Expansion factors of social security costs related to formal long-term care insurance services (hereafter LTC costs) are due to not only an increase in the number of frail elderly people as a result of population aging but also Baumol's cost disease (or the Baumol effect), which was presented 50 years ago.

The effects of the disease can vary greatly in future public LTC costs. For an example, in the basic framework of public LTC cost estimates, conducted by the Japanese government, costs will increase in line with the population aging multiplied by the 65-to-35 weight estimates of the rate of wage increases and inflation. The weight is based on the fact that 65% of public LTC costs are payroll costs (labor input). However, as Baumol predicted, if payroll expenditure weights increase gradually, future public LTC costs will grow more rapidly relative to the current government estimates.

The consumer price index (CPI) for Japan in 2015 was 1.8 times larger than that in 1975 and the private medical and welfare services price indices increased 5.2 times over the same period. This means that the increase rate of the price indices of these private services is nearly three times higher than the (general) CPI. Unlike these private services, however, the price index for public health care and welfare services only increased 2.2 times during the same period, although the increased rate was still higher than the CPI.

The relatively low increase rate of the price of these public services is due to the institutional arrangement of public health and LTC insurance in Japan. Both price, including co-payment rate, and total spending is strictly controlled by the central government (i.e. Ministry of Finance and Ministry of Health, Labour, and Welfare). As a result, any increase of these public service fees has been suppressed.

Additionally, there has been a pronounced increase in the share of medical and welfare industry workers. In 2002, 7.5% of all workers were in these industries, and by 2016, the share was 12.5% (for women, 21.6%), although the total number of workers, excluding those industries, had decreased in the same period.

The suppressed costs due to government effort to curtail the budget deficit and the increased share of workers may lead to a polarization of employment and a gradual deterioration of the quality of formal LTC care services. The situation is exactly what Baumol warned against in his recent publication.

To protect workers in the progressive sector from a risk of leaving work to take responsibility for informal LTC for their family members, the ability to utilize formal LTC and reduce their opportunity costs may serve for further productivity growth. In this broad sense, formal LTC care services can be regarded as an intermediate good, like business services. However, several researchers' conclusions that social LTC insurance increased female labor participation rate in Japan are still controversial.

In summary, future research on formal LTC services should shed light on whether (1) they influence economic growth in terms of productivity and labor supply, and (2) the curtailed financing of public LTC insurance changes the quality of formal care.

With healthcare budget particularly constrained in Japan, there is an urgent need to produce and to use high quality evidence to reap the greatest possible health benefits from limited available resources. An intervention is worth adopting if the health benefit it produces outweighs the foregone health benefit which could have been achieved if the additional resources associated with the intervention were to be used elsewhere in the system. The foregone benefit represents the health opportunity cost of the intervention, which informs a "cost-effectiveness threshold" and a "value based pricing" of interventions within the system. The impact and value of these policy applications depend on the extent to which they accurately reflect the health opportunity cost, which can be measured by the marginal productivity of the health system in producing health from a unit of spending. Quantifying the health opportunity cost therefore involves the estimation of the causal effects of marginal changes in healthcare expenditure on changes in health outcomes within the system. Drawing causal inferences using observational data analysis is a significant methodological challenge. This paper discusses key data and analytic methods for the quantification of the health opportunity cost for Japan and other countries.

Reflecting the increasing demand for long-term care (LTC) services as Japan's population continues to age, ensuring a stable supply of caregivers has been an important policy issue in recent years. Preceding studies have highlighted that one reason for the shortage of caregivers is that the wages of caregivers are effectively regulated through the fixed price imposed on LTC services, so that even though there is excess demand in the labor market for LTC, it has been difficult for care service providers to raise wages. Against this background, this study aims to examine how the increase in LTC compensation in 2009 affected the wages, working hours, and job separation rate of caregivers using microdata.

A challenge when examining the impact of the increase in LTC compensation on wages and labor supply is to isolate it from the impact of general macroeconomic developments on the labor market. To deal with this challenge, the approach employed here is to isolate the effect of the LTC compensation reform through difference­-in-differences (DID) estimation, using the fact that within the greater Tokyo area LTC compensation was raised by 3 percentage points only in the 23 wards of Tokyo as a natural experiment. Specifically, we use these 23 wards as the treatment area, while the rest of Tokyo prefecture as well as the urban parts of Saitama, Kanagawa, and Chiba prefectures are used as the control area. The analysis focuses on non-regular part-time home helpers and regular fulltime nursing care staff. As dependent variables, the wages, working hours, and job separation rates of the two types of carers are employed.

For wages, while for both types of carers no significant increase in scheduled wages is found, a significant increase in total wages － i.e., including allowances, lump-sum payments, etc. - is observed. Therefore, it seems that LTC providers used the increased income resulting from the hike in LTC compensation to raise wages through allowances and lump-sum payments. On the other hand, no significant change in working hours for both types of carers is found. For regular full-time nursing care staff, working hours are stipulated in advance, so that even if their total wages increase, this is unlikely to have a substantial effect on their working hours. Meanwhile, for non-regular part-time home helpers, the income tax-related so-called "wall of 1.03 and 1.30 million yen" may have led some carers to reduce their working hours, which may have cancelled out any increase in working hours of workers not affected by this "wall." Finally, the job separation rate of non-regular part-time home helpers declined significantly following the reform. This is likely due to an increase in carers that decided not to quit their job due to the improvement in working conditions brought about by the increase in total wages.

Objective:

Japan's public health insurance system has been internationally highly acclaimed, however, there is a growing concern about its sustainability. A governmental long-term strategic proposal, "The Japan Vision: Health Care 2035", suggests the establishment of new financing scheme to complement the public system. In developed countries where private insurance markets play complementary roles, regulations or assistance have been set for high risk or low income population due to equity concerns. In Japan, whether the health risk or income status determines the demand for private insurance is still unclear. This paper aims to find the determinants of the demand for private health insurance, and examine the need for regulations in order to maintain equity in the health system if the role of private insurance is to expand.

Methods:

Demand models for private insurance were estimated on the data from "Survey on Life Protection 2001-2013". Two types of insurance policy, which dominate the market, were targeted: "health insurance" and "cancer insurance". Purchase of both policies was also taken into account.

Results:

The purchase of "cancer insurance" policy only was found to be rare, so the samples were classified into three groups: those with no private insurance policy; those with "health insurance" policy only; and those with both "health insurance" and "cancer insurance" policies. The multinomial regression showed that individual's health risk (age, health concerns) and socioeconomic status (household income, occupation) were the determinants of the demand for private health insurance. Furthermore, the predictive values from the model, i.e., the possibility of the individuals with no private insurance, decreased by the increase of individual's age. The possibility of purchase increased among those in 50's and 60's in the year of 2013, when compared with year 2001. Regarding the socioeconomic status, the possibility of purchase increased by an increase in household income. This tendency was found to be more remarkable among those with both policies, i.e., the choice of more generous coverage.

Discussion:

If the vision of expanding the role of private health insurance is implemented, as in "The Japan Vision: Health Care 2035", concerns on equity cannot be ignored according to our findings which show that health risk and/or socioeconomic status are the determinants of the demand for private health insurance. Regulations set for private insurance market would be necessary to protect the vulnerable population.