commentary on long-term care insurance and the market for aged care in japan

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Invited Commentary Commentary on long-term care insurance and the market for aged care in Japan The paper in this issue by Makoto Kubo is only the fourth account of Japan’s long-term care insurance (LTCI) scheme to appear in the Australasian Journal on Ageing in 15 years [1]. Writing on the basis of a posting to the Japanese Consulate General in Melbourne in 1997, Nishimura [2] identified a number of similarities and differences between Australia and Japan and flagged several strategic directions for LTCI, which was to be implemented in 2000. The close relationship estab- lished at that time led to the Australia Japan Partnership in Aged Care, and in commenting on a report on the Partnership in 2001, McCallum [3] noted some of the early outcomes of LTCI in Japan and some lessons for Australia, notably the need to consider social insurance as a basis for funding aged care. Although the formal Partnership did not continue, a period of study leave spent by a Japanese sociologist in Australia led to a third paper [4], which outlined marked changes in Japan over the decade of development and implementation of LTCI. Large increases in the volume of care services had been realised through fostering the care market and encouraging entry of private providers; systematic assessment had also been established nationwide. Looming workforce shortages were a less positive trend. The current paper provides further insights into these trends and in doing so raises a number of issues of relevance to research and policy development in Australia. While the 2012 report of the Productivity Commission Inquiry into Caring for Older Australians included an overview of inter- national experience [5], it did not evaluate different policies and programs in the national contexts in which they were implemented. The need for such contextual understanding is however critical in comparing Japan and Australia. Kobo is not alone in reporting concerns about escalating public expenditures and consequent reductions in benefits paid under LTCI, but there is agreement that the scheme remains sustainable and affordable notwithstanding Japan’s decades of economic stagnation [6,7]. In contrast, the Productivity Commission Inquiry shows continuing debate about sustain- ability and affordability in Australia after more than a decade of economic boom conditions. Turning to common concerns about workforce shortages, even this short account indicates that the forces underly- ing actual or anticipated availability of skilled workers are complex and time and place specific, rather than transnational. Australian workforce strategies have empha- sised training, yet the Japanese experience shows that while extensive training programs can increase the number of qualified care workers, their entry to the workforce is shaped more by factors in the wider labour market. The report on Australia’s aged care workforce 2012 [8] pro- vides a rich source of data for research into the influence of these factors on local workforce dynamics. The third area of interest is the discussion of the quasi-market that has emerged in care services in Japan. Kobo notes that while private providers have increased under LTCI to account for over half of all providers, they do not necessarily account for as large a share of service provision. Similarly in England, the number of private sector agencies grew rapidly in the 5 years to 2009, but this growth has been characterised by fragmentation and instability among small enterprises that lack the managerial expertise of larger voluntary and local authority providers [9]. In contrast, the sectoral balance in Australia has been relatively stable: the not-for-profit sector has historically stood at around 60% of residential care provision, with the private sector gaining marginally from declines in the small government sector since 2000 and never coming to account for more than a very small share of community care [10]. These different outcomes in the three countries can all be explained in terms of the limits of the care market that are concisely explicated by Kobo. The findings that competition has not enhanced efficiency, quality or consumer choice, and that rather than operating differently, there is a high degree of convergence in the behaviour of providers in both sectors, are salutary lessons for those who have high expec- tations of market-driven change. As Australia moves to implementing the Living Longer, Living Better reforms, research into the extent of forces driving sectoral conver- gence locally could bring much needed recognition of the mediating effects of provider decisions on outcomes for older people. Drawing on Kobo’s report and other studies of provider views of reform directions, such as a 2009 survey of constituency groups in the USA [11], such research could usefully investigate whether the apparent consensus massaged from consultations and committees in fact masks more diversity of views, intentions and capabili- ties among different providers. This paper and the references it provides to recent develop- ments in Japan will hopefully see renewed interest in compara- tive research in Australia and a revival of exchanges between individual researchers and governments. Japan’s success in Correspondence to: Dr Anna Howe, Consultant Gerontologist, Canberra, ACT, Australia. Email: [email protected] DOI: 10.1111/ajag.12073 140 Australasian Journal on Ageing, Vol 33 No 3 September 2014, 140–141 © 2014 ACOTA

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Page 1: Commentary on long-term care insurance and the market for aged care in Japan

Invited CommentaryCommentary on long-term care insurance and the market foraged care in Japan

The paper in this issue by Makoto Kubo is only the fourthaccount of Japan’s long-term care insurance (LTCI) scheme toappear in the Australasian Journal on Ageing in 15 years [1].Writing on the basis of a posting to the Japanese ConsulateGeneral in Melbourne in 1997, Nishimura [2] identified anumber of similarities and differences between Australia andJapan and flagged several strategic directions for LTCI, whichwas to be implemented in 2000. The close relationship estab-lished at that time led to the Australia Japan Partnership inAged Care, and in commenting on a report on the Partnershipin 2001, McCallum [3] noted some of the early outcomes ofLTCI in Japan and some lessons for Australia, notably the needto consider social insurance as a basis for funding aged care.

Although the formal Partnership did not continue, a periodof study leave spent by a Japanese sociologist in Australia ledto a third paper [4], which outlined marked changes in Japanover the decade of development and implementation of LTCI.Large increases in the volume of care services had beenrealised through fostering the care market and encouragingentry of private providers; systematic assessment had alsobeen established nationwide. Looming workforce shortageswere a less positive trend.

The current paper provides further insights into these trendsand in doing so raises a number of issues of relevance toresearch and policy development in Australia. While the2012 report of the Productivity Commission Inquiry intoCaring for Older Australians included an overview of inter-national experience [5], it did not evaluate different policiesand programs in the national contexts in which they wereimplemented. The need for such contextual understandingis however critical in comparing Japan and Australia. Kobois not alone in reporting concerns about escalating publicexpenditures and consequent reductions in benefits paidunder LTCI, but there is agreement that the scheme remainssustainable and affordable notwithstanding Japan’s decadesof economic stagnation [6,7]. In contrast, the ProductivityCommission Inquiry shows continuing debate about sustain-ability and affordability in Australia after more than a decadeof economic boom conditions.

Turning to common concerns about workforce shortages,even this short account indicates that the forces underly-ing actual or anticipated availability of skilled workersare complex and time and place specific, rather than

transnational. Australian workforce strategies have empha-sised training, yet the Japanese experience shows that whileextensive training programs can increase the number ofqualified care workers, their entry to the workforce isshaped more by factors in the wider labour market. Thereport on Australia’s aged care workforce 2012 [8] pro-vides a rich source of data for research into the influence ofthese factors on local workforce dynamics.

The third area of interest is the discussion of the quasi-marketthat has emerged in care services in Japan. Kobo notes thatwhile private providers have increased under LTCI toaccount for over half of all providers, they do not necessarilyaccount for as large a share of service provision. Similarly inEngland, the number of private sector agencies grew rapidlyin the 5 years to 2009, but this growth has been characterisedby fragmentation and instability among small enterprisesthat lack the managerial expertise of larger voluntary andlocal authority providers [9]. In contrast, the sectoral balancein Australia has been relatively stable: the not-for-profitsector has historically stood at around 60% of residentialcare provision, with the private sector gaining marginallyfrom declines in the small government sector since 2000 andnever coming to account for more than a very small share ofcommunity care [10].

These different outcomes in the three countries can all beexplained in terms of the limits of the care market that areconcisely explicated by Kobo. The findings that competitionhas not enhanced efficiency, quality or consumer choice,and that rather than operating differently, there is a highdegree of convergence in the behaviour of providers in bothsectors, are salutary lessons for those who have high expec-tations of market-driven change. As Australia moves toimplementing the Living Longer, Living Better reforms,research into the extent of forces driving sectoral conver-gence locally could bring much needed recognition of themediating effects of provider decisions on outcomes forolder people. Drawing on Kobo’s report and other studiesof provider views of reform directions, such as a 2009survey of constituency groups in the USA [11], suchresearch could usefully investigate whether the apparentconsensus massaged from consultations and committees infact masks more diversity of views, intentions and capabili-ties among different providers.

This paper and the references it provides to recent develop-ments in Japan will hopefully see renewed interest in compara-tive research in Australia and a revival of exchanges betweenindividual researchers and governments. Japan’s success in

Correspondence to: Dr Anna Howe, Consultant Gerontologist,Canberra, ACT, Australia. Email: [email protected]

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DOI: 10.1111/ajag.12073

140 Australasian Journal on Ageing, Vol 33 No 3 September 2014, 140–141© 2014 ACOTA

Page 2: Commentary on long-term care insurance and the market for aged care in Japan

dealing with much greater challenges than Australia faces nowor foreseeably in the future suggests that instead of resting onour laurels of having one of the best aged care systems in theworld, we might do even better if we open our eyes to what hasbeen achieved in the rest of the world.

Anna L Howe90 Grayson St, Hackett, ACT 2602, Australia

References1 Kubo M. Long-term care insurance and market for aged care in Japan:

Focusing on the status of care service providers by locality and organi-sational nature based on survey results. Australian Journal on Ageing2014; 33: 153–157.

2 Nishimura J. Aged care in Japan and Australia: A comparative review.Australian Journal on Ageing 1997; 16: 135–137.

3 McCallum J. The Australia-Japan partnership: Some cross culturallessons for Australia. Australasian Journal on Ageing 2001; 20: 55–56.

4 Someya Y, Wells Y. Current issues on ageing in Japan: A comparison withAustralia. Australasian Journal on Ageing 2008; 27: 8–13.

5 Productivity Commission. Caring for Older Australians. Report 53. Appen-dix D, Canberra: Productivity Commission, 2011.

6 Tsutsui T, Muramatsu N. Japan's long-term care system reform of 2005:Containing costs and realizing a vision. Journal of the American GeriatricsSociety 2007; 55: 1458–1463.

7 Yong V, Saito Y. National long term care insurance policy in Japan adecade after implementation: Some lessons for aging countries. AgingInternational 2012; 37: 271–284.

8 King D, Mavromaras K, He B et al. The Aged Care Workforce 2012: FinalReport. Australian Government Department of Health and Ageing. 2013.[Cited 28 May 2013.] Available from URL: www.health.gov.au/internet/main/publishing.nsf/Content/ageing-nat-workforce-survey

9 Glendinning C. Home care in England. In: Rostgard T (coordinator).LIVINDHOME: Living Independently at Home. Reforms in Home Care in 9European Countries. Copenhagen: The Danish National Centre for SocialResearch, 2011: 95–116.

10 Australian Government Department of Health and Ageing. Report on theOperation of the Aged Care Act 1997. DoHA. Canberra. 2000-01 and2011-12.

11 Miller EA, Mor V, Clark M. Reforming long term care in the United States:Findings from a national survey of specialists. The Gerontologist 2009;30: 238–252.

L T C I a n d t h e m a r k e t f o r a g e d c a r e i n J a p a n

141Australasian Journal on Ageing, Vol 33 No 3 September 2014, 140–141© 2014 ACOTA