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Welfare Reform on the Web (March 2011): Social care - overseas

Dynamics between nonprofit and for-profit providers operating under the Long-Term Care Insurance System in Japan

Y. Suda and B. Guo

Nonprofit and Voluntary Sector Quarterly, vol. 40, 2011, p. 79-106

The Long-Term Care Insurance (LTCI) system introduced in Japan in 2000 devolved responsibility for provision to local government and the private sector. Central government and local governments cover 25% of the costs of the scheme apiece; the remaining 50% of costs are covered by insurance premiums compulsorily collected from citizens over 40. The LTCI also allows any private sector organisation to provide services as long as it meets central government standards; government agencies have withdrawn from service provision and the system allowing social welfare organisations to be the main holders of government contracts has been abolished. Under LTCI, clients contract directly with the provider they choose. This study focuses on the behaviour of for-profit and nonprofit service providers operating in this new environment based on case studies of two municipalities in the Tokyo Prefecture. Results showed that for-profit providers behaved like nonprofits in one of the municipalities but not the other. These differences corresponded to the way that resources were allocated.

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