【Aging, safety net and fiscal crisis in Japan】No.314:The welfare service budget for people with disabilities is increasing rapidly

In 2020, the government’s entire budget amounted to JPY 102,658 billion (USD 933 billion). In the same year, the social security budget was JPY 35,861 billion (USD 326 billion), which rose from JPY 28,708 billion (USD 261 billion) in 2011. The average growth rate of the social security budget was calculated to be 2.5% between 2011 and 2020. According to a report by the Ministry of Finance, the rate of increase in the welfare service budget for people with disabilities is extremely high compared to other budgets related to social security. It increased from JPY 735 billion (USD 6.7 billion) in 2011 to JPY 1,635 billion (USD 14.9 billion) in 2020 at an average annual rate of 9.3% (Figure 1).

The biggest reason for this increase is that the number of people with disabilities who use public support services has increased as the government has enhanced the existence of programs that support their independence. The number of people with disabilities that use welfare services almost doubled from 618,000 in March 2011 to 1,234,000 in March 2020 (Figure 2). In addition, the number of establishments providing welfare services for people with disabilities also increased from 51,000 to 109,000 in the same period.

According to a survey by the Ministry of Health, Labour and Welfare, the average profit margin of these establishments was 6.8% from 2017 to 2019. This is higher than the average profit margin of all industries during the same period (4.9%). This suggests that the official price of welfare services for people with disabilities is inappropriately high. Furthermore, some welfare service providers are making fraudulent claims.

Figure 1 The welfare services budget for people with disabilities

Source: Ministry of Finance.

Figure 2 The number of people with disabilities using welfare services

Source: Ministry of Finance.