Japan's Radical Reform of Long-term Care

Japan's mandatory long‐term care social insurance system started in 2000. Many important choices about the basic shape and size of the system, as well as a host of details, were necessary when the program was being planned. It represents a reversal from earlier steps toward a tax‐based direct‐service system, and is based on consumer choice of services and providers. The benefits are in the form of institutional or community‐based services, not cash, and are aimed at covering all caregiving costs (less a 10 percent co‐payment) at six levels of need, as measured by objective test. Revenues are from insurance contributions and taxes. The program costs about $40 billion, and is expected to rise to about $70 billion annually by 2010 as applications for services go up. There are about 2.2 million beneficiaries, about 10 percent of the 65+ population. The program has operated within its budget and without major problems for two years and is broadly accepted as an appropriate and effective social program.