Addressing Population Ageing in Japan

ADDRESSING
POPULATION
AGEING IN
JAPAN
PP5223 | Oct. 15, 2019
Fajardo | Hiraoka | Makhbal | Yi-Ju

OUTLINE
Key Questions
Background
Policy Review
Fertility Policies
Health Care Policies
Pension Policy
Recommendation
KEY QUESTIONS
1. Are the following social policies effective, fair, and
politically feasible?
Fertility Policies
Healthcare Policies
Pension Policies
2. How can we improve these polices to make
government spending efficient and sustainable?

BACKGROUND
JAPAN IS A RAPIDLY AGEING POPULATION
50-YEAR POPULATION PYRAMID
Old Age: ≥ 65 y.o.
Working Age: 15-64 y.o.
Young Age: ≤ 14 y.o
https://www.populationpyramid.net/japan/
ELDERLY SOCIAL SERVICES TAKES
A LARGE PORTION OF THE BUDGET
2017 GOVERNMENT
EXPENDITURE ON
Others
3%
PENSION AND
12.5%
HEALTHCARE
%3 srehtO
Social
Welfare
12.5% Rest of
MHWL Government
%
37.5% .5
6% of
fdp.e10/ld/11wh-pw/pw/hsilgne/pj.og.wlhm.www//:sptth
Medical Care 68
9.8% Long Term 2017 Budget 68.5%
Care Benefit Benefit Japan's GDP.5%
37.5% 31.5%
31
9.8%
Pension
Benefit
37.2%
37.2% of Health, Labor

Ministry
and Welfare 2017 Budget

Japanese Government 2017 Budget
USD 2.83 Billion
USD 8.99 Billion
FISCALLY UNSUSTAINABLE SPENDING
LEADING TO INESCAPABLE DEBT TRAP
trahc-rotacidni#mth.tbed-tnemnrevog-lareneg/agg/gro.dceo.atad//:sptth
G7 DEBT TO GDP RATIO (2015)
%
571egap#ne-10ff9g2g_2-eussi/9102-emulov/seirtnuoc-dceo-fo-stnuocca-lanoitan/scimonoce/gro.yrarbili-dceo.daer//:sptth
ONLY A THIRD OF THE TOTAL
POPULATION ARE WORKING IN 2017
POPULATION SHARE OF EMPLOYMENT TYPE

WORKING AGE PEOPLE AND INDUSTRY
Total Employment
0 25,000,000 50,000,000 75,0

65. 65%
NON 35%
1% 34.
9% Legend Agriculture, Manufacturing, Trade, Services, Finance, Real Estate, Government,
WORKING WORKING Forestry, Fisheries Construction ITC Professional, Technical, Others Social Service
(58.2 Million People) (67.5 Million People)

JAPAN HAS ONE OF THE LOWEST
FERTILITY RATES IN THE WORLD
2017 FERTILITY RATE AMONG G7, EU, OECD AND

SELECTED EAST ASIA AND PACIFIC COUNTRIES
2.9
2.7
Legend 2.5
2.6
2.4
2.3
Japan 2.2
2 2
EU/OECD 1.9 1.9
1.8 1.8 1.8 1.8
1.7 1.7 1.7
EA&P 1.6 1.6
1.5 1.5
1.4
Average 1.3
1.2
1.1 1.1
https://https://data.oecd.org/pop/fertility-rates.htm ; https://data.worldbank.org/indicator/SP.DYN.TFRT.IN?locations=Z4
WOMEN TEND TO EXIT THE
WORKFORCE WHEN THEY START A FAMILY
2015 LABOR FORCE PARTICIPATION BY SEX
POLICY REVIEW
Fertility Polices
Childcare Services
Parental Leave Schemes
Child Allowances
CHILDCARE SERVICES
Daycare Centers in Japan (2015)
(25,465 Total)
Main Problems
Public
37.6%
1. Long waiting list
37.6% 2. Flawed point system

Private 3. Lacking and underpaid child care providers
62.4%
(9,568)
4. Overcrowding in public daycare centers
(15,897)
5. Mismatched business hours with parents' work hours
62.4%
6. Unregulated, overpriced 'baby hotels'
EFFECTIVITY EQUITY POLITICAL FEASIBILITY

POLICY EVALUATION
CHILDCARE SERVICES
POLITICAL
EFFECTIVITY EQUITY
FEASIBILITY
POLICY OPTIONS
1. Expanding services (hire more

providers and increase salaries, build
more centers)
2. Cancel point system

PARENTAL LEAVE SCHEMES
Percentage of Females who Percentage of Workers Taking
Continued to Work after Child Birth Child Care Leave by Gender
Legend
Unemployed
before CB
Retired
after CB
Continued
work after
CB (did Employed
not take
before C.B.
CC leave)
72% (100%)
Continued
work after
Continued
CB (took
CC leave) work after
Main Problems
childbirth
Others/
unknown
38%(53%%)
1. Leaves underutilized
2. Do not address root cause
(toxic work culture)
https://www.mhlw.go.jp/english/wp/wp-hw11/dl/07e.pdf

POLICY EVALUATION
PARENTAL LEAVE SCHEMES
POLITICAL
EFFECTIVITY EQUITY
FEASIBILITY
POLICY OPTIONS
1. Subsidize companies utilizing leaves
2. Re-orient/redefine work culture

Healthcare Polices
Universal Healthcare System
Public and Private Care
Long-term Care Insurance
Integrated Community Care Services

UNIVERSAL HEALTHCARE SYSTEM
Social Health Insurance (SHI) : everyone who is employed full
time with a medium or large company [5%]

Japan (2011)
Government co-pays 70% of hospital bills
Every 2 years, fees are adjusted
More than 50% of medical care expenditure was spend on

elderly population (aged 65 years or over), while that of younger
population (aged 0–14 years) was only 8% (WHO, 2018)
Main Problem
Too high government spending leading to crowding
out of private financing
Source: Health at a Glance. OECD, 2016

POLICY EVALUATION
Source: Ministry of Health, Labor and Welfare (2019)

Source: Ministry of Health, Labor and Welfare (2019)

LONG-TERM CARE INSURANCE
n oi t ai c o s s A e c n a r u s n I h t l a e H n a p a J M B I : e c r u o S
Started in 2000
Beneficiaries (WHO, 2018):
Category I beneficiaries are the elderly aged 65 years and above
Category II beneficiaries are people aged 40–64 years with
disabilities
Needs Assessment Based
Main Problems
1. No formal mechanism for supporting
informal caregivers in Japan
2. Escalating costs

POLICY EVALUATION
LONG-TERM CARE INSURANCE
POLITICAL
EFFECTIVITY EQUITY
FEASIBILITY
POLICY OPTIONS
1. Support informal caregivers
2. Contain cost through reducing

quantity but maintaining/improving
quality
INTEGRATED COMMUNITY CARE SERVICES
n oi t ai c o s s A e c n a r u s n I h t l a e H n a p a J M B I : e c r u o S
COMPONENTS
1. Medical care
2. Long-term care
3. Long-term preventive care
4. Living support
5. Housing services in
an integrated manner to
the local community
Pension Policy
Coverage
Pensionable Age
Budget
COVERAGE
l m t h . x e d ni / 1 1 w h - p w / p w / h si l g n e / p j . o g . w l h m . w w w / / : s p t t h
Main Problems
1. Inequity (Non-regular workers, self-employed)

POLICY EVALUATION
COVERAGE
POLITICAL
EFFECTIVITY EQUITY
FEASIBILITY
POLICY OPTIONS
1. Expand coverage of 2nd floor.
2. Abolish 2nd floor. Expand 1st floor.

PENSIONABLE AGE
Main Problems
1. Disincentive for elderly workers
2. Don't match recent longevity

POLICY EVALUATION
PENSIONABLE AGE
POLITICAL
EFFECTIVITY EQUITY
FEASIBILITY
POLICY OPTIONS
1. Raise beginning age
2. Abolish / Mitigate suspension

POLICY EVALUATION
EFFECTIVITY
BUDGET
EQUITY
1.
Fiscal
POLITICAL FEASIBILITY
Sustainability
Main Problems
BUDGET
POLITICAL
EFFECTIVITY EQUITY
FEASIBILITY
POLICY OPTIONS
1. Raise beginning age
2. Reduce benefit level
3. Raise tax and subsidy

POLICY
RECOMMENDATIONS
Short to medium term
INCREASE CO-PAY OF BENEFICIARIES

Applicable only to middle (40%) and high (50%) income citizens
EMPLOY STAY-AT-HOME MOMS TO PROVIDE CHILD/ELDERLY CARE

Increases labor force participation rate of women and contrribution to economy
EXPAND CHILDCARE SERVICES

Increase labor force and facilities
ENCOURAGE THE ELDERLY TO WORK

Allow elderly to receive pension while working
Long term
RAISE PENSIONABLE AGE

Further studies need to determine the age and year of implementation
THANK YOU!
COMMENTS | QUESTIONS
References:
IBM Japan Health Insurance Association. retrieved from : http://www.ibmjapankenpo.jp/eng/member/outline/system03.htmlJapan Health Policy Now. Retrieved
from: http://japanhpn.org/en/section-3-1/. Accessed: October 6, 2019. MASAHARU TATENO, YUTA TSUNASHIMA and HIROYUKI AKIYAMA. Japan raises consumption
tax to 10%. Nikkei Asian Review. Retrieved from: https://asia.nikkei.com/Economy/Japan-raises-consumption-tax-to-10. Accessed: October 5, 2019.Ministry of Health,
Labor, and Welfare. Overview of the Japanese Medical Insurance System. July 2009. Reviews of Public Health Japan. OECD. 2019. Retrieved
from: https://www.oecd.org/health/health-systems/OECD-Reviews-of-Public-Health-Japan-Assessment-and-recommendations.pdf. Accessed: October 7, 2019.
Brasor, Philip. Tsubuku, Masako. Cracks forming in Japan's premium based universal health care system. 2019.
Retrieved from: https://www.japantimes.co.jp/news/2019/05/09/national/cracks-forming-premium-based-health-care-system/#.XaKm2eczbEZ. Accessed:
October 6, 2019. Understanding the Japanese Healthcare System. International Insurance. Retrieved
from: https://www.internationalinsurance.com/health/systems/japan.php. Accessed: October 6, 2019. Health at a Glance. OECD. 2016
https://www.populationpyramid.net/japan/
https://www.mhlw.go.jp/english/wp/wp-hw11/dl/01e.pdf
https://https://data.oecd.org/pop/fertility-rates.htm
https://data.worldbank.org/indicator/SP.DYN.TFRT.IN?locations=Z4
https://read.oecd-ilibrary.org/economics/national-accounts-of-oecd-countries/volume-2019/issue-2_g2g9ff01-en#page171
https://data.oecd.org/gga/general-government-debt.htm#indicator-chart
https://www.oecd-ilibrary.org/docserver/9789264265592-en.pdf?expires=1571055248&id=id&accname=guest&checksum=41C8A3629E6310F2C3AB16C402EBC920
https://www.mhlw.go.jp/english/wp/wp-hw11/index.html

Addressing Population Ageing in Japan

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ADDRESSING

Fajardo | Hiraoka | Makhbal | Yi-Ju

Health Care Policies

2. How can we improve these polices to make

government spending efficient and sustainable?

50-YEAR POPULATION PYRAMID

Old Age: ≥ 65 y.o.

Working Age: 15-64 y.o.

Young Age: ≤ 14 y.o

37.2% of Health, Labor

and Welfare 2017 Budget

G7 DEBT TO GDP RATIO (2015)

POPULATION SHARE OF EMPLOYMENT TYPE

0 25,000,000 50,000,000 75,0

(58.2 Million People) (67.5 Million People)

2017 FERTILITY RATE AMONG G7, EU, OECD AND

2015 LABOR FORCE PARTICIPATION BY SEX

Parental Leave Schemes

37.6% 2. Flawed point system

EFFECTIVITY EQUITY POLITICAL FEASIBILITY

1. Expanding services (hire more

2. Cancel point system

CC leave) work after

EFFECTIVITY EQUITY POLITICAL FEASIBILITY

1. Subsidize companies utilizing leaves

2. Re-orient/redefine work culture

Public and Private Care

Long-term Care Insurance

Integrated Community Care Services

Social Health Insurance (SHI) : everyone who is employed full

time with a medium or large company [5%]

Every 2 years, fees are adjusted

More than 50% of medical care expenditure was spend on

Source: Health at a Glance. OECD, 2016

EFFECTIVITY EQUITY POLITICAL FEASIBILITY

Source: Ministry of Health, Labor and Welfare (2019)

Source: Ministry of Health, Labor and Welfare (2019)

Beneficiaries (WHO, 2018):

Category I beneficiaries are the elderly aged 65 years and above

Category II beneficiaries are people aged 40–64 years with

Needs Assessment Based

EFFECTIVITY EQUITY POLITICAL FEASIBILITY

1. Support informal caregivers

2. Contain cost through reducing

3. Long-term preventive care

EFFECTIVITY EQUITY POLITICAL FEASIBILITY

1. Expand coverage of 2nd floor.

2. Abolish 2nd floor. Expand 1st floor.

EFFECTIVITY EQUITY POLITICAL FEASIBILITY

1. Raise beginning age

2. Abolish / Mitigate suspension

1. Raise beginning age

2. Reduce benefit level

3. Raise tax and subsidy

INCREASE CO-PAY OF BENEFICIARIES

EMPLOY STAY-AT-HOME MOMS TO PROVIDE CHILD/ELDERLY CARE

EXPAND CHILDCARE SERVICES

ENCOURAGE THE ELDERLY TO WORK

RAISE PENSIONABLE AGE

from: https://www.oecd.org/health/health-systems/OECD-Reviews-of-Public-Health-Japan-Assessment-and-recommendations.pdf. Accessed: October 7, 2019.

October 6, 2019. Understanding the Japanese Healthcare System. International Insurance. Retrieved

from: https://www.internationalinsurance.com/health/systems/japan.php. Accessed: October 6, 2019. Health at a Glance. OECD. 2016

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