Japan's radical reform of long-term care

Japan's mandatory long-term care social insurance system started in 2000. Many important choices about the basic shape and size of the system, as well as a host of details, were necessary when the program was being planned. It represents a reversal from earlier steps toward a tax-based direct-service system, and is based on consumer choice of services and providers. The benefits are in the form of institutional or community-based services, not cash, and are aimed at covering all caregiving costs (less a 10 percent co-payment) at six levels of need, as measured by objective test. Revenues are from insurance contributions and taxes. The program costs about $40 billion, and is expected to rise to about $70 billion annually by 2010 as applications for services go up. There are about 2.2 million beneficiaries, about 10 percent of the 65+ population. The program has operated within its budget and without major problems for two years and is broadly accepted as an appropriate and effective social program.