An obvious reason is Japan’s population aging and inevitable increase of the need for long term care. Another reason is related with the reform of Japan’s long standing health insurance system.

While the population aging is undoubtedly a major reason, one does not have to create a new system just to cater to the increasing need for LTC. It can be achieved by simply expanding the scope of benefit of the existing health insurance system. Actually some pioneering health insurers have been providing the LTC services which were not included in the traditional health insurance schemes, such as domestic services by home helpers.

It is widely believed that Japan simply followed the wake of Germany in establishing the LTCI system, but a closer comparison of both countries will reveal otherwise. While German LTCI system simply added new benefits to the existing health insurance system, Japan’s LTCI system was created as an entirely different system with distinctive legal and administrative structures.

This distinction is best illustrated by the population coverage. The LTCI system does not cover the entire population: it covers roughly half of it. While the health insurance covers the entire population: from newborn to elderly, the LTCI system covers the population aged 40 years or over.