Horizontal Equity or Gatekeeping? Fiscal Effects on Eligibility Assessments for Long-term Care Insurance Programs in Japan

Abstract

This paper considers the effects of municipal fiscal climates on eligibility assessments in the Japanese system of long-term care insurance (LTCI). We find that municipalities with more stringent fiscal climates tend to reject more applications for LTCI benefits, almost certainly in the hope of containing benefit expenditures. This would not be a serious problem if financial assistance from the upper levels of government counteracted the adverse effect. However, we also find that the effects of the assistance are almost negligible, despite layers of intergovernmental subsidies for municipal LTCI expenditures. In other words, horizontal equity in Japanese long-term care insurance is compromised for the sake of gatekeeping.