Comparison of the Japanese and German Nursing-Home Sectors: Implications of Demographic and Policy Differences

Abstract

This research provides a comparative study of the Japanese and German nursing-home sectors. Facing aging populations, both countries share similar long-term care policies based on social insurance. However, descriptive statistics indicate significant differences in the outcomes of utilization and costs in their respective nursing-home sectors. This research seeks out the reasoning behind these observations, looking at demographic and policy differences between the two countries. To shed light on multiple angles, we conduct empirical analysis using three methods: regression, the Blinder-Oaxaca decomposition, and data envelopment analysis, which uses regional data from the past decade. Our findings indicate that different outcomes are driven by both demographic and policy differences where policy relates to long-term care as well as to additional welfare aid. Among the policy elements, our results are consistent with the regional existence of moral hazard, but only for Germany. This result might be due to a generous welfare program in Germany, while Japanese figures do not indicate the existence of moral hazard as a result of strict nursing-home admission rules for welfare recipients.