Japan Healthcare Spending 2040: Two Forecasts, ¥11T Apart

One number keeps showing up in write-ups of Japan's ageing problem. By 2040, the country's combined medical and long-term care spending reaches 83 trillion yen, about 1.5 times what it spent in 2020. It is clean and quotable, and it travels well through consultancy decks and investor briefings.

Japan's own government ran the same calculation and got a bigger answer. Its projection puts medical care at 68.5 trillion yen in 2040 and long-term care at 25.8 trillion yen, or roughly 94 trillion yen together.¹ The two forecasts describe the same country in the same year. They sit about 11 trillion yen apart.

What Japan spends now

Start with the measured figures rather than the forecasts. Japan's national medical expenditure reached a record 48.09 trillion yen in the year ending March 2024, which works out at 386,700 yen per person.² People aged 65 and over accounted for about 60% of it.

Long-term care is counted separately. It cost 11.5 trillion yen in fiscal 2023, up 322.7 billion yen on the year before.³ The fiscal 2022 figure was 11.2 trillion yen.⁴ Both come from the Ministry of Health, Labour and Welfare.

That gives a present-day combined total of roughly 60 trillion yen a year.

One caution about the medical figure: Japan publishes two versions of it. In September 2024 the health ministry released a preliminary estimate of 47.3 trillion yen for fiscal 2023.⁵ The final national medical expenditure figure came in later at 48.09 trillion yen. The preliminary count excludes some categories and lands about a year earlier. The gap is definitional, not a disagreement about the facts.

Why the two 2040 forecasts disagree

The government projection dates from 2018 and uses fiscal 2018 as its base year. In that base year, medical care cost 39.2 trillion yen and nursing care cost 10.7 trillion yen. The projection has medical care rising 1.7 times and nursing care rising 2.4 times by 2040. Total social security benefits reach 190 trillion yen, or about 24% of GDP, up from 21.5%.¹

The 83 trillion yen figure comes from the Mitsubishi Research Institute, a private research firm.⁶ Its own published estimate has moved. An earlier article from the same institute put the 2040 total at 80.5 trillion yen, also described as 1.5 times the 2020 level.⁹ The two sit eight months apart.

That matters for how much weight the number can carry. A figure that shifted by 2.5 trillion yen between two of its publisher's own articles is an estimate under revision, not a settled result.

This publication could not retrieve either Mitsubishi Research Institute page directly, because both returned errors to automated requests. The 83 trillion and 80.5 trillion figures here come from indexed summaries of those pages. Treat them as attributed rather than verified.

The base year explains part of the remaining gap. The government measured from fiscal 2018. The 83 trillion yen estimate measures from 2020, when Japanese medical spending dipped during the pandemic. A lower starting point produces a lower endpoint at the same growth rate.

Where the money is already failing to land

Both forecasts describe money entering the system. Neither tells you whether it reaches the organisations doing the work. On that question there is hard, recent data, and it points the other way.

Bankruptcies among Japan's medical and nursing care providers reached 478 in fiscal 2025, the highest level since 1988, according to the credit research agency Tokyo Shoko Research.¹⁰ The climb was steady: 350 in fiscal 2023, then 436 in fiscal 2024, then 478.

Small operators are taking the damage. Firms with four or fewer employees made up 72.1% of the fiscal 2025 failures.¹⁰ Tokyo Shoko Research attributes the surge to staff shortages and rising costs.

The structural reason is pricing. Because Japan sets what providers may charge for insured care, an operator facing higher wage and energy costs cannot pass them on.¹⁰

A second source counts the care segment on its own. Nippon.com reports 91 nursing care provider bankruptcies in 2025, a record for the third consecutive year, also citing Tokyo Shoko Research.¹¹ The two counts use different scopes, one covering hospitals and clinics as well as care operators. They agree on direction and on the record-setting.

The workforce number that decides the rest

Money is the easier constraint here, because a government can raise it. Staffing is the one that binds.

Japan's health ministry expects demand for care workers to reach 2.72 million by fiscal 2040. The workforce stood at about 2.15 million in fiscal 2022. That leaves a projected shortfall of 570,000 people.⁷ The International Labour Organization independently counts 2.1 million long-term care workers in Japan in 2023, which matches the ministry's starting point closely.⁸

Pay explains much of the difficulty. Average monthly pay in nursing care runs about 303,000 yen against about 386,000 yen across all industries.¹¹ The gap is roughly 83,000 yen a month.

Closing it is expensive. Yuki Yasuhiro is a professor who studies the system. He estimates care wages need to rise by at least 50,000 to 60,000 yen a month. Nippon.com puts the extra annual funding that would take at about 1.4 trillion yen.¹¹

Neither 2040 projection includes a pay rise on that scale. Both model current wage structures forward.

The labour market shows what that pay buys. Care work had 3.9 job openings per applicant in fiscal 2023, against 1.2 across all occupations.⁷ Employers are competing for a pool that is not growing.

Turnover then cancels out recruitment. The care worker turnover rate ran at 14.4% against a hiring rate of 14.2%, meaning as many people leave the sector each year as join it.⁷

That is the mechanism behind the shortfall. The gap is not caused by too few people entering care work. It is caused by too few staying.

Nippon.com puts the risk plainly, quoting researchers on the funding question: without radical change, Japan faces a "system without services".¹¹ Benefits would remain legally available with no provider able to deliver them.

The demographic clock

The 2040 date is not arbitrary. It marks the point where two population waves have fully arrived.

The first arrived in 2025. Every member of Japan's postwar baby boom reached age 75 or older that year.⁷ Certification rates for long-term care rise steeply after 75.

The second arrives around 2035, when the same cohort reaches 85.¹¹ Care need at that age is heavier and lasts longer. That is what pushes the long-term care projection up 2.4 times, against the 1.7 times projected for medical care.¹

The certified-user count is already moving. In January 2015, just over five million people were certified as needing care, about 17% of the population aged 65 and over.¹² By 2024 the system covered 35.9 million people aged 65 and over, of whom 7.1 million, or 19.4%, were certified.⁸

By 2040, more than one in three people in Japan will be aged 65 or over, according to research published in The Lancet Regional Health, Western Pacific.¹³ Its authors argue the central question is not how Japan protects the existing system but how it redesigns the social contract underneath it.¹³

What the headline numbers leave out

The forecasts are models, not measurements. Each rests on assumptions about drug prices, technology, policy and demographic behaviour. The government's version is now eight years old and built on a fiscal 2018 base.

Several widely repeated details do not survive checking. A figure of 2.3 trillion yen for Japan's 2022 long-term care spending circulates online. The ministry's own number for that year is 11.2 trillion yen.⁴ That is about five times higher.

Two capacity claims could not be sourced at all. One says the average new care facility shrank from 100 beds in 2015 to 80 in 2022. The other says construction cost per bed rose 12% to 8 million yen. Neither could be traced to a retrievable primary source during this research, so neither is used above.

The user's share is not fixed. Most people pay 10% of the cost of insured care services.¹² Higher earners pay 20% or 30%, thresholds the government introduced in 2015 and 2018 respectively.¹⁴ Those rules have been tightened before and can be tightened again.

Premiums have already doubled. The average monthly long-term care premium was 2,911 yen when the system launched in 2000. It now stands at 6,225 yen.¹¹

Household budgets are the binding constraint for families. A person who paid pension premiums for 40 years receives 69,308 yen a month in fiscal 2025. Lifull Senior surveyed 1,873 families whose relative had recently entered a facility.¹⁵ Monthly fees came to around 100,000 yen for a third of residents and around 200,000 yen for another quarter. The pension does not cover the facility.

The elderly medical system runs on transfers from younger workers. Japan's scheme for people aged 75 and over cost 17.34 trillion yen. Public funds cover half of it. Support payments from the working-age population cover about 40%, and premiums from the elderly themselves cover about 10%.²

Its buffer is thin. Reserves in that scheme cover 0.23 months of benefits, which is about a week.² The transfer from working-age contributors is the part under demographic pressure, and it is the part the 2040 projections assume continues.

Public money carries most of the system. Public sources fund 83% of Japanese health spending, according to the Health and Global Policy Institute.¹⁶ That share is what turns a demographic forecast into a fiscal one.

How to read a 2040 care forecast

Three habits make these numbers usable.

Ask whose projection it is before quoting it. The 83 trillion yen figure is a private research estimate, while the 94 trillion yen figure is the government's. They are not interchangeable. The gap between them is larger than Japan's entire annual long-term care budget.

Check the base year. A forecast anchored to 2020 starts from a pandemic-depressed level of medical spending, while one anchored to fiscal 2018 does not. The same growth assumption then produces different totals.

Watch the staffing figure, not the spending figure. Money can be raised through premiums, co-payments or taxes, and Japan has used all three. A shortfall of 570,000 workers cannot be closed that way inside fifteen years. The care system's real ceiling is the number of people willing to do the job at the pay on offer.

For countries treating Japan as a template, that is the transferable lesson. Japan built a long-term care insurance scheme that works and is still funded. Its stress now shows up in provider failures and vacant posts rather than in a funding gap. Those are the indicators worth copying into a domestic forecast.

Footnotes

1. https://www.nippon.com/en/features/h00214/ — Nippon.com, "Aging Population Means Social Security Costs Will Balloon to ¥190 Trillion in 2040" (published Jun 18, 2018), reporting Japanese government projection figures. Accessed Sep 17, 2026. ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶

2. https://isvd.or.jp/en/columns/healthcare-cost-crisis-2030 — Institute for Social Vision Design, "The Structure of ¥48 Trillion in Medical Expenses: A Turning Point for Sustainability Toward 2030" by Naoya Yokota (published Mar 11, 2026), citing Ministry of Health, Labour and Welfare national medical expenditure data. Accessed Sep 17, 2026. ↩ ↩² ↩³ ↩⁴

3. https://www.nippon.com/en/japan-data/h02170/ — Nippon.com, "Expenditures on Nursing Care in Japan Reach ¥11.5 Trillion" (published Nov 1, 2024), citing Ministry of Health, Labour and Welfare statistics. Accessed Sep 17, 2026. ↩ ↩²

4. https://www.nippon.com/en/japan-data/h01825/ — Nippon.com, "Japan Spends Over ¥11 Trillion on Nursing Care in Fiscal 2022" (published Nov 9, 2023), citing Ministry of Health, Labour and Welfare statistics. Accessed Sep 17, 2026. ↩ ↩²

5. https://pj.jiho.jp/article/251627 — Pharma Japan, "Japan Healthcare Spend Hit Record High of 47 Trillion Yen in FY2023" (published Sep 4, 2024), citing Ministry of Health, Labour and Welfare preliminary figures. Accessed Sep 17, 2026. ↩

6. https://www.mri.co.jp/en/knowledge/article/202505_1.html — Mitsubishi Research Institute, "Reforming Japan's Medical and Long-Term Care Systems: Data-driven evaluation of policy priorities and public understanding key to success" (published May 2025). Page could not be retrieved directly; figure taken from indexed summaries. Accessed Sep 17, 2026. ↩ ↩²

7. https://isvd.or.jp/en/columns/2026-03-09-care-worker-shortage-structure — Institute for Social Vision Design, "The Structure of Japan's Care Worker Crisis: The 'Invisible Roadmap' to 2040" by Naoya Yokota (published Mar 9, 2026), citing the Ministry of Health, Labour and Welfare's "Required Number of Care Workers Based on the 9th Long-Term Care Insurance Business Plan" (2024). Accessed Sep 17, 2026. ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶

8. https://webapps.ilo.org/globalcare/south-4-care/24 — International Labour Organization, Global Care Policy Portal, "Long-term care insurance (Kaigo Hoken) in Japan". Accessed Sep 17, 2026. ↩ ↩² ↩³

9. https://www.mri.co.jp/en/knowledge/article/202409_1.html — Mitsubishi Research Institute, "Making Japan's Medical and Long-Term Care Systems Self-Sustaining by 2040: Stronger governance by the prefectures and digital transformation essential" (published Sep 2024). Page could not be retrieved directly; figure taken from indexed summaries. Accessed Sep 17, 2026. ↩

10. https://medicalbuyer.co.in/japan-records-478-bankruptcies-among-medical-nursing-care-providers/ — Medical Buyer, "Japan records 478 bankruptcies among medical, nursing care providers" (published May 2026), citing Tokyo Shoko Research data released May 4, 2026. Accessed Sep 17, 2026. ↩ ↩² ↩³ ↩⁴

11. https://www.nippon.com/en/japan-topics/c15004/ — Nippon.com, "Japan's Failing Nursing Care Insurance System" (published Apr 11, 2026), citing Tokyo Shoko Research bankruptcy data and Ministry of Health, Labour and Welfare wage statistics. Accessed Sep 17, 2026. ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶

12. https://japanhpn.org/en/longtermcare/ — Health and Global Policy Institute, "Japan Health Policy NOW: Long-term Care Insurance". Accessed Sep 17, 2026. ↩ ↩²

13. https://www.eurekalert.org/news-releases/1136334 — EurekAlert (American Association for the Advancement of Science), "Lancet papers call for Japan to redesign health and diplomacy by 2040" (published Jul 16, 2026), reporting on Nomura et al., "Japan's health system toward 2040: structural challenges and a renewed social contract", The Lancet Regional Health, Western Pacific. Accessed Sep 17, 2026. ↩ ↩²

14. https://www.dlapiper.com/en/insights/publications/real-estate-gazette/real-estate-gazette-living-capital/5-japan-investment-in-facilities-for-the-elderly-in-japan — DLA Piper, "Investment in facilities for the elderly in Japan" by Mitsuharu Kataoka, Real Estate Gazette: Living Capital (published May 25, 2023). Accessed Sep 17, 2026. ↩

15. https://www.nippon.com/en/japan-data/h02282/ — Nippon.com, "Moving to Senior Care Facility Poses Financial Burden for Family Members" (published Feb 7, 2025), reporting a Lifull Senior survey of 1,873 respondents. Accessed Sep 17, 2026. ↩

16. https://japanhpn.org/en/finan1/ — Health and Global Policy Institute, "Japan Health Policy NOW: Health Expenditures". Accessed Sep 17, 2026. ↩

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