AMPONTAN

Japan from the inside out

Drawing conclusions from Japanese demographics

Posted by ampontan on Thursday, May 8, 2008

THE REALITIES OF DEMOGRAPHICS and the aging of Japanese society are causing some people, primarily in private-sector businesses, to draw their own conclusions and act accordingly. Meanwhile, others are oblivious to the new realities because they can’t see–or don’t want to see–beyond their own front yard. The latter group might wind up regretting their failure to pay attention.

Here are some examples:

Item 1

The Nishinippon Shimbun published a survey earlier this week that revealed 58 hospitals and clinics in all seven Kyushu prefectures eliminated their pediatric wards during the period from April 2007 to April 2008. The primary reasons cited for the step included the declining number of children and a shortage of pediatricians. In contrast, 35 facilities added an internal medicine ward.

Some hospital officials pointed out the difficulties of pediatric practice. Because both parents are working in many more families than before, they take their children for medical examinations during their off hours, when most examinations are being conducted on emergency patients. It is also difficult to determine the severity of a child’s illness, and illnesses in children tend to become more severe more quickly than in adults. That means pediatricians must work longer hours without a commensurate increase in pay.

The 2004 reform of the system for medical education resulted in greater freedom for students to select their course of study. Since then, the number of medical students choosing pediatrics has sharply declined.

One hospital director also cited business factors as a reason. The remuneration for treating children is low, their diagnosis and treatment involve a lot of time and trouble, and fewer tests and drugs are ordered. Pediatrics always has been a money-loser for hospitals, but the falling population of children has spurred the elimination of the wards that treat them.

Here’s what is being left unsaid, but is perfectly obvious: Bright young medical students have drawn the conclusion that pediatrics is not a growth sector in Japan, and some hospitals think the sector is more trouble than it’s worth.

Why are pediatrics wards becoming unnecessary in some hospitals?

Item 2

The Ministry of Internal Affairs and Communications released a report for 5 May–Children’s Day–estimating the national population of children on 1 April this year. The estimate counted a record low of 17,250,000 children aged 14 or younger, down 30,000 from the previous year. The number of children in this category have declined every year since 1982, or 27 straight years. According to the ministry, this age group accounts for 13.5% of the population, one of the lowest levels in the world. This percentage has been dropping for 34 consecutive years.

On the same day, the National Institute of Population and Social Security Research (link also on right sidebar) reported there will be fewer than 15 million children by 2015, and they will account for less than 12% of the population. The institute said that urgent measures were needed to deal with this situation.

The institute broke down the percentages by prefecture. Tokyo had the lowest percentage with 11.7%, followed by Akita with 11.8%. This is significant because these two locations represent different population extremes. It isn’t surprising that there would be fewer children in Tokyo, a megalopolis with a high percentage of singles. But Akita is a more rural prefecture with a much smaller urban population.

The prefecture with the highest percentage of children was sunny Okinawa at 18.1%. The only one in which the percentage of children rose over the past year was Tokyo–by 0.1%.

The private sector has drawn its own conclusions from this information and is taking steps to seize their financial opportunities.

Item 3

On the same day that its report on local pediatrics wards appeared, the Nishinippon Shimbun ran a feature explaining that Kyushu Electric Power, Saibu Gas, Nishitetsu Railroad, and other big businesses in the Kyushu region are ramping up their business investments in homes for the aged by building facilities on their unused land holdings. These companies are parlaying their name recognition to create facilities that provide services similar to those of hotels. Some are assisted care facilities that require initial payments ranging from several hundred thousand yen to several million yen, and a few upscale institutions require initial entry payments of more than 100 million yen (about US$ 952,000).

A facility built in Fukuoka City by Saibu Gas has 122 units on 24 floors with Italian furniture in every unit and a natural hot spring on the premises. The minimum entry fee is 30 million yen. It opened in 2006 and now has an occupancy rate of 40%. Two of those units carried the 100-million-yen price tag.

The extreme aging of society

Recall that the National Institute of Population and Social Security Research forecast that children aged 14 and younger would account for less than 12% of the population in seven years. Statistics from the institute’s website also show that the percentage of Japan’s population aged 75 and older rose from 1.4% in 1930 to 4.7% in 1995 and to 8.8% in 2004.

Everyone knows the reasons for this: the Japanese are a healthier people to begin with, and they are living longer as a result of the advances in medical science.

That means the day there are more people aged 75 in Japan than those younger than 15 is just over the horizon. How far away is it? We might be able to count the years on our fingers, with a few toes thrown in.

To its credit, the Japanese government drew its own conclusions about this situation a long time ago. Japan’s semi-socialized medical system provides exceptional care with few of the drawbacks of the systems in Canada or Great Britain, for example. Until recently, the elderly were required to pay just 10% of their costs, and those who were registered as dependents of employed children (not unusual in this East Asian country) were exempt from payments altogether.

Considering the general abundance of modern life and the success of the Japanese pension system, the elderly—who are naturally the primary consumers of health care—had quite a deal for themselves.

But the country is in a difficult fiscal situation: gross public debt is more than 170% of GDP and is expected to continue to rise. More old people are using more health care resources paid for by public funds. And the tax-paying population is going to decline in the future, not grow.

The government began planning changes in the system a few years ago, and they inaugurated the new system on 1 April this year. Those people aged 75 and older will be required to be responsible for their own health care costs (though this has been purposely delayed to limit the political backlash), and there was a marginal increase in the monthly payments.

It’s difficult to blame anyone for the inevitable uproar that resulted.

Gray anger

The government is trying to keep outlays from getting out of hand. It’s not unreasonable to expect people to assume more responsibility for their health care, particularly when the system is so generous and affordable to begin with.

People who have ceded their responsibility for the basic functions of life to the government are not going to act their age when that government tells them fairness requires they start assuming more personal responsibility.

As the novelist Upton Sinclair once observed, it is difficult to get a man to understand something when his salary depends upon his not understanding it. Replace salary here with benefits, and the statement describes the reaction of many Japanese elderly to the new system.

One old man on the street interviewed for national television blustered for the camera that it was as if the government was telling him it hoped he died early. In fact, some people have started calling this the “hurry up and die” insurance system.

The reaction was so intense it was cited as one of the reasons for the defeat of the ruling party’s candidate in a by-election for a lower house seat in Yamaguchi.

Yes, that is blubbering selfish stupidity, but no one seems anxious to set them straight. Indeed, no one explained the new system to them to begin with. Discussions about the reforms became public around the time the war in Iraq started, and the mass media, being an entertainment enterprise, knows that people dying in explosions wins the ratings battle every time. Instead of covering a development that involved all Japanese, they devoted their time and resources to covering a story that involved almost no Japanese.

And when it became a matter of public discussion, the media chose to fan the political flames and turn it a potential election issue between the ruling party and the opposition rather than present it in a reasonable way.

Meanwhile, communicating with the citizens has never been a forte of the Japanese government.

Failing to connect the dots

The only ones who seem to be unable to draw any conclusions are those people over the age of 75, though they are probably hiding their eyes deliberately. The government is fiscally strapped. Personal liability for health care costs is low. The population is rapidly aging, and more elderly are using health care services more often. The number of children is plummeting, which means the pool of potential taxpayers to pay the bills is shrinking.

And yen trees don’t grow in the gardens of Nagata-cho.

Responding to the criticism, Prime Minister Fukuda Yasuo said the government would study ways to alleviate the burden on the lower-income elderly using funds from the national budget, but the new system would remain in place.

The contours of future developments are not difficult to make out, however. As health care costs continue to rise in tandem with the number of late-stage elderly, the older citizens will exercise their right to vote until they find a party that will shelter them from financial reality.

There will be no shortage of politicians volunteering for the task.

But that will inevitably place a larger financial burden on an increasingly smaller group of younger people who are employed. As with other social welfare programs, the Japanese health care system shares the same characteristics as a pyramid scheme—it requires a growing population to sustain, and that’s no longer possible in Japan. The taxpaying population won’t put up with it forever, and one day they will demand tax relief, perhaps with an American-style taxpayer revolt.

In that scenario, the logical first step would be to ration health care. Arguments in favor of that step already are being made elsewhere. As this article points out:

(In the book Setting Limits, author Daniel) Callahan proposed that the government refuse to pay for life-extending medical care for individuals beyond the age of 70 or 80, and only pay for routine care aimed at relieving their pain.

As we’ve seen, some people have been calling the new Japanese health care plan for the late-stage elderly the “hurry up and die” system. Of course that’s just silly, but it’s time those people started drawing conclusions of their own.

Otherwise, before too long, they might find that the rest of society really has begun to wish they would hurry up and die.

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15 Responses to “Drawing conclusions from Japanese demographics”

  1. Bender said

    Great post!

    Even if monthly payments rises, they are still significantly lower than what one has to pay in the U.S. for individual plans. Maybe the Japanese should look at the situation in the U.S. (good antithesis) and compare before they complain. I haven’t made the comparison, but including taxes and all, it’s probably still cheaper than Nordic countries.

  2. Rick in Texas said

    Another interesting post.

    Part of the problem is that even if the elderly do “hurry up and die” it won’t fix the crux of the issue in Japan. They need to get busy makin’ babies. I seriously wonder if the Diet has the creativity to map out the fundamental cultural changes that are going to be needed in Japan if they are going to reverse the birth rate issue. At this rate the Chinese can just wait a century or two and then conquer Japan with a couple of ole Junks because there won’t be anyone left on Honshu to stop them.

    The only other option I can see if for Japan to open the immigration floodgates like they have never been.

  3. […] blogs about government and private sector's plan for meeting the demographic challenge. Posted by Oiwan Lam Share […]

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  5. Overthinker said

    Why not just increase the number of taxpayers by raising the retirement age? Sure, many people may want to retire, but the money is surely better for when you are working, so there is that incentive.

  6. wu said

    First: Overthinker, I have seen you around. Seriously, upping the retirement age? Do you want a 75 year old hunched over (caused by osteoporosis due to bad diet) obachan filling your tank or making your burger?

    second: There are sooooooooooo many issues with the japanese medical system. The hospitals will bed a old lady for two weeks just because she has a cold. Why? Because the system will pay for it. But if a high school girl tears her ACL (most are required to join a sport or social club) the doctors will say “Oh you can live without an ACL”. Later on in life she has arthritic issues and the hospital makes more money. Bottom line here is that the doctors here could give a shit less about preventive care, they want you coming back.
    In the US preventive care is all the rage these days because the insurance companies figured out that if they keep you healthy you will spend less of their money seeing doctors. People whine that US healthcare is way too expensive but the best doctors on the planet are educated in the US. Capitalism does have a few benefits, competition forces people to innovate.

  7. Bender said

    Let’s look at the real figures before debating over impressions/images portrayed by the media and sorts.

    U.S.:

    Click to access 38980580.pdf

    Japan:

    Click to access 38979974.pdf

    BTW, I don’t think preventive care is working in the U.S. For example, it’s pretty obvious Americans are more obese than other nationals. Because of the high cost involved, many people aren’t insured at all and wait until the last minute when ER is the only option. I believe one of the major reasons Americans are filing for bankruptcy is health costs. I hope denying universal health care won’t lead to this:

    http://krugman.blogs.nytimes.com/2008/05/09/avoiding-moral-hazard/

  8. Overthinker said

    I have no desire to get into a comparative health care debate.

    However, raising the retirement age is not as silly as it sounds. With people staying healthy into old age, thanks to modern medicine, retiring at 60 or 65 means you still have a couple of active decades ahead of you. Maybe they can’t do as much physical activity as a 20 or 30 year old, but there are many fields they can be active in. As for geriatrics filling my tank or making my burgers, they’re not done by people about 60 as it is, so why would that change? All I am suggesting is about another ten years.

  9. Paul said

    Bender, it won’t, and Paul Krugman is a delusional ideologue. “Universal health care” is a euphemism anyway.

    Also, people like to claim that uninsured people wait until the last minute and then go to the ER, but they never actually provide evidence for this. Just because you think it’s obvious doesn’t mean it is.

    It’d help if people could pump their own gas in Japan too.

  10. Overthinker said

    Paul – they can, as of several years ago. I was amazed the first time I saw a self-serve place in Japan.

  11. Bender said

    Oregon gas pumps aren’t self-service but they’re cheaper than neighboring CA or even WA.

    For hard-core conservatives out there, here’s an interesting opinion on WSJ I’d like to share. If the link below doesn’t work, search for the “Our Great Economic U-Turn” on the net:

    http://online.wsj.com/article_print/SB121072656227790335.html

    The closing sentence I kind of like:

    So let us have one now. Instead of pleasant talk about “change” and feats of beer drinking at the corner tavern, let us hear our candidates address this greatest issue of them all: What kind of country are we to be? A land of equality? Or a bankers’ utopia – where the law of the land has achieved mystical oneness with the higher law of classical economics, and devil take the bottom 80%.

  12. ampontan said

    1. The people who believe in free markets, the rule of law, and property rights are not “conservatives”. For a further explanation of this, see Hayek’s “Why I Am Not a Conservative”.

    2. This is not a WSJ opinion. It’s a column—and a rather poorly written and conceived one at that—by their house left-winger, Thomas Frank. (He would probably call himself progressive.) Frank is more at home in The Nation, for whom he also has written.

    3. Frank is known for his book, “What’s The Matter With Kansas”, in which he complains that American hicks are too stupid to know what’s in their best self-interest, which is to vote for left-wing Democrats like all the intelligent people from New York City.

    4. He says:

    Mr. Greenhouse reveals how managers extract unpaid work through an array of ingenious tricks, from eliminating bathroom breaks to electronically erasing hours from workers’ records.

    The plural of “anecdote” is not “data”.

    5.

    The top 20% of households earned more, after taxes, than the rest of the country combined in 2005, while the topmost 1% of the population took home more than the bottom 40%.

    The topmost 1% of the population also accounts for about 28% of all federal taxes, and about 39% of federal income taxes, the highest since 1979 and higher than Clinton’s last year in office.

    The bottom 50% of Americans by income pay 3% of all federal income taxes.

    Also:

    The top-earning 25 percent of taxpayers (AGI over $62,068) earned 67.5 percent of the nation’s income, but they paid more than four out of every five dollars collected by the federal income tax (86 percent). The top 1 percent of taxpayers (AGI over $364,657) earned approximately 21.2 percent of the nation’s income (as defined by AGI), yet paid 39.4 percent of all federal income taxes. That means the top 1 percent of tax returns paid about the same amount of federal individual income taxes as the bottom 95 percent of tax returns.

    As for how much some people earn compared to others: So what?

    Does Mr. Frank have some kind of infallible standard that he uses to judge how much people should make?

    6.

    It is, in other words, a political disaster, with tax cuts, trade agreements, deregulatory measures, and enforcement decisions all finely crafted to benefit one part of society and leave the rest behind. Few of the voters who gave Ronald Reagan his landslide victories, it is fair to say, intended for this to be the outcome.

    Does Mr. Frank actually believe that Americans would be better off economically if Jimmy Carter had been reelected, or Mondale elected in a second term?

    8.

    What kind of country are we to be? A land of equality?

    We have empirical evidence of what happens when governments insist on equality of economic results. People tore down the Berlin Wall with their bare hands.

    Socialism is to prosperity as pantyhose are to sex.

    9.

    Or a bankers’ utopia – where the law of the land has achieved mystical oneness with the higher law of classical economics, and devil take the bottom 80%.

    Note the comment: “mystical oneness with the higher law of classical economics”.

    Others have noticed that he’s a smartass too:

    The following is a typical Frank sentence: “The most powerful symbolic weapon in the arsenal of market populism was the astonishing new information technology of the decade, to which all manner of cosmic significance could be attributed and from which no end of lessons could be drawn.”

    Note the snigger, the distancing, the mock exaggeration, the proof that the speaker is not a fool. If you like sentences like that, you’ll like this book. But if you like carefully considered critique of today’s culture, you’ll have to look elsewhere.

    10. The bottom 80%? Most of the world would love to live like the bottom 80% of Americans. African-Americans have a higher PPP-adjusted GDP per capita than do Swedes. (This originally from a Swedish research institute.)

    Also:

    …a study by a Swedish research organization, Timbro, … compared the gross domestic products of the 15 European Union members (before the 2004 expansion) with those of the 50 American states and the District of Columbia…. the study found (that) if the E.U. was treated as a single American state, it would rank fifth from the bottom, topping only Arkansas, Montana, West Virginia and Mississippi.

    Frank’s column in the WSJ is just breakfast table entertainment for the “plutocrats”, as he calls them. You know–all the people who look like the old bald guy in the top hat in the Monopoly game.

  13. Bender said

    Yeah, you got me there. I knew some would catch me on Frank. I introduced it anyways, because I thought it was interesting that WSJ (which is NOT liberal) would have such a post. Maybe a sign that even conservatives think the income divide should be fixed a little? Or maybe just like you said in your last sentence.

    With Japan, I think it’s over-regulated to a degree that it kills itself.

    BTW, if figures say African-Americans are “richer” than Swedes, that’s so counterintuitive I’d have to doubt that figure. You honestly believe so?

  14. ampontan said

    Bender: The research was done by the Swedes, and the first report I saw of it said the Swedes were shocked to find out. I looked around a little bit and couldn’t find the name of the institute that first published it. I found that instead.

    Perhaps it’s counterintuitive because everyone focuses on image rather than reality.

    BTW, one factor dragging down the recent American income numbers, and probably the Swedes too, is non-skilled immigrants. A lot of Muslim immigration to Sweden in the past few years.

  15. Bender said

    Ampontan:
    American income numbers aren’t being dragged down, it’s amazingly high compared to other big-population states (other top tiers in per-capita GDP are small Northern European nations). Statistics seem to show it’s the American rich that is dragging overall income UP. Compared with how Japan fared in the last 10 years or so, American growth is awe-inspiring.

    But still, it seems many Americans (and economists) feel the income disparity is in a serious a state, and needs to be fixed one way or another. The disagreement seems to be about how that should be achieved.

    One thing I find interesting is that American liberals are not “ichimai-iwa” on this. Take free trade, for example. Many columnists at WaPo or NYT are against protectionism, while you see Obama and Clinton leaned towards protectionism…

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