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Medical and non-medical services were not in a competitive relationship before the LTCI system was implemented: medical services were reimbursed by the Elderly Health Care system and non-medical services were financed by welfare system. However the LTCI system brought both sectors into a competitive relationship in which one's gain is another's loss, because they have to compete over the fixed "pie" of budgetary cap.

The picture illustrates that welfare services (nursing homes, home help etc) and medical services (SNFs, geriatric hospitals, visiting nursing services) [shown left] were integrated into a common funding system of the LTCI [right].