How Japan Stood Up to Old Age

John Creighton Campbell, professor emeritus at the University of Michigan, has devoted much of his career to studying responses to ageing in Japan. He takes issue with some fellow academics who associate what has become known as Japan’s “hyper-ageing” with inevitable economic catastrophe, even civilisational collapse. One virtue of the ageing “crisis”, he says, is that it happens slowly and predictably, giving governments, labour markets and society in general time to adjust. By around 2017, the number – though not the proportion – of over-65s will actually stabilise, he says, meaning the costs associated with ageing will tend to level off.

As far back as the early 1960s, the government became aware of the imminent ageing problem and began to establish nursing homes and home helpers. In the 1970s, benefits for retirees were more than doubled and a system of virtually free healthcare for older people was established. In 1990, Japan introduced the “Gold Plan”, expanding long-term care services. Ten years later, it started to worry about how to pay for it, and imposed mandatory insurance for long-term care. All those over 40 are obliged to contribute. The scheme’s finances are augmented with a 50 per cent contribution from taxes and recipients are charged a co-payment on a means-tested basis. Even then, there have been financing problems and the government has had to scale back the level of services provided. Still, Campbell calls it “one of the broadest and most generous schemes in the world”.

As a result of these and other adaptations, he argues, Japan has struck a reasonable balance between providing care and controlling costs. Other countries, including Britain, have studied Japan closely for possible lessons. Of course, 15 years of deflation have left Japan’s overall finances in lousy shape, with a public debt-to-output ratio of 240 per cent, the highest in the world. Spending on healthcare per capita, however, is among the lowest of advanced nations, though outcomes are among the best.

by David Pilling, FT |  Read more:

Image: Tohiski Senoue