The Current State of Welfare Moving Toward Marketization

The provision of welfare services is becoming more diversified, with not only government bodies but also private companies taking on this role. Here is a summary of its effects and challenges.　

• The “Megumi” Group’s Egregious Fraud Case
• Will Companies Exploit Welfare?
• The Trend toward Diversified Welfare Service Providers
• What Is a Quasi-Market?
• The Reality of Diversification and the Role of Families

The “Megumi” Group’s Egregious Fraud Case

In June 2024, “Megumi,” which operates group homes nationwide, received the heavy penalty of license cancellation for fraudulent billing of disability services. More than 100 facilities were affected, dealing a major blow to stakeholders because numerous residents were impacted. Investigations also revealed false claims for reimbursement—such as reporting required qualified staff where none were assigned—and multiple forms of abuse, including failure to provide proper meals and physical assault.

Will Companies Exploit Welfare?

In the 1980s, some faculty members at welfare-related university courses criticized the idea that entrusting welfare to corporations would lead to exploitation of people with disabilities. This incident can be seen as a fulfillment of that "prediction." The
"Megumi" group was indeed profiting from exploiting people with disabilities. This is absolutely unacceptable.

However, that doesn't mean we can simply stop allowing corporations to provide welfare services. There are also companies that genuinely care for people with disabilities. Furthermore, from a macroeconomic perspective, social security benefit expenditures (the total amount of social welfare-related expenses in Japan, including pensions and health insurance), paid from social insurance premiums and national funds, reached a record high of 138.7433 trillion yen in fiscal year 2021 (far exceeding the general account budget), and the amount per citizen reached a record high of 1,105,500 yen. The system of relying solely on the government to provide welfare services, as was once the case, is no longer realistic, and the diversification of welfare service provision has reached a point of no return.

The Trend toward Diversified Welfare Service Providers

The exploration of "welfare pluralism," which advocates for diversifying the provision of welfare services from those traditionally handled by government agencies, is said to have begun with the Welfenden Report (1978) in the UK. Following the "Beverage Report" (1942), which made all citizens eligible for welfare, welfare services continued to expand, and this report attempted to diversify the providers of welfare services by including private service providers.

Japan also followed suit in this direction. Specifically, this began with the enactment of the Long-Term Care Insurance Act in 1997, which allowed private companies to enter the long-term care insurance market that began in 2000.

Source: Created by the author

Companies such as COMSN, Inc. initially drew attention as corporate providers—along with criticism—but they also actively served remote islands and nighttime slots that other providers avoided. COMSN, too, ultimately committed fraudulent billing and shut down. While slow responses have been criticized, the only viable course appears to be strengthening administrative supervision of welfare-sector companies.

What Is a Quasi-Market?

There is another concept that defines the environment for providing current welfare services: the "quasi-market" by British social policy scholar John le Grand. This idea, which partially introduces the principle of competition into the welfare market, simply put, encourages welfare facilities and service providers to compete to a degree that prevents them from going bankrupt.

As occurred in the "Megumi" case, if a facility with residents has its license revoked (goes bankrupt), the residents will lose their homes. Securing alternative housing quickly is not easy. In the "Megumi" case, the facility whose license was revoked was transferred to another corporation.

On the other hand, if there were a system that absolutely prevented bankruptcy, the management efforts of facilities and service providers may become weak. The quality of service may tend to decline, and situations such as strong odors in facilities or arrogant attitudes from staff may occur. Such tendencies were seen in the era of the administrative system (a welfare system centered on government) before the basic structural reform of social welfare in 2000. For facilities and welfare service providers, since clients (users) are brought in by the government as a measure, the idea that clients are gods is unlikely to arise. The government was the god.

Reflecting on this, a contract system was introduced. In this system, users choose facilities and service providers, enter into contracts, and pay usage fees. The usage fees are provided by the government as subsidies. This also meant turning welfare services into a quasi-market.

The Reality of Diversification and the Role of Families

The diversification of welfare service providers in a quasi-market refers to a system in which welfare services are delivered by four types of entities: (1) traditional government providers; (2) the voluntary sector (nonprofits/NGOs and volunteers); (3) informal systems (unofficial groups, families, friends, neighbors); and (4) private companies.

Source: Created by the author

Within this framework, the family is defined as an informal system. This is because current welfare services have become so highly specialized that it is impossible to obtain appropriate services without the help of professionals. Families simply cannot secure the necessary services on their own. If families try to provide care solely on their own, for example, it could lead to caregiver suicides or caregiver murders.

In an era of diversification of service providers, the role of the family, which is often unable to be deeply involved in specific care, seems to be that of a source of emotional support. When a family member needs to receive welfare services, the family should learn about the system and become the entity that utilizes it effectively.

However, in reality, it takes a considerable amount of time for families to learn about the system, and in worse cases, they may not even know that the system exists. This situation can be avoided if there are people knowledgeable about welfare or professionals around the family in need.

As a final point, regarding the role of an emotional support, I think it would be good if the relationship between supporting elderly parents and inheritance division in the family's obligation to support them under civil law could be clarified.

To be an emotional support, a certain level of economic strength is necessary. However, under equal inheritance, even including contributions to caregiving, there is no economic incentive to care for one's parents.

If there were inheritance benefits to supporting elderly parents, and furthermore, to maintaining the family grave, wouldn't it be easier for family members, specifically key people within the family, to become the emotional support?

(This article was originally published in the November 2024 issue of 'EN-ICHI FORUM' and has been revised and expanded.)

References

• 『社会福祉の原理と政策』日本ソーシャルワーク教育学校連盟編、中央法規、2021年。
• 『政策志向の社会学－福祉国家と市民社会』武川正吾、有斐閣、2012年。
• 『準市場、もう一つの見えざる手』ジュリアン・ルグラン著、後房雄訳、法律文化社、2010年。
• 『社会福祉の拡大と限定』古川孝順、中央法規、2009年。
• 『公共政策と人間－社会保障制度の準市場改革』ジュリアン・ルグラン著、郡司篤晃監修、聖学院出版会、2008年。

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