Sub-Module 2: Allocation of Responsibilities between the Central Government and Local Governments Case Study 2. Allocation of Responsibilities between the Central Government and Local Governments in the Long-Term Care Insurance System Section 1. Outline of the long-term care insurance system 1-1 Background behind introduction of the system Japan s population is aging at a rapid pace. As of September 2003, the number of people aged 65 years or older in Japan is 24.31 million, a figure that represents 19.0% of the entire population. It is expected that the percentage of people aged 65 or older will rise to 26.0% in 2015 and to 28.7% in 2025 1. In line with this rapid aging of the nation s population, it is expected that the number of elderly people who are bedridden or have recognition impairments that require long-term nursing care will grow. Thus, a major factor behind introduction of the long-term care insurance system was the need to meet requirements elderly people have for long-term nursing care services. Conventional long-term nursing care for the elderly was provided by a) the family, b) welfare systems for the elderly, or c) healthcare programs for the elderly (medical insurance). However, these approaches have been found to entail the following problems. Problems identified in nursing care provided by the family include a) the fact that the increasing prevalence of the nuclear family and the advancement of women into society have meant that there is no one in the home to provide nursing care, b) even if a caretaker is available, considerable physical and mental hardship is involved in caring for bedridden or recognition-impaired elderly people (e.g., providing meals, performing toilet duties, assisting in bathing, etc.), and c) the problem of one elderly person being forced to care for another is emerging due to a rising number of households in which 1 National Institute of Population and Social Security Research, Population Projection for Japan (January 2000 Projection) 1
only elderly people live. Thus, a framework in which not only families but society as a whole shares the burden of nursing care was required. Looking at welfare systems for the elderly, the types of services supplied and the providing institutions were determined based on a municipal survey of user income and needs. However, it was pointed out that there was psychological resistance to the use of these systems because users tend to be low-income earners, users cannot select the services they want, and because an examination of earnings was required. And, in terms of healthcare programs for the elderly (medical insurance), it was pointed out that, because a portion of long-term nursing care needs were met by medical insurance, problems such as rising medical costs caused by long-term hospitalization in general hospitals for the purpose of nursing care (so-called social hospitalization ) arose. The long-term nursing care system was commenced in April of 2000. Intended to solve problems like those mentioned above, it reorganizes the framework for providing long-term nursing care services that had been supplied separately by welfare systems and healthcare programs for the elderly. 1-2 Outline of the system Under the long-term care insurance system, municipalities are the insurers. Insured parties are people aged 65 or older (Type 1) and people aged 40 to 64 (Type 2). People who require long-term nursing care apply to their municipality to receive official recognition that they are a person requiring nursing care. This recognition is divided into seven categories 2 : higaito (inelligible), yo-shien (assistance needs), and yo-kaigo 1 (care needs level 1) to yo-kaigo 5 (care needs level 5). The municipality determines the appropriate category based on the applicant s need for long-term care and then notifies the applicant of its decision. The monetary amount to which services can be used is limited by the recognition category. The user selects the services that he or she will receive within this limit (monetary amounts that exceed this limit are borne by the user). 2 Persons that are judged to be higaito may not receive long-term care services. Persons that are judged to be yo-shien may receive at-home services but not services at long-term care facilities. 2
If a user will utilize at-home services, he or she may ask a care manager to prepare a long-term care service plan ( care plan ) when selecting services. The care manager will prepare a care plan based on consultations with the user and his/her family, and the user will utilize services in accordance with this plan. If the user will utilize facilities services, he or she will apply directly to the relevant facility. As a rule, a user is responsible for paying 10% of long-term nursing care services, with the rest being paid to the businesses that supply the services through insurance benefits. The burden of insurance benefits expenditure is broken down as follows: premiums paid by insured persons: 50%; share borne by the central government: 25%; share borne by prefectural governments: 12.5%; share borne by municipal governments: 12.5%. 1-3 Roles of the central, prefectural, and municipal governments The most important role of the central government is to issue 25% of the insurance benefits expenditure of all municipalities to municipal governments. Of this, 5% of insurance benefits expenditure (financial adjustment subsidy for long-term care benefits expenditure) is raised or lowered for each municipality based on its late-term aging ratio (population aged 75 years or older divided by the population aged 65 years or older) and the income level of Type 1 insured persons. Shortfalls compared to the national average are adjusted for municipalities having a high late-term aging ratio and therefore high percentage of people requiring long-term care, as well as for municipalities having income levels that are below the national average. In addition, the central government engages in overall administration of the system by, among other activities, establishing recognition standards for yo-kaigo (care needs) and setting long-term care compensation amounts to be paid to long-term care insurance businesses. The prefectural governments designate businesses that wish to provide long-term care insurance services, designate and approve the opening of long-term care insurance facilities, offer advice on long-term care business plans formulated by municipalities, establish long-term care business support plans, and set up fiscal stabilization funds. As the insurers, the municipal governments handle the majority (and most important aspects) of system administration. Among other activities, they set and collect 3
insurance premiums from Type 1 insured persons, handle administration of insurance benefits, and formulate municipal long-term care insurance business plans. Section 2. Response of municipalities to the long-term care insurance system The following will discuss the response of municipalities to the long-term care insurance system. It will cover independent benefits trends and management of long-term care insurance through extended associations, etc. 2.1 Independent benefits In addition to services that are legally designated by the central government, municipalities can provide independent municipal benefits called tacked-on services, in which monetary limits on services used are raised, and side services, in which municipalities supply services other than legally designated services. Taking Takahama City in Aichi Prefecture as an example, the city is tacking on the following amounts to monetary limits on services used as a tacked-on service. Amount tacked on to benefit limits in Takahama City Unit: Yen/month Yo-shien Yo-kaigo 1 Yo-kaigo 2 Yo-kaigo 3 Yo-kaigo 4 Yo-kaigo 5 Limit in Takahama City 97,500 219,800 247,200 316,300 378,900 420,100 National standard 61,500 165,800 194,800 267,500 306,000 358,300 Amount independently tacked on by Takahama City 36,000 54,000 52,400 48,800 72,900 61,800 Percentage tacked on 58.50% 32.60% 26.90% 18.20% 23.80% 17.20% The revenue source for independent municipal benefits is, in principal, premiums paid by Type 1 insured persons. However, because implementation of independent services is directly connected to increases in insurance premiums, few local governments conduct tacked-on and side services within their long-term care insurance frameworks. The number of local governments providing tacked-on services (i.e., tacking on to benefit limits) is only 24 (0.9% of all local governments), while that of governments providing 4
side services stops at 115 (4.2%) 3. In cases where independent services are provided, revenue is often obtained through contributions from general finances as a standard policy of the long-term care insurance framework. 2-2 Management of long-term care insurance by multiple municipalities Broad-based insurer management is being practiced in 67 regions and 502 municipalities through the establishment of extended associations and some administrative unions by multiple municipalities (as of April 1, 2004). Advantages of long-term care insurance management by multiple municipalities include savings on personnel and administrative costs, stability in insurance finances, standardization of premium levels, and establishment of regional facilities. For example, in the Northern Chita Extended Association of Aichi Prefecture (Tokai City, Obu City, Chita City, and Higashiura Town), it is estimated that centralization of personnel expenses and computers has resulted in expenditure reductions of approximately 750 million yen over the course of five years 4. On the other hand, items that can be considered disadvantages include the fact that it takes time to coordinate opinions among participating bodies, as multiple municipalities participate, and the fact that the relationship between the premiums burden and level of services becomes ambiguous. Discussion Topics How is shouldering of public expenditure by the central government, prefectural governments, and municipal governments significant when looking at both maintenance of a national minimum and municipal autonomy? How does the obtaining of revenue sources for provision of independent municipal services (as described in 2.1 above) through raising of premiums paid by Type 1 insured persons and through the general finances of the municipality impact on the burden placed upon insured persons and on municipal finances? What merits and demerits are there in joint management of long-term care insurance by multiple municipalities (as described in 2.2 above)? 3 Ministry of Health, Labor, and Welfare, Materials from a national meeting of managers in charge long-term care insurances (September 8, 2003) 4 Website of the Northern Chita Extended Association (as of August 10, 2005) 5