Munich Personal RePEc Archive

Identifying Discretion of Municipalities to Undertake Eligibility Assessments for Japan’s Long-Term Care Insurance Program

Nakazawa, Kasuyoshi (2016): Identifying Discretion of Municipalities to Undertake Eligibility Assessments for Japan’s Long-Term Care Insurance Program.

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Abstract

Eligibility assessments play an important role in Japan’s long-term care insurance program and have been designed so that municipalities do not have discretion in their working. However, there are doubts about eligibility assessments based on the municipal fiscal situation. This study empirically identifies the discretion of municipalities to undertake eligibility assessments employing the idea of opportunistic municipal behavior at amalgamation. Amalgamation offers municipalities an incentive to free ride (e.g., public debt accumulation) when they can subrogate the load to a new municipality after amalgamation. If so, pre-merger municipalities might increase the eligibility ratio before amalgamation. Difference-in-difference regression confirms a free-rider effect of pre-merger municipalities in the eligibility assessments for long-term care by Japanese municipalities. Smaller pre-merger municipalities increase the eligibility ratio immediately before amalgamation. These results mean that the Japanese long-term care insurance system is not managed in accordance with the institutional design.

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