Identifier
Created
Classification
Origin
06FUKUOKA14
2006-02-28 10:37:00
UNCLASSIFIED
Consulate Fukuoka
Cable title:  

KYUSHU'S AGING SOCIETY CREATING BOTH HEADACHES AND

Tags:  ECON EFIN ELAB SOCI PGOV BTIO JA 
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RR RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHFK #0014/01 0591037
ZNR UUUUU ZZH
R 281037Z FEB 06
FM AMCONSUL FUKUOKA
TO RUEHC/SECSTATE WASHDC 0169
RUEHKO/AMEMBASSY TOKYO 0175
INFO RUEHKSO/AMCONSUL SAPPORO 0071
RUEHNAG/AMCONSUL NAGOYA 0070
RUEHOK/AMCONSUL OSAKA KOBE 0079
RUEHNH/AMCONSUL NAHA 0073
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAUSA/DEPT OF HHS WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEHFK/AMCONSUL FUKUOKA 0187
UNCLAS SECTION 01 OF 02 FUKUOKA 000014 

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN ELAB SOCI PGOV BTIO JA
SUBJECT: KYUSHU'S AGING SOCIETY CREATING BOTH HEADACHES AND
OPPORTUNITIES


SUMMARY

UNCLAS SECTION 01 OF 02 FUKUOKA 000014

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN ELAB SOCI PGOV BTIO JA
SUBJECT: KYUSHU'S AGING SOCIETY CREATING BOTH HEADACHES AND
OPPORTUNITIES


SUMMARY


1. While analysts frequently warn about the coming demographic
and fiscal challenges that Japan's aging population will pose,
in much of the Kyushu/Yamaguchi region that future has already
arrived. Senior citizens age 65 and over now account for more
than one in five Kyushu residents, and this proportion is
forecast to reach nearly one in three by 2025. Rural
prefectures are already struggling to provide health care and
other services to senior citizens in outlying areas. Meanwhile,
the continued population influx into Fukuoka Prefecture mirrors
the national trend of young Japanese abandoning rural areas to
concentrate in big urban centers. While the Government of Japan
(GOJ) and local governments grapple with the skyrocketing costs
of caring for the elderly, businesses are moving to take
advantage of new opportunities this "gray society" is creating.
End summary.

AROUND KYUSHU, VARYING SHADES OF GRAY


2. According to 2005 census figures, the population of the
Kyushu/Yamaguchi region (seven Kyushu prefectures plus Yamaguchi
in western Honshu) stood at 14.9 million, with a "senior rate"
(i.e. portion of the population age 65 or older) of 22% - two
percentage points higher than the national average. That share
is forecast to rise to 27% by 2015 and to exceed 30% by 2025,
ahead of the national rate. World-leading Japanese longevity
also means more very elderly people: half of Kyushu seniors
(particularly women) are already age 75 or older, and that
population segment will grow sharply over the next two decades.


3. Around the region, the "senior rate" varies among
prefectures, from a low of 18% in Fukuoka to over 24% in
Yamaguchi and Kagoshima, tying them for fourth highest among
Japan's 47 prefectures. Wide variations exist within
prefectures. In Kagoshima, for instance, the rate is 17% in
Kagoshima City but ranges as high as 50% in some small towns;
rates exceed 30% in more than half the prefecture's
municipalities. On the national level, the Japanese media

reported widely in October 2005 that, a full year earlier than
expected, the country had officially reached the "tipping point"
at which deaths exceeded births - marking the start of
population decline. In the Kyushu region, with the lone
exception of Fukuoka, prefectural populations reached that point
and began declining more than a decade ago.

FUKUOKA, KYUSHU'S FOUNTAIN OF YOUTH


4. While not exempt from the aging trend, Fukuoka Prefecture -
in particular the Fukuoka City metro area - is a steady magnet
for Kyushu's shrinking population of young people. Attracted by
Fukuoka's large number of universities, healthier economy and
job opportunities, and abundant shopping and nightlife, the hip,
younger crowd on Fukuoka streets contrasts sharply with the
scene in most interior areas of Kyushu. Fukuoka City's
population of under 40-year-olds, at 52% of the total, is by far
the highest of any Kyushu city.


5. Fukuoka is the region's only prefecture where the population
continues to grow. Officials here forecast that, even as
Fukuoka's "senior rate" creeps higher in line with the national
trend, it will average at least a full percentage point below
the national average and well below the rest of Kyushu. On a
regional level, Fukuoka is gradually becoming a microcosm of
Japan's likely future - a teeming urban island of relative youth
and prosperity, surrounded by a depopulated countryside largely
abandoned to the elderly.

FOR SENIORS, EXPANDING SERVICES BUT ESCALATING COSTS


6. Both the national and local governments are grappling with
the enormous fiscal and societal implications of the "elder
boom." Under Japan's obligatory nursing care insurance system
introduced in 2000, all citizens aged 40 and over must enroll
and continue to pay monthly premiums for life - including those
drawing benefits. Elderly beneficiaries, who receive services
ranging from home nursing visits to full time hospice care,
numbered 587,700 in Kyushu in 2003, up from 420,500 in 2000.
System outlays in the region rose from USD 4.74 billion to 6.71
billion in the same three-year period.


7. In addition to their monthly premiums, beneficiaries under
the system pay 10% of the fixed cost of the service received.
The national insurance fund, supported by subscriber premiums,
covers 50% of the remaining cost, with governments responsible

FUKUOKA 00000014 002 OF 002


for the other 50% (25% central government, 12.5% prefectures,
12.5% municipalities). For local governments, which must cover
their portion out of general tax revenues, the pressure on
budgets is enormous - especially in areas where the aging,
declining population means a shrinking tax base. Kumamoto
Prefecture officials told post that in the last five years their
outlays for elderly care rose 55%. That includes a whopping
222% increase for home nursing services, due to rapidly rising
demand from the elderly in smaller, more isolated communities.


8. Local officials say this situation is unsustainable, and
government cost containment strategies will require the elderly
increasingly to shoulder more of the cost for their own care.
One major push is to limit full-time public nursing home/hospice
care. The waiting time for admission to these facilities now
averages 2-3 years, and starting in October 2005 nursing home
patients must now pay separate room and meal charges (an average
increase of USD $250/month on top of the standard 10% service
fee). Effective April 2006, a revision in the nursing care
insurance law will require local governments to provide more
services aimed at keeping the elderly in good health longer,
such as more home visits for physical therapy/muscle training,
nutritional counseling, etc. While this will cost more in the
short term, officials hope they will save in the long term by
helping the elderly to better care for themselves.

SERVICING THE ELDERLY BECOMES BIG BUSINESS


9. While caring for the elderly is a growing headache for local
governments, it is increasingly lucrative for the private
sector. The explosion in demand for home care and other
services has attracted many new business entrants, and seniors
with the means to pay - or with good private insurance to cover
costs - can choose from many options. A social welfare official
in Kumamoto Prefecture lamented, however, that his office is
hard-pressed to license and regulate properly all the new
service providers. Ensuring quality of care and preventing
fraud/abuse is shaping up to be as much of a challenge as rising
costs, he said.


10. As the traditional Japanese practice of elderly parents
living with grown children wanes, the number of private
sector-run nursing homes, assisted living centers, and condos
for seniors has mushroomed. There was only one such facility in
all of Fukuoka Prefecture in 2000; by 2005 there were 121.
Businesses are especially eager to tap well-to-do retirees.
Post staff recently visited a luxury senior living center in
Kumamoto, run by Kyushu Electric Power Co. (Kyuden),which
opened in 2005. Residents enjoy top-notch facilities, including
24-hour nursing staff, but at a price: as much as USD $70,000
up front, and $1500-2000 per month thereafter depending on the
size of the unit. Kyuden has a similar facility in Fukuoka and
hopes to build others in each prefectural capital in Kyushu.
Like Kyuden, other major Kyushu companies in unrelated lines of
business - Nishinippon Railroad Co., Saibu Gas, and Fukuoka
Jisho, to name a few - already operate senior living centers or
plan to jump into the market. Other types of business, such as
interior remodeling to make homes more accessible and "senior
friendly," are also booming.

COMMENT


11. From post's discussions with officials around Kyushu it is
clear that local governments are already feeling the strain of
providing adequate public services for the growing elderly
population. This is especially true in many rural communities
where, given current trends, within another decade or two only
the elderly will be left. Officials acknowledge that Japan's
societal commitment to provide equitably for its senior
population is wavering in the face of stark fiscal and
demographic realities. Japanese senior citizens enjoy many more
options for care and services than their counterparts elsewhere
in the world, but accessing those services will increasingly
depend on one's personal ability to pay. End comment.
WONG