Policy Options for Financing Future Health and Long-Term Care Costs in Japan

Tadashi Fukui and Yasushi Iwamoto

in Fiscal Policy and Management in East Asia

Published by University of Chicago Press

Published in print November 2007 | ISBN: 9780226386812
Published online February 2013 | e-ISBN: 9780226387062 | DOI:
Policy Options for Financing Future Health and Long-Term Care Costs in Japan

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The 2003 annual report on the Japanese economy and public finance stated that “the sustainability of the present fiscal and social security systems is uncertain and hence, an early commitment toward bold institutional reforms is required.” In the public pension reforms of 2004, Japan cut future pension benefits substantially. This chapter explores the effects of introducing a pre-funding scheme on the intergenerational distribution of burdens, giving new insights into the future financial problems of social insurance programs. It first examines both health care and long-term care programs and considers the concept of pre-funding long-term care insurance. The chapter then describes the current problems in the budget of the Japanese social security programs, arguing that the growth of health and long-term care costs is the most serious problem for the sustainability of the government budget. It also discusses the projections of labor force participation and explains some policy simulations that deal with the financing of future health and long-term care costs until FY 2100.

Keywords: Japan; pre-funding; long-term care; social security; social insurance; health care; labor force; pension benefits; government budget

Chapter.  12633 words.  Illustrated.

Subjects: Business and Management

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