Intergenerational fairness in long-term care financing in Japan

Overview

The report describes the current system in the financing of long-term care (LTC) in Japan, and considers the roles of and relationships between the different levels of government and sectors. It discusses the key implications in terms of intergenerational fairness and financial sustainability.

Japan has had an LTC insurance system since 2000 for all citizens aged 40 years and older. Public financing is provided in the form of insurance premiums and public transfers. The main insurers are the municipalities.

Significant intergenerational transfer mechanisms are embedded within the system. Around 50% of total revenues are from social contributions (i.e. insurance premiums) contributed equally by the secondary and primary insured population groups of working age (40–64 years) and older (≥ 65 years), respectively. The primary insured group (i.e. those aged ≥ 65 years) are considered more likely to need LTC.