How to Treat Japan’s Anxiety About Healthcare and Elderly Care

Japanese who are in their working age worry most that the healthcare and pensions systems are souring the country's solvency.

This is the segment's top answer when it comes to concerns related to society from our survey of 30,000 Japanese residents, topping the list for 12 years running, ever since we started measuring in 2011. And just as the media often report, expenditures for healthcare and taking care of the elderly are skyrocketing, resulting in higher social-insurance contributions for the actively employed: over the past 20 years, health insurance contributions have risen by almost a third for those working. And the low birthrate means fewer people will be around to share the costs, so their contributions are bound to continue rising.

The human-resources aspect looks dire too: there is an increasingly acute shortage of people to fill nursing, care-giving, and other frontline jobs that keep healthcare and elderly-care services running. Many institutions have to juggle the few personnel they have effectively enough to ensure the wellbeing of the patients and resident in their care. If the situation continues unaddressed, it could become unsustainable, threatening the viability of the whole social security system.

The whole purpose of social security systems is for societies to provide their members with support for the challenges and risks of life that are difficult for individuals to shoulder on their own. We believe the following three approaches are critical for overhauling the current system and ensuring its long-term viability.

First, set co-pays at levels commensurate to insurance enrollees’ ability to pay, according to the principle of paying according to means, regardless of age: Income and assets would determine co-pay rates—the out-of-pocket percentage of an enrollee’s medical or care bill. Specifically, rather than having the elderly pay a lower rate than other age groups on the assumption that the older they are, the less able they are to pay—a hallmark of the current system—individuals would be assigned co-pay rates by ability to pay. This would bring us closer to the ideal scheme, in which the cost of all members assisting each other would be fairer.

Second, programs must be realigned with the principle that public insurance programs are founded on—that society’s members should cover small risks themselves but take on the big risks collectively. Specifically, insurance would still cover most of the expenses for big events like illnesses requiring hospitalization or surgery, while individuals would shoulder higher co-pays for less-serious ones like colds, muscle pain, and things that can be treated with over-the-counter medicine. This would make it possible to allot more resources to more-critically needed services.

Third, effective utilization of digital technologies would enable better and more-convenient public services while simultaneously reducing costs and frontline workloads. For instance, deploying digital technology would do much to hold down the administrative costs of processing paperwork for getting assistance to those who are in distress. And at the same time it would make it possible to provide rapid, proactively offered assistance commensurate to individuals’ income—to those in dire need of it. In health- and elderly-care theaters, too, digitalization would be beneficial, lightening workloads by, for example, letting machines take over certain administrative processes.

Unfortunately, plenty of hurdles stand in the way of these three approaches to a system overhaul. For one thing, it will be tough to win society-wide consensus for changing the system, and there will likely be resistance due to concerns regarding the new system. Along with wide-scale public involvement in the planning process, this makes indispensable local pilot projects across the country to identify the benefits and side effects that changes will bring.

Another thing none-too-few working-age Japanese fret about: what would happen if they or a family member gets seriously ill. Our wellbeing survey¹ found the working demographic’s overall life satisfaction to be low, with many respondents citing worry about their mental and physical health as a reason, alongside economic inequity and lack of time. And, in fact, each year more and more working-age Japanese are struck by mental illness and lifestyle diseases, a fire the covid pandemic further fueled. And on top of all that, Japan’s population of seniors 85 and over will exceed 10 million in 2035, a development that could significantly worsen an already serious situation for working caregivers, or those who shoulder the work of caring for a family member who is ill or disabled while maintaining their job.

Digitalization of healthcare and caregiving services is effective for assuaging the working cohort’s concerns about health and being able to get adequate care.

Sharing and utilization of patient healthcare data would propel the overhaul of the healthcare and elderly-care system forward. For example, deploying ICT and pursuing digital transformation will be indispensable for getting a detailed picture of how changes in co-pay rates will affect the nation’s overall health. And they will also make it possible to assess the correlations between how frequently people use health- and elderly-care services and the outcomes; i.e., the actual state of their health. Further, analyzing treatments and subsequent changes in patients’ health will yield improvements in the quality of care and efficiency in its provision.

The hindrances to a thorough overhaul of the current system are numerous, but that’s no reason to shy away. What’s crucial at this juncture is to tenaciously keep the ball rolling forward through incremental experiments.