The Silver Markets in Japan can be
stimulated by regulatory reform
October 4th, 200８

DISCLAIMER
No portion of these materials is to be
used or disseminated byany method without the expressed
written consent of the presenter(s)and the German Institute for JapaneseStudies (DIJ).

Naohiro Yashiro
International Christian University andCouncil on Economic and Fiscal Policy

Outline Japan’s aging is proceeding rapidly,
and markets for the elderly is growing; The elderly are not necessarily poor,
but are diversified income groups;
 Health care and nursing care services
are promising industry, as thecustomers are increasing and themarkets are underdeveloped withvarious regulations.
2Continuously declining Japan’s
population from the peak of 2004
Projection on Japan's Population
130

125

120

110

105

100

95

20
35

20
20

20
05

1990

1975

90
1960

Million115

Population Research Institutes
2006 estimates2002 estimates3

Still increasing elderly populations in
the coming two decades
Changes in population in various age groups
6,000

4,000

1000 persons

2,000

01980

1985

1990

1995

2000

0～19age

20～64age

2005(2010)(2015)(2020)(2025)(2030)-2,000-4,000-6,000-8,00065～74age

75age & over4The elderly are not necessarily poor,
but they are the group with thehighest income disparity
世帯主年齢別年間収入格差（ ジニ係数）

0.38

0.36

0.34

0.32

0.3

0.28

0.26

0.24

0.22

0.2
1979

1984
30歳未満

1989
1994
出所；全国消費実態調査
30-39歳40-49歳50-59歳1999
60-69歳2004
年齢平均Prohibition of the mixed billing between
those covered by insurance and not Only the rich can purchase the better
health care services by additional costs;
 Public insurance may well be abused by
combining with the treatments forhealth serves other than basic healthcare; Doctors may well induce their patientsto buy unnecessary drugs or treatments
by using their advantageous knowledge
over the patients.
6

Regulation ignores the followings;
 Not only the rich, but the middle income classcan afford to utilize qualified health care services
by paying for the extra costs other than coveredby public insurance.
 Banning rule can be relaxed only for thosequalified hospitals under severe assessments of
the quality; Providing extra financial resources to qualified
hospitals stimulating the incentives for quality
improvement
7

Non-profit principle for hospitalmanagement
 Definition of “profits-seeking behavior” is
not clearly defined Prohibition of issuing dividends byhospitals and clinics
 Regulation on the means to finance thecapital of medical institutions
 Difference between interests and dividends
as the “costs of financing capital”
 The regulation de facto works for theprotection of small hospitals and clinics by
excluding new entrants of large hospitals
8Merits of the regulatory reform Development of M&A of hospitals
 Financing of the large scale private
hospitals or chain of medium-size hospitals
 Well-managed hospitals meeting thedemand by patients can take over the lesswell-managed ones, resulting in a dynamic
efficiency mechanism in hospital markets.
 “No-profitability” in the health care service
markets could be guaranteed by setting aform of “supply obligation” like the cases ofelectricity or gas companies.
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Nursing care services
 An increasing number of the frail elderly.
Possibility of being a frail elderly in someform was 3.8% between age 65 and 74,
but it rose to 24% at age 65 and above.
 Number of family having the frail elderly
has risen overtime, while the family’s
capability in taking care of them has
been declining Those frail elderly are getting to behospitalized under a rule of free accessto medical services, a major causes foran expansion of health care costs.
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Nursing care insurance has developed thecare service markets
 Entry to the markets has been opened
to new entrants of any forms
 Public insurance benefits are directed toconsumers rather than providers as in
the case of welfare services; Options for consumers in combining
extra nursing services with those
covered by the public insurance is larger
than the case for health services
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Silver markets are the key for revitalizing the Japanese economy
 From compulsory tax and social
contributions to private consumption
 Creation of various private services
combined with standard public services
 Stimulating the competition between
various type of hospitals and clinics
 Providing variety of choices to theconsumers in the aging society
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