【Aging, safety net and fiscal crisis in Japan】No.143: Financial Structure of Long-Term Care Insurance

In this column series, Yukihiro Matsuyama, Research Director at CIGS introduces the latest information about aging, safety net and fiscal crisis in Japan with data of international comparison.

The Japanese government founded a public long-term care insurance system in 2000. In Column No. 7, (Probability to Require Long-term Care Services), I explained the conditions for receiving long-term care services and the probabilities that the elderly are provided with those benefits by age group and gender. In this column, I will explain the financial structure of long-term care insurance.

As shown in Figure 1, the number of persons who were entitled to receive benefits from long-care insurance increased 2.5 times from 2,562,000 in 2000 to 6,320,000 in 2016. As a result, long-term care expenses amounted to 9,990 billion yen in FY2016. Among them, the ratio of the amount borne by the beneficiaries was 7.6%. (Table 1)

Figure 2 shows the composition of finance excluding the payment of beneficiaries from the long-term care expenses. Looking at the base budget in FY2018, the burden ratio by premium is 27% for the working generation of 40 to 64 years old and 23% for those aged 65 and older. It means that, similar to medical insurance, the working generation is responsible for the majority of financial resources for long-term care insurancewn.

Figure 1: Number of people permitted to receive LTC insurance benefits

Source: Ministry of Health, Labor, and Welfare

Table 1: Long Term Care expenses (billion yen)

Note: The total does not necessarily match because it has been rounded off.

Source: Ministry of Health, Labor, and Welfare

Figure 2: Financial structure of LTC Insurance

Source: Ministry of Finance

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