The Japanese public long-term care insurance for the elderly is unequivocally a problem both for the health care system and as a social issue. The issues for the socially hospitalized and institutionalized are still unsolved due to a lack of family and community support. A central feature is to investigate the behavioral choices among elderly formal/informal home care and nursing home care. This study uses the General Survey on Actual Living Conditions of Elderly People as a natural experiment to analyze behavioral decision-making between the nursing home care and community-based formal/informal home care among the elderly. A logit model analysis that controls for socio-economic, demographic and physical/mental health influential factors was conducted. Developing community-based formal/informal home care would lead to economic gains. A provision of compensation to family health caregivers for their informal home care for the elderly is a key factor and a viable option. The Geneva Papers (2006) 31, 600–632. doi:10.1057/palgrave.gpp.2510101

Using a microsimulation model named Integrated Analytical Model for Household Simulation (INAHSIM), the author conducted a household projection in Japan for the period of 2010—2050. INAHSIM-II specifically means that the initial population is created using the INAHSIM model itself. The model produces outputs such as (a) the number of the elderly according to dependency and/or living situations, (b) the relative parents/children ratio taking into account the number of brothers and sisters, and (c) a 1-year transition matrix by household type. As an application of the model, a projection of health and long-term care expenditures is made for the years 2010—2050 in Japan.

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By using a microsimulation model named INAHSIM, we conducted a household projection in Japan for the period of 2011–2060. Due to rapid aging of the population, the distribution of the elderly (65 years old or older) by living arrangement and dependency level has a profound impact on the future social burden. In this paper, we measured the social burden of the elderly by three variables: (1) institutionalization rate (percentage of the elderly living in institutions), (2) parent-child ratio (relative number of old parents taking into account the number of brothers and sisters), and (3) one-year transition matrix of the elderly by household type. Especially, the choice of the elderly among (a) living independently, (b) coresident with child households, and (c) moving to institutions are crucial indicators for the future social burden of the elderly in Japan.

We defined the depenadency level of the elderly, and calculated the annual transition probability of dependency level in Japan. Then incorporating this transition probability into a dynamic micro-simulation model named INAHSIM-II, we calculated expected years of each dependency level from birth for future years, applying the life table method. In this way, expectation of independent living at birth was obtained from the simulation, and we conclude that although extension of Healthy Life Expectancy is desirable, extension of Expectation of Independent Living is more important as a public health objective.Correspondence to: Tetsuo Fukawa, Co-representative, Institution for Future