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Long-term Care is Just as Broken as our Acute Care Industry: Can we Learn From Japan

Published September 2, 2015 7:41 AM by Brian Garavaglia

In Chris Farrell’s August 21st, 2015 article, entitled, “What Japan can Teach us About Long-Term Care,” he paints picture that demonstrates our need to not only speak about the breakdown of our national healthcare indictors, our fragile national healthcare policy and the problems faced in the acute care health settings, but also the need to address the breakdown nationally of our long-term care industry healthcare industry. In reality, the long-term care (LTC) industry is mimicking many of the problems found in the larger acute care industry. Although the problems are slightly different and unique to the LTC industry itself, the LTC industry is facing many similar problems that are leading to individuals gasping for breathe as they attempt to navigate themselves through this labyrinth.

He starts the article with some sobering data. He states that the odds of those who are turning 65 and will eventually need assistance with their activities of daily living is approximately 50%. In addition he states that these individuals who utilize long-term care can expect a cost that is approximately $138,000 on average. However, and this is the distressing statistic, the median balance in individual’s saving accounts who are between 55 and 64 years of age is approximately $104,000. As one can readily see by comparing those two pieces of data, the net result of the long-term care is being placed in debt. We can see that financing of our healthcare industry is badly broken and this is also reflected in our long-term care industry.

Troubles Still Abound
Regardless of the Affordable Care Act and its provisions, we are a country, the richest on the face of the earth, which continues to struggle to subsidize healthcare, to fiscally manage it correctly and to control for proper inflationary expenditures that are astronomically driving up costs at the expense of those that need comfort and care. At a time when individuals are in need of care, when they do not need additional worries to complicate their treatment and recovery, many are entering acute care facilities, and now many LTC facilities, with the added specter of having to worry about whether they will be able to pay for their care, and if they leave the facility, will they have any personal resources left to continue to live a viable social existence.

Let me share a side story that I was shocked by since it happened to a close friend, yet stories like this are an all too frequent occurrences in our wealthy society. My friend acquired a very aggressive form of cancer. He eventually passed away within six months of the diagnosis. However, at one point during his stay within the hospital that was caring for him, a bill collector called him up from the hospital itself, asking how he was going to pay his approximately up to that point, one million dollar medical bill!  Here is a person that is dying and struggling for his life, having to receive some of the most expensive therapeutic intervention found in medicine, having to worry whether he will be allowed to get further care or be harassed by bill collectors looking to profit off his terrible and fatal diagnosis. Yet, the hospital, calling him during a period when he was still within the hospital being treated was requesting him to explain to them how he would pay his medical expenses, even though this person had a limited life expectancy with a highly aggressive form of cancer that would ultimately preclude him from ever being able to work again, or even live a viable life outside of the hospital environment for any extended period of time. An all too common occurrence, both in our acute and LTC settings:  sick people needing to worry about their treatment and getting better now being reduced to economic variables and looked at as nothing more than possible sources of revenue. Notice the antinomy that exists between the compassionate care giving organization and the reduction of the human being down to a point of a commodity for economic gain.      

Aging Population: Where is the Protection?
As the aging population in the United States continues to expand, and as healthcare problems within this population continue to expand as well, many are looking around and saying, “Who and what can I count on for healthcare protection as I get into older age.”  Medicare has been the primary insurance targeted toward the Elderly population since 1965. However, it only provides limited coverage for nursing home coverage home care, and it only covers certain individuals, the so-called “skilled population,” that has met the requisite hospital stay requirements and can enter the nursing care center with a short-term, no more than 100 day, coverage for rehabilitation.

For those that need much longer care within nursing care centers, the primary insurance has often been  Medicaid, which was never set up to be a major medical provider for long-term care, but an insurance for the indigent. Yet, it currently is the primary financial reimbursement tool used for enduring nursing home placements. Notice the term and insurance for the “indigent.”  This is often the fate of many elderly that need continued placement in nursing home settings. They often have to exhaust a considerable, if not almost complete, amount of the personal resources before Medicaid will be applicable for their coverage.

The thought of including long-term care coverage as part of most healthcare plans has never caught on in the United States and is often looked at with a level of abhorrence by healthcare insurance CEO’s since it would take away from a large amount of profit in their industry. This has often left, when it is available, separate long-term care insurance plans that are offered separately. However, as Farrell writes in his article, the long-term care insurance industry has constricted considerable, with fewer and fewer companies offering such insurance at a very high premium. Of more than 100 companies offering long-term care insurance a decade ago, the number now offering such insurance plans has been reduced to a handful. Most individuals cannot afford these plans due to their cost, which can be approximately $4,000 per year for each individual.   

As one can see, the long-term care industry is witnessing much of the same breakdown as is found in other areas of healthcare. With an older adult population of approximately 13% in the U.S. currently, a rapidly aging baby boom population, an older adult population that will reach approximately 20% over the next 50 years, a pharmaceutical industrial in which an inflationary index and level of product cost is controlled by passing the expense on to the consumer, a healthcare and long-term care industry that is seeing a sicker population that often has higher technological interventions applied to them at greater costs, and an insurance industry that still wants to make its share of a profit by passing more and more costs on to the consumer by way of coinsurances, copayments and deductibles, one can see we have a mess out there. The once thought-of security net of American healthcare and health insurance is far from providing many with any feeling of security, and it is often a net that is porous with many individuals falling through, falling down and falling out.

Japan has witnessed an incredible growth in their elderly population and currently has an elderly population that makes up approximately one-fifth of their population. The traditional cultural norm was to promote an obligation by children to care for their older parents. However, with the dramatic growth of the older adult population, many Japanese children have become quite stressed in caring for the large number of elderly within their homes. In fact, the rate of Japanese elderly abuse has increased as dramatically as their older adult population growth. In fact, a 1994 survey found that 1 in 2 family members had engaged in abusive behavior toward the elderly, and many acknowledged harboring feelings of hate toward the elderly. These are eye-opening statements that often run contrary to our conception of the Japanese population being one that is totally reverentially engaged in their behavior toward the elderly.

As more Japanese women also moved into the workforce the time they had to spend taking cover of an older adult parent or parent-in-law created monumental stressors that were formerly not seen among this young and middle age population, a stressor quite similar to what we see here in the U.S. and have given the name the “sandwich generation,” a designation often for middle-age women left to take care of elder parents and often young children still in the same household. However, in the case of the Japanese population, the sandwiching is even more prominent due to the greater number of older adults as a percentage of the total population.  

What is Japan Doing?
It must first be mentioned that the changes that the Japanese society introduced is far from being a complete panacea to the issue at hand. As the older adult population in Japan increased, the increasing number of older adults were often shunted to hospitals (often referred to as social hospitalizations), since Japan offered free hospital care for the elderly. This is similar to our society’s redirection and admission of many older adults in our past to many state hospitals, as well as unnecessary placements within nursing homes as well.

With the growing rate of elderly within the population, the increasing stressors placed on caregivers, and the public concern over these social hospitalizations, the Japanese society brought forth important reform in 2000. In 2000 the Japanese introduced a mandatory long-term insurance system. It is funded by both the general tax revenues and payroll taxes on those who are 40 years and over. Furthermore, the importance of the family has not been reduced. As is the case in our society and many others, the family remains the most fundamental source of care for the elderly. The Japanese government has also introduced important subsidies that can help support many family members in caring for their older adult family members. Some of these subsidies are also providing greater outreach to the community to assist with elderly care. Finally, the Japanese society is attempting to bring about an economic competition between the home and community-based services to help create a competitive cost-lowering economic force based on supply and demand.      

America and Its Long-Term Forecast
The Japanese, with an incredibly burgeoning population who are 65 years of age and older, which is currently slightly greater than 20% of the population, has created a structural momentum for them to address the aging population as well as many of the concomitants that have been a by-product of its growth. As was already mentioned, the changes that they have implemented are not an absolute panacea. Moreover, the changes made by the Japanese society have also come with a financial cost to its society and its members. However, given the growth of their elderly populations, with the growth of this population over the next 40 years reaching approximately 35%, the demographic momentum has forced the Japanese people to look for some way to assist with managing the needs of the ever-increasing elderly population and the needs that they specifically have that need to be addressed.  

The question for our society is how much longer can we as a society afford to wait and not make dramatic changes based on an elderly demographic that we know will only continue to grow? Currently, healthcare comprises approximately 18% of our GDP. As our population ages, this will continue to grow and further exacerbate an already existing financial healthcare crisis. However, the next question that needs to be posed is, if the older adult population will continue to increase, and if we will witness some level of increase in healthcare expenditures as part of the GDP, what can be done to 1) reduce some of the financial pressure that we face due to the ever-increasing number of chronic illnesses often presented with an increasingly elderly population and 2) what can we do to, if not stop, at least dramatically slow down healthcare expenditures in this area. In Japan, even with an older adult population of approximately 20%, their healthcare expenditures as part of their GDP is still only slightly over 10%. Therefore, Japan has already started addressing a problem, maybe slightly later than they should have based on the demographic nature of the population, but earlier on an economic level in comparison to what is found in the U.S.

The U.S. has a very explosive run-away cost in its healthcare system. Not only is this due to the increasing elderly population, but as the healthcare expenditures as part of GDP have reached 18%, far and exceeding any other nation in the world, we are spending more and getting less. The level of poor management that is found within the U.S. healthcare system leading to these run-away costs, which now comprise approximately 18% of the GDP, coupled with the fact that the elderly population is aging with the fastest growth in the elderly population being found among those who are 85 years of age and older, forebodes a continued cost-escalating crisis that will fall heavily on the elderly. Furthermore, with the oldest-old of the elderly population growing the fastest, this brings with it a much greater level of chronic illnesses and associated with this, an increasingly level of expensive care. At this point, to paraphrase an old saying, “we are getting caught waiting for the paint to dry on the fence.”  When will we stop waiting? In fact, the paint has dried, aged and is now blistering. Although our country does not have to create a facsimile of change as was found in Japan, we do have to fight the inertia of continuing to move in the same path that would ultimately only lead to increasingly grave problems for our American healthcare system in general, and more particularly, the elderly population and its healthcare needs in our country. Continuing to prolong addressing this issue in a substantive manner will only see our wounds related to health care and the elderly fester.    

1. Farrell, C. (August 15, 2015). What Japan Can Teach Us About Long-Term Care: Its program helps families shoulder the burden?
posted by Brian Garavaglia


Healthcare is just a business to most people. There is no real concern among the insurers for peoples' health concerns; just how much they can profit by them.

A different approach needs to be taken. Whether or not the Japanese route will prove correct waits to be seen. Personally, I think it will take more than money.

Walter September 14, 2015 8:55 PM
Garden City MI

It is sad that today in health care patients who need the care and testing needed can't get it. I work in a oncology office and patients by their health insurance are denied certain tests because of costs. One test which is vital in staging and restating hodgkins lympoma is a pet ct. Most insurances will not cover this anymore if the patient is 6 months out of treatment. Patients should not have to worry about getting treatment which causes more stress on them.  I believe everyone should be able to have health care but not at the cost to people who work hard for it.

Kim September 6, 2015 2:11 PM
Detroit MI

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About this Blog

    Brian Garavaglia, PhD
    Occupation: Long-term care administrator
    Setting: Sterling Heights, Mich.
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