Working Paper No. 6

Social Security and Social Network in Japan

by

Shuzo Nishimura

Faculty of Economics

Kyoto University

April 1992

Department of Research Cooperation

Economic Research Institute

Economic Planning Agency

Tokyo, Japan

Any opinions expressed here are those of the author and not those of the institution to which

the author belongs.

SOCIAL SECURITY AND SOCIAL NETWORK IN JAPAN

Shuzo Nishimura

Faculty of Economics

Kyoto University

Table of Contents

Page

I. Introduction: the Scope of this Paper 1

II. Macroeconomic Aspects of Social Security in Japan 2

III. Pension Schemes in Japan 3

IV. Social Health Insurance and the Health Care System in Japan 5

(1) almost equal access to health care and low out-of-pocket expenses 6

(2) rapid increase of the health care expenditures for the elderly 8

(3) the system of point fees which are set by the government 9

(4) the unique role of profits which private hospitals pursued for 10

(5) no quality assurance 11

V. Care for the Elderly in Japan 12

-1-

I. Introduction: the Scope of this Paper

The purpose of this paper is to give a brief overview on the Japanese social security

system. However, here I do not try this to be extensive. Rather, I will discuss the issue from the

following viewpoint, that is, how differently does her system work from those of other Western

industrialized countries. And how does her system share the common problems with those of

other countries.

According to the international standard classification, social security programme are

sometimes classified into three categories: (1) income security, (2) health and medical care, and

(3) housing and unemployment allowances. 1 However, among these, housing and

unemployment allowances seem to have different character. In order to explain these

allowances, I have to show broader backgrounds such as land issues and industrial relations

which relate to the Japanese economy as a whole. Therefore, here, I confine to the first two

categories only.

Instead, in-kind provision of welfare services such as sending home helpers to the

disabled elderly at home now seems to play an important role as a social security programme

in most developed countries. Therefore, in this paper, I will describe social security in Japan as

consisting of the first two categories shown above and also as consisting of the welfare services

for the elderly. The reason why I think such welfare services in Japan to be important is as

follows.

The first reason lies in a changing demographic structure in Japan, speed of aging of

which is the fastest in coming 30 years among the developed countries. Secondly, though, at

least until recently, care for the elderly has been considered to belong to family's responsibility,

drastic change of family structure urges it to be treated as a social security programme.

Although family tie is still strong in Japan, increase of the nuclear family, which were mainly

brought from urbanization, is making family to take care of the elderly difficult.

In what follows, at first, I briefly sketch the macroeconomic data on social security in

Japan. The volume of contributions and the benefits of social security in relation to national

income is shown. Secondly, in section III, I will consider the public pension system. And in

section IV, health care systems in Japan are characterized.

Finally in section V, I will examine the present status and future prospects of the welfare

policy for the elderly. Here I will also show the people's ambivalent attitude towards the

changing pattern of the role of the family.

1 See for instance, International Labour Office, The Cost of Social Security, 1981 － 1983.

International Labour Office, 1986.

-2-

II. Macroeconomic Aspects of Social Security in Japan

People's contributions for social security in relation to national income in Japan is not so

high. I showed those figure with those of other main developed countries in Table 1. As of 1988,

it amounts to 11.3 per cent. As far as we take its ratio to national income, Japan ranks second

from the bottom among five major countries, where the United States ranks lowest.

Since some social security benefits are financed not only from social security

contributions but from general tax revenue, I showed the share of social security contributions

by sources in Table 2.

The reason why the U.K.'s social security benefits are relatively lower is because the share of

tax financing is relatively higher. These rough estimates might be enough to show that

Japanese social security contributions are relatively lower with those of other developed

countries except for those of the United States. As a result of this, social security benefits also

are lower in Japan. This is shown in Table 3.

One reason why the burden of social security contributions is still low for Japan is

because she, as well as the United States, is still young in her age distribution. However, this

factor cannot explain the whole difference of contributions and benefits among different

countries. (See Table 3.)

The important difference lies in the fact that benefits other than public pensions are

significantly different, because expenditures for pension seem to reflect the difference of age

structure in main developed countries which were taken in Tables 1 and 2. We can see in Table

3, that the difference of 'others' is significant among these countries. In section V, I will inquire

why this is so different.

There are different views on whether the coverage of social security be broadened or not.

One politically influential Commission which were directed by the government, recommended

that at least until the beginning of 2000s, total burdens of taxations and social security

contributions in relation to National Income should not exceed 50 per cent.2

While it is uncertain whether this recommendation is achieved or not, in my view, one of

the most important factors which will determine the amount of social security benefits is the

future of the saving ratio. Because if savings as a source of economic growth is not enough,

burdens as a ratio of National Income will necessarily become higher.

Though the personal savings in relation to disposable income is quite high in Japan,

there is much controversy about the future trends of saving ratio. More than half of people,

when asked why do they save, respond that it is because they feel uneasy when they get older.

2 This Commission is called as 'The Second Ad Hoc Commission on the Governmental Administrative Reform,

(Daini Rinji Gyousei Kaikaku Chousakai), the Purpose of which is to make the government to work more

efficiently.

-3-

Therefore, on one hand, some analysts consider that the increase of the social security

benefits will reduce the saving ratio. However, on the other hand, some analysts observe that

bequest motives are more significant.

III. Pension Schemes in Japan

In any developed country, public pension benefits are paid, to a larger extent, from

workers' contribution for social security, that is, those are only partly financed by general tax

revenue. In terms of inter-generational distribution, the systems are classified into two kinds

of financing. One system is full-funding system, which each generation prepare for their own

generation by saving their contributions. The other system is pay-as-you-go system, which

implies that benefits of pensioners are financed by the contributions of the present working

generation.

In each system, in order for the financial soundness to be pursued for, precise prediction

on such as the increase of wage rate, rate of economic growth, the consumer price increase, and

the future prospect of interest rate is necessary.

One of the most general ways to do this is as follows: at first targeted so called

'replacement rate' is set aside. Replacement rate means the ratio of the mean amount of the

benefits for pensioners to the mean amount of wages for the present workers. Once this targeted

ratio is set, it seems easy to calculate the required amount of the ratio of contributions to wages

(contribution rate).

In reality, however, the story was not easier than what has been done as a paper work.

In most countries, as is the case in Japan and also in the United states, public pension benefits

were slide by consumer price index.

When targeted replacement rate is fixed, since pension benefits are slide by the consumer

price index, and since the rate of increase of workers' wages does not necessarily coincide with

the increase of the consumer price index, sound financial management of pension scheme was

a difficult task. This way of sliding is often called as double-indexing, which means that the

benefits are slide both by consumer price and the workers' wages.

Needless to say, if tax-financed resources are enough, the double-indexing system would

not result difficulty in the management of the scheme. Just before the oil shock had come, both

the Japanese economy and the fiscal budget of the central government could afford to finance

this double-indexing pension scheme.

More precisely, though the pension provision by law did only secure the consumer price

indexing, it did actually index to wages of workers, in order to raise the replacement rate to the

standard of main developed countries. (See Table 4.)

-4-

Since many developed countries faced this kind of problem after the lower economic

growth of post oil-shock era, most of experts warned this scheme to be revised. Another issue,

however, was an obstacle to the prompt reform. That was an equity issue. Especially, how to

secure equality between wage earners and the self-employed was the issue.

There are at least two kinds of difficulty in treating different status of the self-employed

and the wage earners. One problem lies in the difficulty to obtain the income of self-employed

precisely.

According to several researches, their incomes are underscored at the taxation office. It

is commonly understood that on the average only one third of their incomes are grasped

compared with the income of wage earners.

Another problem is that, on one hand, half of social security contributions by wage

earners are paid by the employer, on the other hand, the self-employed have to pay their

contributions both as the employer and the employed.

These problems make it difficult to treat them as having the same income basis. After

the long controversy, the reform was enacted in 1985 and put into operation in 1986.

Prior to reform, the elderly, survivors, and disabled were protected by three main

schemes: the Employees’ Pension Insurance(EPI); the National Pension Scheme(NPS) covering

mainly the self-employed, some workers in industry, agriculture, forestry, and fishing; and

smaller group of Mutual Aid Associations(MAAs) of which the most important are those

covering public employees.

All of these schemes are of social insurance type, with benefits related to the amount and

the period of contributions. However, only the NPS is based on flat-rate contributions, because

of the difficulty of estimating precise income as described above.

The reform has three main features: unification, basic provision and adjustment of the

benefit level. In order to avoid complication, here I only explain two features, basic provision

and adjustment of the benefit level.

The reform promised that the NPS will provide a universal flat-rate basic amount to all

elderly in the country in the near future. Even people who are covered by EPI and MAAs will

be covered by this NPS. Since the NPS have been established in 1961, and since those are with

contribution span of 40 years, they were immature at the time of reform. Therefore, full

provision was supposed to be achieved in 1991.

The amount of basic universal flat-rate was fixed at 50,000 yen in 1984 prices for those

with 40 years of contribution. Dependent wives are covered by the contributions of their

husbands.

Under this approach, independent pension eligibility were established for all women,

including the wives of salaried workers. Consequently, if they become disabled, dependent

-5-

women will receive their own basic disability benefits, and in the event of divorce, they will be

given their own old age basic benefits at retirement age.

However, a problem still lies in the case of divorced women. Since their contributions

start at the time of divorce, though their contributions of pre-marriage time are counted, their

benefits tend to be lower than those of pre-husbands, if they quit from working as housewives.

Thus, the universal flat-rate benefits were introduced. For salaried workers, the EPI and

MAAs will provide a further earnings-related part, creating a two-tie public system for most

employed.

Another striking feature of the reform was the benefit level adjustment. Under the old

EPI, replacement rate would have increased further, giving a rate of 83 per cent for an average

worker with a dependent wife and 40 years of contributions. The reform aimed to retain roughly

the current rate, despite further increase in the required period.

Therefore, in spite of this reform, actual average benefits did not decreased. As of 1988,

replacement rate is almost the same with those of other developed countries. (See Table 4.)

In a political sense, the reform seemed to be made successful by taking advantage of

immaturity of the scheme, because benefits depend not only upon the rate of contributions to

salaries but also depend upon the period of which contributions were done.

Political implication of this can be explained by a following example. Suppose that Mr. A

were born in December 31, 1930 and Mr. B were born in January 1, 1931. And then suppose

that both Mr. A and Mr. B earned almost same salaries. If reform is applied only for the people

who were born after 1931, Mr. B will complain about the reform, because only one day difference

of the birth date will result significant amount of the reduction of the benefits.

On the other hand, overall reduction of the benefits would cause social problem, because

the present pensioners do not get enough benefits to sustain their living, although they did not

contributed much. One politically reconcilable way to make reform was to change the formula,

in which the payment bases of period were to be changed. Thus, the rate of return for pension

contributions became unfavorable to younger generation, benefits themselves did not decreased.

This reform, though politically successful, did not solve the problem of the heavy burden

of future generations. Realizing this problem, the government tried to postpone the time of

paying benefits from the age 60 to 65. However, as of 1992, this proposal is not still accepted at

the congress.

IV. Social Health Insurance and the Health Care System in Japan

Japanese health care system consists of a mixture of the system of several Western

countries and of the product of her own historical experiences. On the demand side, all the

-6-

Japanese residents, except for illegally immigrant workers, are covered by compulsory health

insurance system.

Though they are covered universally, all are not treated equally, because they, depending

on their occupational status, belong to different types of insurance systems. In this sense it is

similar with those of France and Germany.

On the supply side, more than 80 per cent of hospital are owned and managed by private

sector. At least legally, some similarities are found in the management of hospitals with those

of the United States, because after the World War II, Japan tried to follow the way of

management in American community hospitals. It should be kept in mind, however, that

difference of historical origin of hospitals produced them quite different features.

Total health care expenditures in Japan is not so high, in so far as this figure as a

percentage of National Income or GDP is compared with those of other developed countries.

(See Table 5.) One of the important tasks here in this paper might be to explain the reason of

this, because policy makers of most developed countries are interested in the way to reduce the

increase of health care costs.

The question posed, however, should be whether it is cost-effective or not. In what follows,

I will show five features which characterize the Japanese health care system. Most of these

features are discussed from the viewpoint of cost-effectiveness: (1) almost equal access to health

care and low out-of-pocket expenses, (2) rapid increase of the health care expenditures for the

elderly, (3) the system of point fees which are set by the government, (4) the unique role of

profits which private hospitals pursued for, (5) no quality assurance.

(1) almost equal access to health care and low out-of-pocket expenses

It was the year 1961 when universal health insurance system was achieved in Japan.

Since 1961, thanks to higher economic growth, patients' out-of-pocket payments for health care

gradually decreased in relation to the total health care expenditures.

According to the formal statistics, total out-of-pocket payments amount to only about 12

per cent of total expenditures as of 1990.3 However, this data should be discounted to some

extent, since the coverage of social insurance is limited.

It does not cover following items: (1) normal delivery, (2) special room charge (Under the

social insurance coverage, patients usually have to share one room with other 5 to 7 patients.)

(3) mass examination, (4) OTC Drugs, (5) eyeglasses, (6) expenses to pay for care workers at

some hospitals. However, even if we include these expenses, according to my estimates, less

than 15 per cent of total expenditures are paid out-of-pocket of patients.

3 See Ministry of Health and Welfare, Kokumin Iryouhi Suikei (Estimates on the National Health

Expenditures, 1991.

-7-

Out-of-pocket expenses for items covered by insurance also differs depending on what

kind of insurance schemes with which they are affiliated. And people cannot choose from

alternative insurance schemes. Employees who are hired at relatively larger companies are

automatically belonged to their companies' mutual employees’ insurance schemes. And

employees who are hired at relatively smaller companies are automatically belonged to

government managed employees insurance schemes. This different from employees’ pension

insurance (EPI) schemes in the sense that EPI is managed under the universal scheme.

Workers who are covered by these kinds of employees insurance schemes only have to

pay 10 per cent of expenditures for health care. Their dependents have to pay either 20 per cent

or 30 per cent of expenditures as an inpatient care or as an outpatient care respectively.

The self-employed and the unemployed who are covered by National Health Insurance

have to pay 30 per cent both for inpatient care and outpatient care. However, for any different

scheme, there is a kind of catastrophic insurance coverage. Expenses which are over 60,000 yen

per month are refunded.4

For the elderly with more than 70 years of age and for the disabled who are 65 to 69

years of age, there is a separate system. This is not called as an insurance system, but is called

as the 'Elderly Health Services', though they still have to pay social insurance contributions.

Because this services provide also several health maintenance services such as mass

examinations.

Under the coverage of the 'Elderly Health Services', they have to pay only 900 yen per

month for outpatient visit and have to pay 500 yen per day for hospitalization as of 1992. The

result of this policy will be discussed below.

Workers who are employed at larger companies and their dependents sometimes obtain

the refund of their expenses according to the financial conditions of their insurance scheme.

Total amount refunded is estimated to be half of their out-of-pocket expenses.

Moreover, several allowances such as those for normal delivery are provided. Though

National Health Insurance scheme also pays allowances for normal delivery, amounts paid are

different from those paid from Employees Insurance Associations.

As a whole, there are several unequal benefits among different insurance schemes.

Surely, it is partly because incomes of self-employed are estimated lower. And it might be true

that, if the self-employed pay more contributions according to their precise incomes, benefits

for those can be improved. However, we can say that the present fragmented schemes obscure

the way to achieve reasonable function of income redistribution as a social insurance system.

In spite of these kinds of inequality, I would like to mention that, financial obstacles to

access health care are almost removed. After the number of visits to the clinic and to the

4 This amount is as of 1991, and to be revised approximately depending upon the consumer price index.

-8-

hospital per population have drastically increased since the enactment of compulsory health

insurance, these figures are quite stable and similar in present day, irrespectively of which

insurance schemes they belong to. (As for the elderly, story is quite different, of which is

discussed next.)

(2) rapid increase of the health care expenditures for the elderly

As was shown in Table 5, total health expenditures as a percentage of GDP in Japan has

been stable and lower than those of major industrialized countries. However, their expenditures

for the elderly of age 70 and over increased remarkably in last 15 years. Figure 1 shows the

significant difference of the increase of those compared with those of total expenditures.

Here I consider the main causes of such increases. Health expenditures for some age

group i can be divided into three factors:

total expenditures for group i (H) =

number of population for group i (P)

× number of cases treated for group i (T)

× number of days per case for group i (L)

× amount of expenditures per day for group i (C).

Since the beginning of 1980s, number of cases treated per population (T) was stable with

the only exception for the care of the elderly. When we compare the number of cases treated per

100,000 people for each age group between 1970 and 1987, for those of age group 5－54, both

the number of inpatients and outpatients decreased. (See Table 6.) On the contrary, the number

of inpatient per population for age group of more than 70 years, doubled.

Since other factors such as L and C in the formula shown above indicate the almost same

trends in any age group, we can conclude that main causes of the rising health expenditures

for the elderly is because of the rapid increase of T in the formula above.

What is the main cause of the rapid increase of T? We can indicate two reasons, of which,

the drastic reduction of out-of-pocket expenses crucial. Until the year 1976 and around, the

elderly had to pay at the same amount of money with younger generations as I described earlier.

Since around 1976, some of local governments started to adopt the policy to make the

elderly to visit and to be hospitalized at free of charge. This policy diffused over many local

governments and finally in 1978 the central government was urged to adopt this policy at the

national level.

Because of the financial problem, in 1982, the elderly have had to pay 400 yen per month

for outpatient visit and had to pay 300 yen per month (up until two months) for hospitalization.

However, this policy was not effective to contain the costs. The negative increase of

expenditures was shown only for one year. And interestingly, it was mainly because the

-9-

reduction of the number of patient visit and the reduction of the number of cases hospitalized

(T). Both average day treated per outpatient visit and the average length of stay (L) jumped up,

just three months after the increase of the copayment. Supplier-induced nature of health care

was clear for this experiment.

After five years later, in 1986, the law was amended to increase from 400 yen to 800 yen

per month for outpatient visit and from 300 yen per day to 400 yen per day for hospitalization.

This time, both the number of visit and the number of hospitalization per population did not

decrease at all.

Since average income of the elderly households (which consist of only the elderly) was

200, 000 yen per month, at least for the average household, these copayments seem to be almost

negligible.5 In 1991, these amounts of copayments were again increased from 800 yen to 900

yen per month for hospitalization and from 400 yen to 500 yen per day for outpatient visit.6

Though the result of this policy is not still clear, it would not be an effective measure to contain

the costs.

Another reason for the increase of the health expenditures of the elderly, which seems to

be more important now, is that they cannot find suitable nonmedical-oriented facilities which

take care of them. Because of the decrease of the extended family, it is not easy for the elderly

to be taken care at home. This point will be discussed in section V.

(3) the system of point fees which are set by the government

One of the most unique devices which Japanese health insurance system has developed

might be so-called 'point fee system'. Though it can be classified into fee-for-services system in

a broader term, Japanese way to remunerate doctors and hospitals is quite different from that

of the United States.

Japanese point-fee schedules are set and regulated by the government authority, and

physicians and hospitals have to claim on this schedules, if those are to be reimbursed from the

social insurance.

Fee for each service does not necessarily reflect the actual cost both in terms of average

cost and in terms of marginal cost. And the government, in order to allocate health resources,

implicitly took advantage of fee schedules as a measure to give incentive to doctors and

hospitals.

Though the history of point fee system goes back to pre-World War II, the main skeleton

of the present fees has been developed just before the universal health insurance system was

5 This estimate is based on the following source: Ministry of Health and Welfare, Kokuminn Seikatsu Jittai

Chousa, (Annual Survey of People's Life) 1991.

6 These amounts will be raised from 900 yen to 1,000 yen and from 500 yen to 600 yen in the 1992.

-10-

achieved. At that time, main goal in health care system was to satisfy the drastically increasing

demand. Quantity provided rather than quality provided was the urgent consideration for the

policy makers.

Ministry of Health and Welfare and the Japan Medical Association had common interest

in making physicians to treat patients as many as possible. (Hereafter I abbreviate Ministry of

Health and Welfare as MHW.) Thus fee schedules like followings were set. Since at that time,

because of the historical tradition, there was no functional separation of medical and

pharmaceutical services, fees for the services of drug prescription was set higher and other fees

such as consultation fee was set lower.

This policy was successful in the sense that doctors and hospitals have tried to purchase

medicine cheaper, and because of low consultation fee, they have tried to consult patients as

many as possible.

The side effect of this policy in changing overall delivery system in Japan is interesting.

As a result of fee setting described above, the income of general practitioners became quite

higher than those of physicians who work at the hospital. It is quite interesting that now only

in Japan, GPs' income is higher than those of salaried physicians. (See Figure 2. Though in this

Figure, relative ratio of GPs' income to salaried physicians' income is not shown in case of Japan,

we can indicate that this ratio for Japan is at least more than 1.5.)

Once this kind of policy was settled, it is not easy to change it drastically, because

political power of physicians is quite strong in any country. Still now physicians and hospitals

can earn profits by prescribing medicine, while consultation fee is low. As a result, general

practitioners consult as many patients as those in other countries. (See Table 7 and Figure 3.)

(4) the unique role of profits which private hospitals pursued for

As I mentioned earlier, and as shown in Table 8, more than 80 per cent of hospitals are

privately owned in Japan. Roughly classified, there are three kinds of private entities; one

owned by individuals, one owned by medical juridical persons, and others.

Historically, in the pre-World War period, only the public entities and individuals owned

the hospitals. Under the influence of American system, hospitals which would follow the type

of community hospitals in the United States were established. This is the hospitals of which

are called to be owned by medical juridical persons.

As an ideal, those should have been owned by each community. People in the community

should have contributed their own funds to establish their own hospitals. This idea, however,

did not come into reality without few exception. Instead, many of individually-owned clinics

with their retained profits were converted into hospitals.

This was made possible, in terms of financial conditions, because the government favored

-11-

the clinics of earning profits, of which I explained in (3) above. Another cause, however, was

more important, that is, physicians' motive.

Since, educational system of medical students did not aim to make clear provision

between general practitioners and specialists, most of physicians who practice at the clinic have

been educated as specialists. It was the natural consequence that they wanted to practice at

the hospital, where the growing tendency of physicians' specialization was prevailing.

Here, it might be suitable to discuss about the meaning of 'for-profit'. The law, which is

effective now in Japan, prohibits private hospitals to pursue for profits. However, this is only

effective in the sense that it prohibits to distribute earnings to whom 'invested'.

Thus most private hospitals retained their profits and put them to enlarge their facilities

such as number of beds and as highly technological equipment in order to attract patients. Here

we should again keep in mind that point fee system did not favor to enhance the quality in

general.

Another reason why such increase of beds were made possible was due to the free access

of the elderly, of which I described in (2). Though average length of stay in the general hospital

is relatively high in Japan, as is 49 days for all age group, that figure for the elderly amounts

to about 80 days.

(5) no quality assurance

One of the most important and difficult issues which medical society in the world have

to do with, is the way to evaluate the quality of health care. If there is an appropriate and

efficient method to evaluate quality from outside body, Japanese way to commit hospitals to be

managed by the private entities might have been successful. Because, in general, organizations

managed by public entity have defects in several respects.

Though, in my personal judgment, it is quite difficult to evaluate quality which should

be a joint product of scientifically objective performance and of patients' subjective sentiments,

we can judge at least in the following sense that Japanese hospitals are far less-developed in

attaining quality assurance.

One of the most important factors why their quality is not assured is that patients are

accustomed to be silent in the hospital. Because of the long-run policy to make emphasis on the

quantity of care which I explained earlier, most physicians do not take much time to consult

with patients. Therefore, even if physicians are competent in performing scientifically objective

diagnosis and treatment, patients cannot judge them.

In case of acute care, since most of the results tend to become clear in the short period,

evaluation for those might be easier. However, growing concerns are being placed on the chronic

care especially for the growing number of the elderly.

-12-

V. Care for the Elderly in Japan

As of 1991, the number of bed-ridden elderly are estimated to amount to 700,000 who

come as approximately 5 per cent of the total elderly. Though I indicated that the number of

the elderly who are hospitalized is quite high, that was judged from the viewpoint of

international comparison. Among 700 thousands bed-ridden elderly, more than half of them are

taken care at home. Others who are estimated to be 160 thousands are taken care at

nonmedical oriented facilities.

Of those who are taken care at home, only about 5,000 are mainly taken care by other

home helpers than their family members. Spouses and daughters-in-law are main helpers for

the disabled elderly.

Since the composition of extended family, is gradually decreasing, though this kind of

family is still dominating especially in rural area, the issue 'who will care of the elderly' is a

serious social problem. Figure 4 shows the gradual decrease of the percentage of the elderly

who live with their children.

In 1990, MHW proposed the new strategy to tackle with this problem. This strategy,

which is called 'a Gold Plan' aims to spend about 5,000 billion yen for social services for the

elderly in ten years beginning at 1991.

Though this strategy is placed more on the home care than noninstitutional care, the

government expects that both the increase of medically oriented and nonmedical oriented long-

term care facilities. 'Medically oriented facilities' are newly devised facilities which would be

intermediate facilities where patients who were discharged from hospitals stay in the short run.

As for medically oriented facilities, number of inhabitants is expected to increase from

27,811 as of 1989 to 280,000 at 1999. And as for nonmedical oriented facilities which affiliate

with clinic, number of inhabitants is expected to increase from 162,019 as of 1989 to 240,000 at

1999.

In order for this strategy be successful, at least two problems should be solved. First of

all, the difference of financial burdens for the elderly should be pointed out. While out-of-pocket

expenses are only 36,000 yen per month when they are hospitalized, they have to pay 55,000

yen for the medically oriented long-term care facilities.

Opportunity costs of the family, when they care the elderly at home, might exceed far

more than those expenses. The government has not yet shown the guideline for the amount to

be paid by the care beneficiaries. It is committed to the discretionary decisions of the local

government. At any rate, how to equalize the burden of the beneficiaries among different

facilities and home help services is an urgent task.

-13-

Secondly, how to secure the quantity and the quality of care workers is a serious problem.

Japanese economy herself now faces serious shortage of younger labor force even in the period

of depression. And because of the recent cost containment policy for health care, it is more

serious to obtain health-related workers such as nurses.

References

1. Abe M. A. [1985] "Japan's Clinic Physicians and their Behavior, "Social Science and Medicine,

Vol.20, No.4, pp.335－40.

2. Doty, Pamela [1988] "Lomb-term Care in International Perspective," Health Care Financing

Review, (Annual Supplement) pp. 145－55.

3. Ikegami, Naoki [1991] "Japanese Health Care: Low Cost through Regulated Fees," Health

Affairs, Vol.10, No.3, pp. 87－109.

4. Nishimura Shuzo [1981] "Physician Manpower Allocation and the Rising Cost of Health

Care," Kyoto University Economic Review. Vol.51, no.1/2.

5. Nishimura Shuzo [1987] "A Test of Physician-induced Demand Hypothesis in Japan," Kyoto

University Economic Review. Vol.57, No.2.

6. Nishimura Shuzo [1991] "Financing the Delivery of Health Care for the Elderly in Japan －

A History of Piecemeal Revision and the Lack of Long-term Solution," Paper Presented at the

International Conference on Health Economics and Medical Systems: A Japan-U.S.

Comparison, Held at Tokyo, November 19－20, 1991.

7. Scheiber, George H. [1990] "Health Expenditures in Major Industrialized Countries, 1960－

87," Health Care Financing Review, (Summer) pp. 159－167.

-14

-

Tab1e 1

Ratio of Tax Burden and Ratio of Social Security Burden to National Income (as of 1986)

Country Tax Burden

Social Security

Contribution Age 65 and Over

National Income National Income Total Population

Japan

United Stated

United Kingdom

Germany (West)

France

Sweden

%

25.0

25.7

41.5

30.0

33.6

53.2

%

10.7

10.1

11.4

22.4

27.8

19.0

%

10.6

12.1

15.3

15.1

13.1

18.1

Source: Social Security Research Council

-15-

Table 2

Share of Social Security Contributions by Sources

Social Insurance Tax Others

Employee Employer Social Central Others

Security Govern't

Tax

Germany 1983 35.7% 34.2% － 27.4% 0.7% 2.0

France 1983 21.5 50.4 2.7% 21.4 1.3 2.7

Italy 1983 15.4 48.3 － 32.7 1.3 2.2

U.K. 1982－83 17.9 23.9 － 49.8 5.8 2.6

Sweden 1983 1.0 43.8 19.6 26.4 9.3

New Zealand 1982－83 2.2 4.4 91.6 － 2.8

Canada 1982－83 11.3 15.3 44.0 19.7 9.7

U.S. 1982－83 22.6 34.3 28.6 6.3 8.3

Japan 1982－83 26.3 28.9 26.2 3.0 15.6

Source: I.L.O. The Cost of Social Security, 1981－1983.

-16

-

Table 3

International Comparison of Social Security Benefits as a Ratio of National Income and its Component

Country

Health Care Benefits Pension Benefits Other Benefits Total Benefits

National Income National Income National Income National Income

Japan

(1989)

%

5.5

%

7.1

%

1.4

%

14.0

United States

(1986) 4.1 8.5 2.6 15.2

United Kingdom

(1986) 5.9 10.0 9.1 25.0

Germany

(West,1986) 7.9 14.0 7.3 29.1

France

(1986) 8.7 27.4 36.1

Sweden 9.7 14.2 15.7 39.7

-17

-

Table 4

International Comparison of Public Pension Schemes

Countries Germany Sweden United Kingdom United States Japan

Age when Benefits are Paid 65 65 male 65

female 60 65

male 60

female 56

Monthly ¥81,062 ¥43,158

(KN2,064)

¥37,714

(￡165.2)

¥65,920

($514.4)

¥132,308

Benefits(a) (DM1,110.9) (Single)

¥70,582

(With Spouse)

(Single)

¥63,556

(With Spouse)

(Single)

¥99,931

(With Spouse)

Mean Monthly Wages of

Active Workers(b) ¥222,887 ¥233,901 ¥176,948 ¥226,249 ¥318,663

(a) / (b) 36.4% 57.5% 40.8% 44.2% 41.5%

Ratio of Contributions to

Renumerations 0.187 0.0945 0.01－0.1945 0.1212 0.110－0.143

share of Tax-Financed 17% 15% 0% 0% 1/3

-18

-

Table 5

Total and public health expenditure as a percent of gross domestic product: Organization for Economic Cooperation and Development countries, 1975－87

Total expenditure Public expenditure

Country 1975 1980 1985 1987 1975 1980 1985 1987

Percent

Australia Austria Belgium Canada Denmark Finland France Germany Greece Iceland Ireland Italy Japan Luxembourg Netherlands New Zealand Norway Portugal Spain Sweden Switzerland Turkey United Kingdom United States Mean

5.7 7.3 5.8 7.3 6.5 6.3 6.8 7.8 4.1 5.9 7.7 5.8 5.5 5.7 7.7 6.4 6.7 6.4 5.1 8.0 7.0 － 5.5 8.4

6.5

6.5 7.9 6.6 7.4 6.8 6.5 7.6 7.9 4.3 6.4 8.5 6.8 6.4 6.8 8.2 7.2 6.6 5.9 5.9 9.5 7.3 － 5.8 9.2

7.0

7.0 8.1 7.2 8.4 6.2 7.2 8.6 8.2 4.9 7.3 8.0 6.7 6.6 6.7 8.3 6.6 6.4 7.0 6.0 9.4 7.7 －

6.0 10.6

7.4

7.1 8.4 7.2 8.6 6.0 7.4 8.6 8.2 5.3 7.8 7.4 6.9 6.8 7.5 8.5 6.9 7.5 6.4 6.0 9.0 7.7 3.5 6.1

11.2

17.3

3.6 5.1 4.6 5.6 6.0 5.0 5.2 6.2 2.5 5.3 6.4 5.0 4.0 5.2 5.9 5.4 6.4 3.8 3.6 7.2 4.8 － 5.0 3.6

5.0

4.0 5.5 5.4 5.6 5.8 5.1 6.2 6.2 3.5 5.7 7.8 5.6 4.5 6.3 6.5 6.0 6.5 4.2 4.4 8.7 5.0 － 5.2 3.9

5.5

5.0 5.4 5.5 6.4 5.3 5.7 6.9 6.4 4.0 6.4 7.1 5.4 4.8 6.0 6.6 5.6 6.1 4.0 4.3 8.6 5.2 － 5.2 4.5

5.7

5.1 5.7 5.5 6.5 5.2 5.8 6.7 6.3 4.0 6.9 6.4 5.4 5.0 6.9 6.6 5.7 7.4 3.9 4.3 8.2 5.2 1.4 5.3 4.6

15.6

1 Includes Turkey. 1987 means excluding Turkey are 7.5 percent for total expenditure and 5.8 percent for public expenditure. SOURCE: Organization for Economic Cooperation and Development: Health Data File, 1989.

-19-

Table 6

Comparison of the Number of Cases per 100,000 People by Age Group in 1970 and

1987

(a) Number of Cases Hospitalized per 100,000 People by Age Group

(One day survey)

age Inpatients(1970) (A) Inpatients(1987) (B) (B)/(A)

Total 935 1174 1.26

0 530 1372 2.59

1－4 149 205 1.38

5－9 205 184 .90

10－14 222 176 .79

15－19 484 258 .53

20－24 827 468 .57

25－34 1014 650 .64

35－44 1065 776 .73

45－54 1294 1204 .93

55－64 1759 1753 1.00

65－69 2208 2475 1.12

70－74 2280 3834 1.68

75－79 2132 5664 2.66

80－ 1686 5668 3.36

－(b) Number of Cases of Outpatient Visit per 100,000 People by Age Group

(One day survey)

age Outpatients(1970) (A) Outpatients(1987)(B) (B)/(A)

Total 6042 5426 .90

0 8429 5575 .66

1－4 7952 5704 .72

5－9 6303 4444 .71

10－14 3367 2457 .73

15－19 3077 2265 .74

20－24 4572 3013 .66

25－34 5299 3522 .66

35－44 6069 3762 .62

45－54 7232 5602 .77

55－64 8574 8271 .96

65－69 9394 11345 1.21

70－74 9518 14630 1.54

75－79 8644 15344 1.78

80－ 7111 13620 1.92

Source: Ministry of Health and Welfare, Patient Survey.

-20

-

Table 7

Number of Patient Visits per General Practitioner per Year, and Average Duration of Visits:

Selected Countries, Selected Years 1979－89

Country No. of Patient visits per G.P. Average Duration of Visits

Netherlands (1986)

United Kingdom (1987)

Germany (1981－82)

United States (1985)

France (1979)

Quebec(1985)

Japan(1989)

8,200

7,656

－

6,723

5,101

4,513

11,000

5minites

8.2

9

14

14

15

4

Sources: See Reference

Japan. Patient Statistics, 1989

-21-

Figure 1

Trends of National Health Expenditures and those for the Elderly

By Outpatient Expenditures and Inpatient Expenditures

Source: Ministry of Health and Welfare

Estimates on National Health Expenditures

-

-22

-

Figure 2

Utilization of physician services: Selected countries, selected years 1981－86

-23-

Figure 3

Gross Income per physician and ratio of net Income per physician to national average wage

for general practitioners and all physicians: Selected countries, selected years 1983－85