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

Katsuyoshi Nakazawa

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Long-term care insurance; Eligibility assessment; Municipal amalgamation; Free-rider behavior; Difference-in-difference (search for similar items in EconPapers)
JEL-codes: H51 H73 H75 I13 I18 R5 R51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea and nep-ias
Date: 2016-12-13
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