AARP

On August 30, the Democratic Party of Japan (DPJ) won a landslide victory in the election, sweeping the Liberal Democratic Party (LDP) out after an almost unbroken 54 years in power. One of the chief reasons given for the LDP's sound defeat was their inability to tackle the country's demographic crisis - a rapidly aging population with one of the world's lowest birth rates (1.23 per woman). This, along with the continuing 20-year economic slump and record unemployment, may explain the DPJ's victory.

In this AARP News Maker interview, John Creighton Campbell, Professor Emeritus of Political Science at the University of Michigan and a visiting researcher at the Tokyo University Institute of Gerontology discusses the historic elections and what the new government will aim to do to reverse Japan's demographic and economic decline.

AARP: How great a factor was the future of the Japanese welfare state (old-age pensions and health care) in the August elections?

JC: In one sense, it was an enormous factor. In public opinion polls most voters mentioned "social security" in a broad sense as their number one concern, well ahead even of the economic recession as an issue. The opposition Democratic Party of Japan (DPJ) frequently mentioned pensions and health care in speeches and advertisements, and the ruling Liberal Democratic Party (LDP) accused the DPJ of making promises they could not afford. An issue that hurt the LDP was last year's reorganization of medical care provisions for people 75 and over, which was ineptly introduced and was seen by older people as discriminatory. The DPJ also effectively attacked the government's mishandling of past records of pension contributions, and promised to fix the problem more quickly. Such issues were important in helping to convince voters to elect a new administration, but the parties' differing views on broader policy matters probably did not influence voters very much.

AARP: Will the new government's plans to promote child rearing and encourage older workers have much effect on the country's demographic and economic malaise?

JC: The DPJ's emphasis on children and women has been well received, but the effect on decisions to have children will be marginal, and in any case the declining number of women of childbearing age means that even if the birthrate improved a bit the absolute number of children born will continue to fall. More older people are already working in Japan than anywhere else in the developed world, to some extent due to government policies which probably will not change much in the new government. A pickup in economic growth, including more jobs, will be required before people become much more positive minded, but there does seem to be a widespread feeling that the new government is offering something of a fresh start. Constant, detailed attention to prices has helped Japan keep the growth rate of health care spending down to 1 to 3 percent a year despite rapid aging.

AARP: Immigration is rarely discussed in Japan as an option to increase the labor force and fertility rate; do you see this changing under the DPJ?

JC: The DPJ did not mention immigration in its election platform, and the fact that labor unions are among its supporters might mitigate against an early change in policy. The fall of the LDP from power means that the main supporters of liberalized immigration, big business, are now less influential, but on the other hand the party's substantial xenophobic right wing is gone and it had been the main barrier to liberalization. Again, the economy will be the main factor-immigration is hardly attractive with a high unemployment rate, but if labor shortages develop in the future, one way or another more immigrants will come into Japan, as happened in the 1980s. Incidentally, another component of DPJ support is liberal NPO groups, many of whom have a multicultural perspective; they could help smooth a slow process of liberalization.

AARP: Given its older population, how does the Japanese system provide health care at lower cost than the American system?

JC: Japan along with many European countries has more older people and lower health care spending than the US. The most important factor is covering everyone in a comprehensive system, which is the only way to get a handle on spending. The second factor is that Japan does not save money by "rationing" health care; in many areas usage is much higher than in the US, particularly regular doctor visits that are so important for controlling chronic illness. Rather, in Japan and Europe the main strategy is fixing prices-health care spending is so high in the US largely because prices are so high and those who profit from the high prices so powerful.

Japan is particularly adept at manipulating prices to keep costs down. Every two years the price of each treatment, test, medication and device is examined to see if excess profits are leading to overuse, in which case the price is cut. When the government wants to increase some service, such as home visits by physicians, it increases the price. Constant, detailed attention to prices has helped Japan keep the growth rate of health care spending down to 1 to 3 percent a year despite rapid aging.

AARP: What are the most important lessons the Japanese can teach us as the US reforms its health care and public pension systems?

JC: Japan should learn from the US in pensions: its system is badly fragmented, and while the programs for employees work fairly well, the one for non-employees is in a mess partly because many people who are legally required to pay premiums simply do not. America's unified, efficient Social Security system might be the best in the world and its financial problems are relatively easy to fix.

Health care is of course the other way around. As well as learning about controlling costs as mentioned above, American's should look at Japan's successful introduction of public, mandatory long-term care insurance a decade ago. Depending on level of need (not income), people are entitled to services up to a value of $3500 a month for home and community-based care, with a 10 percent co-pay. This program has transformed caregiving in Japan: for example, over 1 ½ million people, 6 percent of the 65+ population, are attending adult day-care.

AARP: What are the greatest criticisms; what aspects of the Japan system should the US avoid in its reform efforts?

JC: Japan has some real problems in public pensions; the new government has plans for a thoroughgoing reform but it will not be easy. There are also weaknesses in the health care system, such as inadequate emergency room care in some areas and shortages of some specialized doctors. The problems are due to a lack of flexibility in how medical care is organized and probably to cost-cutting having gone a bit too far; the DPJ has promised to put some more money into the health care system, though it certainly does not need very much more by American standards. I don't think the Japanese problems are particularly relevant to the US situation-the positive lessons from Japan in health care and long-term care are much more important to understand.


 
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