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Linkage between Benefit Expenditure and Premium Burden: Long-Term Care Insurance in Japan

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  • Katsuyoshi Nakazawa

    ()
    (University of Toyo)

  • Kota Sugahara

    (University of Kyoto)

  • Minoru Kunizaki

    (University of Aichi)

Abstract

This study considers the discretionary premium-setting behavior of municipalities in the Japanese system of long-term care insurance (LTCI). Although, the LTCI system is managed by the municipality, but the financial system is controlled by national health insurers, and the municipality seems to have no discretion in managing it. However, we find that the premium-setting forecast of each municipality is different, contrary to the intention of the LTCI system. Adjustment subsidy does not function in line with the intention of the system, affecting the standard premium-setting process. Moreover, our empirical results show that municipalities seem to have discretion in premium setting. Cities, in particular, set premiums low, reflecting elderly political power. In addition, premiums are influenced elderly political power when few neighboring municipalities are available for reference. Municipalities do have leeway in premium setting, contrary to the intention of the LTCI system.

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Bibliographic Info

Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 201305.

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Length: 23 pages
Date of creation: 2013
Date of revision:
Publication status: Forthcoming in
Handle: RePEc:mar:magkse:201305

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Keywords: long-term care insurance; inter-jurisdictional interaction; financial transfer; Japan;

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  1. Heyndels, Bruno & Vuchelen, Jef, 1998. "Tax Mimicking Among Belgian Municipalities," National Tax Journal, National Tax Association, vol. 51(n. 1), pages 89-101, March.
  2. Federico Revelli, 2005. "On Spatial Public Finance Empirics," International Tax and Public Finance, Springer, vol. 12(4), pages 475-492, August.
  3. Maarten Allers & J. Elhorst, 2005. "Tax Mimicking and Yardstick Competition Among Local Governments in the Netherlands," International Tax and Public Finance, Springer, vol. 12(4), pages 493-513, August.
  4. Bordignon, Massimo & Cerniglia, Floriana & Revelli, Federico, 2003. "In search of yardstick competition: a spatial analysis of Italian municipality property tax setting," Journal of Urban Economics, Elsevier, vol. 54(2), pages 199-217, September.
  5. Olivia S. Mitchell & John Piggott & Satoshi Shimizutani, 2004. "Aged-Care Support in Japan: Perspectives and Challenges," NBER Working Papers 10882, National Bureau of Economic Research, Inc.
  6. Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
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