The Abe administration initiated a policy of "regional revitalization" and proposed to promote migration of younger people from large cities to local municipalities.

The present paper points out that in order to revitalize local regions, it is necessary to promote the migration of elderly people from large cities to local municipalities by reforming the National Health Insurance programs.

Local municipalities have a comparative advantage in medical and nursing care services for elderly people, because land prices in local municipalities are much lower than in large cities. For this reason, promotion of the movement of members of Japan's elderly population to the nation's regional areas is an effective and very practical policy of regional revitalization.

The greatest obstacle to the movement of members of the elderly population to regional areas is that municipalities are required to share part of the medical care expenditure associated with the National Health Insurance system. When elderly people move from a city to a regional area, they join the National Health Insurance programs in their new municipality. The migration of elderly people to a municipality therefore increases the burden of payment for the municipal administration. For this reason, elderly people moving in from other cities represent a burden to the municipalities, and these municipalities often attempt to block the movement of elderly people to their areas by refusing to grant permission for the construction of new nursing care facilities.

The present paper proposes that the central government pay the "model medical expenditure" for each age cohort to municipalities, and that municipal governments pay the difference between this model payment and the actual payment. This reform will relieve the fiscal burden of municipalities in accepting elderly people, and will boost migration to local municipalities and stimulate the economies of those areas. At the same time, the fact that the central government pays only the model payment implies that it will provide an incentive for cost savings to municipalities.

There exists a gap between the healthcare system and needs for the service all through the ages; however, the gap has widened considerably by accelerating medical technology, diversification of individual values, and rapid ageing of the population in recent years.

Prime Minister Jyunichiro Koizumi's Cabinet, inaugurated in April 2001, boldly undertook regulatory reform in the field of healthcare to fill the gap. Since then many issues have been discussing, and some of challenges have reformed. Under such circumstance, the healthcare reform was positioned as core program of National Strategic Special Zones, enacted as a part of growth strategy by Prime Minister Shinzo Abe's second Cabinet inaugurated in December 2012. Besides medical field, other subjects such as agriculture, education, employment, urban regeneration and renewal, utilization of historical construction, near-future technology, and facilitation of foreigner resources have vigorously discussed and demonstrated, and a part of plan have achieved significant results.

Various deregulation measures including mixed billing of medical care services (a matter of concern since 2001), rule limiting the number of the beds, and face-to-face medical cares and instructions on the use of drugs in telemedicine environment have debated in the medical field. Moreover, a shortening of examination period has discussed and applied to promote the development of world-wide medical equipment at the designated area. At the current moment, innovative approaches in the medical field have been progressing in 13 designated areas.

A minister who is assigned directly below the Prime Minister, local administrative chiefs in the designated area, and private business operators are positioned as one to be aimed at cross-ministerial reforming, by which specific achievements will be demonstrated.

This study investigated whether regional difference in the service utilization of public long-term care in Japan has converged over the years, using the conditional β convergence approach originally proposed by Barro and Sala-i-Martin for the analysis of economic growth. Using prefecture-level panel data of service utilization in the period 2000-2012, we confirmed that the average service utilization per elderly user exhibited a conditional β convergence. In particular, the speed of convergence was higher in the early period (2000-2005) than in the later period (2006-2012). We repeated a similar analysis for the welfare program expenditure on elderly care during the period 1993-1999, before the introduction of long-term care insurance, and obtained a similar estimation of β convergences. Our results suggested that the trend of convergence in regional difference of elderly care services use was observable even before the introduction of long-term care insurance.

This study examined whether supplier-induced demand exists in the formal homecare service market under the public long-term care insurance scheme in Japan, where "care managers," as agents of elderly service users, are officially required to develop care plans independent of service providers.

This study examines if care managers are loyal to the principal service users, considering that 60 % of care managers may have economic incentives to induce demand affiliated with homecare service providers. Prior studies on supplier-induced demand in Japanese long-term care service obtained inconsistent results, presumably because they failed to incorporate the agency quality of care providers and relied on poorly refined measurements of inter-provider competitiveness and instrument variables, as are often used to test physician­-induced demand. This study overcame these limitations by comparing service utilization patterns in the characteristics of care managers, both affiliated and non-affiliated with service providers. We also examined the difference in the magnitude of induced demand between for-profit providers and their non-profit counterparts.

Our results supported demand inducement by care managers with profit incentives affiliated with service providers. Further, the magnitude of demand inducement by for-profit providers was larger than by non-profit ones. There was no evidence supporting demand inducement by the government.