[Issue Interview] "24 Years Since Introducing Kaigo Insurance, What Japan Regrets"

Professor Yayoi Saito, Department of Human Sciences, Osaka University

"A nursing facility in Osaka forces elderly people who need partial assistance in daily life to receive 24-hour intensive care services. This is to increase profits. While private operation can bring innovative services and efficiency, excessive profit-seeking can actually lower the quality of care. This means that some level of management and supervision by local governments is necessary."

Professor Yayoi Saito (Saito Yayoi) of the Faculty of Human Sciences at Osaka University is an authority on comparative research of welfare systems between Japan and Northern Europe. He majored in law at Gakushuin University in Tokyo and earned a master's degree in public administration from Lund University in Sweden. From 1990 to 1993, he studied the elderly care system in Sweden. After serving as a professor at Osaka University of Foreign Studies, he is currently a professor at Osaka University and has held positions such as president of the Nordic Studies Association, establishing a unique position in comparative research of welfare systems between Sweden and Japan.

On the 15th of last month, during a meeting with Asia Economy in Japan, Professor Saito pointed out that Japan's Long-Term Care Insurance system, introduced in 2000, is operated excessively by private for-profit companies. He emphasized that since most nursing facilities and home care services are run by private companies without proper quality control, the system should be converted to one where local governments take responsibility and manage it, like in Sweden. Having visited Jincheon County in Chungbuk and Ansan City in Gyeonggi Province in October, where integrated elderly medical and care support policies are being promoted, he explained, "In Korea, a significant portion of nursing facilities and home care services are still operated by non-profit organizations such as social welfare corporations, and the National Health Insurance Corporation regularly evaluates facilities and publicly discloses the results, so systematic management and supervision are in place, which can create a better model."

On November 15th, Professor Yayoi Saito of the Department of Population Sciences at Osaka University was interviewed by Asia Economy at a cafe in Nagoya, Japan. Photo by Yujin Park

According to Professor Saito, unlike the general expectation that service quality improves when operated by private companies, the opposite phenomenon is occurring in Japan's elderly care. He cited service distortion caused by excessive competition as the reason. This means that unnecessary services are frequently forced to increase profits. Additionally, the lack of management and supervision by local governments and insufficient digitalization leading to poor information sharing make it difficult to compare or evaluate service quality.

- How was the situation in Japan compared to your research period in Sweden during the 1990s?

▲ In 1993, Japan's aging rate was already 14%, making it an aged society, while Sweden's was 17%, the highest in the world. However, the operational methods were completely different. In Japan, families were responsible for care, and social hospitalization was a serious problem. In contrast, Sweden had already established a professional nursing assistant system and group homes. Local governments had a 24-hour response system and directly operated 90% of elderly care services.

- What are the current differences between the elderly care systems in Japan and Sweden?

▲ The biggest difference is who takes responsibility. Although some private companies participate in operations in Sweden, local governments exercise strong management and supervision. In contrast, local governments in Japan are almost hands-off. The financial aspects also differ. Sweden raises funds through local taxes and operates proactively by local governments, whereas Japan operates through an insurance system. Since it can only operate within government-set rules, it is difficult to provide services tailored to local circumstances.

- What is the most serious case of problems caused by private company-centered operation?

▲ The Osaka area, where my university is located, is a representative example. In Osaka, where many facilities are operated by for-profit companies, the average long-term care insurance fee is 9,200 yen (about 87,480 won), compared to the national average of 6,500 yen (about 61,800 won). Companies try to increase profits by recommending unnecessary services to users. In particular, some elderly housing facilities have care service offices on the first floor of the building that induce residents to use more services than necessary. For example, they force a level 3 care recipient (moderate assistance needed) to receive level 5 (most severe) services.

- How does the current community-based integrated care system in Japan operate?

▲ The Ministry of Health, Labour and Welfare requires 1,700 local governments to create care business plans every three years. Since it started in 2000, this is the ninth revision this year, but the problem is that there is almost no budget support. Most community support centers are also entrusted to the private sector. Therefore, there is a huge disparity between regions. Some areas operate well centered on the community, but these are truly exceptional cases.

- What is another problem in Japan?

▲ The biggest problem is that digitalization has not been implemented at all. Let me give an example from when my mother, who is over 90 and lives alone, was hospitalized due to a fracture and discharged. There was no information sharing between the hospital and the nursing facility, so the family had to explain everything repeatedly. Everything was handled on paper, and the same explanations had to be repeated at each facility. Japan has a very strong awareness of personal information protection, making it difficult to introduce the My Number card (similar to a resident registration card).

- I heard you visited Jincheon and Ansan in Korea last October.

▲ I went to study a resident participation care model. I was particularly impressed by the systematic organization of community care, where local volunteer residents check on the elderly. Ansan's integrated service model linking medical cooperatives, community centers, and welfare centers was very interesting.

- What impressed you most about Korea's elderly care system?

▲ First, social workers are mandatorily assigned to all district offices and community centers. In Japan, most community support centers are entrusted to the private sector, but in Korea, professional social workers work in public institutions. Second, the digital integrated system was impressive. Especially Ansan City's smart care system combines medical, long-term care, and welfare information, making it very efficient. The elderly job program was also fresh. Japan's Silver Human Resources Center is simply a means to earn money, but Korea considers both social contribution and income generation, which is meaningful.

- How do old-age security systems differ between Sweden and Japan?

▲ In Sweden, old age is secured by pension alone. Even when entering a nursing facility, it can be covered by pension, and if insufficient, basic livelihood security is provided. Since the system is managed by local governments, there is less worry about old age. In contrast, in Japan, pension alone is often insufficient. Some elderly cannot even pay rent for elderly housing, so their children end up bearing the burden.

- What do you see as the solution?

▲ The government needs to spend more on building welfare infrastructure. Once entrusted to private companies, it is very difficult to reverse. Even in Osaka, without government subsidies, it is difficult to create community-based facilities. In Germany, pensions are well provided, so retired nurses can enjoy leisure without economic worries, but Japan cannot do that. The system should be changed to one where local governments take responsibility like Sweden, but since private companies already dominate many areas, it is not easy, but efforts must be made to find a balance point.