The demographic situation and disease structures are very influential for medical services delivery system and its finance. A rapid ageing is on goimg in Japan. The population of aged more than 65 yr old accounts for 22% and Total Fertility Rate (TFR) was 1.37 in 2008. The total population is decreasing since 2006. This demographic change means the increase in users of social and health services and the decrease of tax payers, which requires the Japanese government to re-organize its social security system. The mortality has been also dramatically decreased during the past 50 decades. It is considered that this improvement in health status was caused by the following factors; improvement of general hygiene, medical system and nutrition, relatively small incidence of violence, relatively moderate climate and so on. On the other hand, the ageing and westernization of the lifestyle have changed the disease structure from the acute to chronic diseases dominant patterns. For example, diabetes mellitus and mental disorders have become new health threats for the Japanese population. Because of this dramatic change in demography and disease structures, we face to a fundamental problem concerning how to make our social system sustainable.Key words: ageing, health system, social security system, Japan The Japanese administration system and financial situationThe Japanese administration system comprises three levels; central government, 47 prefectures, and 1,727 municipalities. Each of the three levels of government has its assembly and chief. For the local governments, inhabitants directly elect both. In the case of central government, the citizens directly elect the members of the Diet, and the Diet members elect the Prime Minister. Central government establishes the principles and basic laws. The Ministry of Health, Labour and Welfare has responsibility for the national health policy. The national health policy is materialised through local governments; prefecture and municipality. Most of the basic health and welfare services, such as those for mother and child, the elderly, and the handicapped, are provided under the responsibility of the municipal government. The prefecture co-ordinates activities among the different municipalities and provides direct health services for specific problems, such as tuberculosis, AIDS, and the mentally handicapped.Because of the instability of political scene, there have been frequent changes of prime minister within the past 20 yr. The unstable political situation has made it difficult for the government to establish a long term strategies for the coming aged society. The too strong populism among the politicians has resulted in many unnecessary public investments that were implemented in order to attract the voters in the rural areas. Furthermore, the rivalry among the different ministries has caused many duplications of projects with similar purposes. A series of mistakes done by politicians and their supporters caused a tremendous amount of debt for the government. In 2010...