The Impact of Home-Modification Service on the Functional Prognosis and Formal Care Use Under the Japanese Long-Term Care Insurance System

Abstract

This study purported to evaluate the impact of home modification service on the functional prognosis and formal long-term care service use under the Japanese public long-term care insurance. Theoretically, home modification is expected to prevent the frail elderly from fall accidents at home, and to help them maintain functional levels and independence. Since its introduction in the year 2000, the Japanese public Long-term insurance system (LTCI), mandatory for all the citizens without selection, and driven by local government insurers, covers home modification service as well as care at home and institutions. However, its empirical evaluation has been quite limited. Using electronic claim bill data with a complementary interview survey provided by a local government insurer, we evaluated whether the home modification service use affected functional prognosis and long-term care service utilization other than home modification one year after the service use. Considering the observational nature of the data, and the susceptibility to endogeneity problems, we used beneficiaries' ex ante preference to use modification service as an instrument. The analytic results did not support the expected benefit of home modification on the functional prognosis. LTCI service use was larger among those used home modification service, suggesting there seemed to exist service-provider induced demand. We discussed on the policy implication of the obtained results and possible policy change of the current LTCI in this country.

Keywords: home modification, elderly, long-term care insurance, functional prognosis