From euphoria to a police state----lessons from Japan's LTCI

When Japan's Long-term Care Insurance (LTCI) was introduced in 2000, people welcomed it with rosy expectations. Concerns from both government and people centered around its technical aspects, e.g., how an individual's care need is properly measured and whether there would be sufficient supply of services. Eight years since its implementation, the LTCI has totally become a part of people's daily life. Instead, people are increasingly reminded about the dark sides of any financial affairs: fraud and abuse, whose impact occasionally exceeding that of the subprime loan scandals. On 6th June 2007, hundreds of thousands of disabled elderly who relied their daily life on domestic services, day care and meal caterings provided by COMSN inc., by far the largest investor-owned provider of long-term care services, were rudely awakened by reports that the provider would be suspended its operation due to fraud and abuse. A government official explained the cunning tactics the company employed to dodge inspections, but the official dared not mention that the company was actually once hailed as a "model" provider who operated 7/24 even in underserved areas. The scandal provoked a call for a stringent law enforcement over service providers. Now, need assessment can only be conducted by care managers employed by municipal governments and separation between care management and service providers are being enforced. The stocks plummeted and many of its 2,061 outposts were taken over by competitors but not all, particularly in underserved areas. Eventually, it was not only stock holders who suffered.