budget tightened policies in place, it has shifted
    the contents of care services from full services to "preventive
    care" approach; some of programs which are designed to introduce
    "exercise and training with the use of machine" are regarded as
    unrealistic for those elderly whose age is 75 years old or more.
    Some medical experts question the contents of "preventive cares" as
    merits to improve the condition of the frail elderly which are
    proposed and being contemplated by the government.

4.  Emphasis are now shifted from the expansion of care services to
    in-home, which will increase the burden of the families in view of
    the accelerating demographic changes taking place in Japan; Decline
    of birth rate and mobility of younger generation in their working
    locations; there will be less family members to look after the
    elderly.

5.  Charging "Room & Meals fees for the elderly residing at
    institutional facilities" will be placed in financially difficult
    condition because the majority of them are depending on their
    incomes on national pension. It is also pointed out that those who
    reside at institutional facilities are less well-to-do compared to
    those elderly who are receiving care services at their homes.

6.  The proposed reduction of service fees for the providers of care
    services may lead to reduction of quality of care services and the
    management of institutional facilities may be out of the business
    operation.

7.  The lack of flexible policies concerning the consideration of added
    services fees for providers of care services operating in major
    populated areas will face the difficulty of recruiting qualified
    care givers due to the higher wages the providers of care services
    must pay for them, whereas the wage scale in country region is less
    because of the less cost of living.

8.  Government has failed to develop specific contents of programs for
    implementation during the process of reviewing revision and
    amendments to the original law(s) of 1997. This has created a large
    degree of confusions among the regional governments, providers of
    care services and people at large.

> We have come full circle. During 21^st^ Century the number of aging
> persons is going to accelerate more rapidly than we will be able to
> predict at this moment. Additionally, the decline of the birthrate
> will make it much more difficult to provide the adequate supporting
> infrastructural resources, particularly the human resources to extend
> personal care services to the growing number of aging people. It is
> important that we establish infrastructural environments to the best
> of our ability in order to extend opportunities not only to the
> elderly but also to those providing care services. However, it may be
> more important to think of how successful aging should be defined and
> follow through with it. In this sense, international collaboration on
> the issue of aging is as important as it will affect on the prosperity
> of the world unless we work together on the issue of aging.
>
> Yusuke Kataoka
>
> Acting Chairman& Executive Director
>
> U.S. Foundation for International Economic policy
>
> Working together with
>
> Dr. Teruhisa Mokuno
>
> Chief Executive Officer
>
> Sun-Life Social & Welfare Organization (not-for profit)
>
> The distinguished visiting scholar John F. Kennedy University