Marketising Social Care, by Fiona Macdonald

As the Productivity Commission continues to look for new ways to introduce ‘greater user choice, competition and contestability’ in human services, the marketisation of social care in Australia proceeds apace. Here, as in the other liberal states (the United States, Canada and Britain) and in many European countries, care provisions for children, the elderly, the ill and people with disabilities are increasingly likely to be commodities purchased by consumers through markets. We are in the middle of the rollout of the National Disability Insurance Scheme (NDIS) and just this year Consumer-Directed Care (CDC) has been introduced in home care for the aged. Yet there has been relatively little public discussion about the likely downsides of these latest moves to marketise social care in Australia.

The provision of care through ‘cash-for-care’ or voucher schemes—involving the allocation of public funding to individual care users to purchase their care services on the market—is increasingly widespread. While lauded by proponents as empowering—by placing control in the hands of care users—and seen as increasing efficiency, the construction of care markets in which individuals are care ‘consumers’ does not necessarily produce good outcomes for people requiring care. At the same time, marketised care economies are mostly built on large workforces of low-paid workers in insecure work with poor working conditions. The mixed origins of cash-for-care schemes provide an indication of why, despite these problems, they have some appeal for consumer and care-user advocates.

In 1997 Clare Ungerson coined the term ‘commodification of care’ to describe the practice she observed of governments in Europe providing allowances or subsidies to individuals to enable them to purchase care services. Over the 1980s and 1990s the convergence of a number of interests and pressures—with varying influences in different countries—led to the growth of these cash-for-care systems. Claims of disability-rights activists for self-determination, choice and control were important at the time and, today, the goals of increasing autonomy and empowering service users through enabling choice, flexibility and control continue to be important. These goals are reflected in the terms ‘consumer-directed’ care, ‘personalisation’ and ‘self-directed support’ that describe contemporary cash-for-care schemes such as the NDIS.

The increasing labour-force participation of women and their unavailability to provide informal, unpaid care was another factor behind the growth of cash for care in the 1980s and 1990s, along with feminist claims that care should not be treated as unpaid labour. A common explicit or implicit policy aim of cash for care in some countries has been the recognition of informal carers or the fostering of familial care, with cash-for care systems often favouring informal care provided by family members. While this can be a response to care users’ preferences (for example, enabling aged people to remain in their homes), the privileging of home-based care is also a strategy for containing care costs.

Converging with feminist and disability-rights claims were neoliberal ideas about competition and choice. These ideas have been critical in the expansion of cash-for-care schemes, driving calls for privatisation of public services in the context of pressures on welfare budgets. According to the neoliberal view, the commodification of care enables individuals to be empowered through exercising consumer sovereignty, leading to increased competition between service providers and better services at cheaper prices, in place of traditional welfare-state service-provision models that are considered to be inflexible and inefficient.

The shift from the provision of services as part of the welfare state to the commodification of care through cash transfers tends to drive labour cost–cutting and encourages low-wage strategies for paid care workers and low-quality care. Care work is a labour-intensive human service in which wages are not dependent on productivity and profit margins are low. Together, the emotional character of care work and the intimate context in which it is performed make it difficult to quantify and define the work and to identify agreed measures of care quality. The dominance of home care in cash-for-care schemes, by locating care services in the private domestic sphere, blurs the boundary between paid care work and unpaid work, potentially ‘informalising’ paid care work and reinforcing its gendered undervaluation. Home-based work is not highly visible and is difficult to regulate effectively, with employment relations subject to being highly individualised and conducted within informal relationships.

Cash for care is just one form of marketised care, if we take marketisation to refer to the ways in which states promote the growth of private care. As Deborah Brennan, Bettina Cass and colleagues have described it, marketisation encompasses government measures ‘that authorise, support or enforce the introduction of markets, the creation of relationships between buyers and sellers and the use of market mechanisms to allocate care’. So markets for care can take a variety of forms, and governments can use market mechanisms to shape consumer behaviour, for example through setting and changing the level of cash packages or vouchers provided to individuals to purchase services, through placing restrictions on service provision by establishing quality standards or through establishing registration systems for providers.

In Australia the marketisation of care and other social-service provision has developed at different rates and in different ways across policy areas. However, as Gabrielle Meagher and Susan Goodwin note in the introduction to their book Markets, Rights and Power in Australian Social Policy, ‘the direction of change overall is clear—market organisations and market logics are playing an increasing role’. Service provision by for-profit companies dominates some areas of child care, such as long day care, and it also dominates some parts of the residential aged care sector. Following the introduction of CDC in home care for the aged, the federal government plans to extend this cash-for-care scheme to residential aged care.

Possibly the most significant marketisation of social care in Australia to date is that occurring with the introduction of the NDIS. Yet there has been relatively little public debate about this massive marketisation project. It seems that the idea of the NDIS as a much-needed ‘fix’ to address the striking deficiencies of the patchwork of support available for people with disability took hold without much public debate or even attention to the proposed new scheme’s detail. The most widely quoted part of the Productivity Commission’s report of its 2011 inquiry into Australia’s disability-support system is the opening sentence, which states: ‘Current disability support arrangements are inequitable, underfunded, fragmented, and inefficient and give people with a disability little choice’. The case for change for support for people with disability was compelling, with almost all of the 1062 submissions to the commission’s inquiry adding to the evidence that many people with disability lacked access to appropriate services that met their particular needs and supported their aspirations. Following the publication of the Productivity Commission’s report the debate shifted fairly quickly to arguments about the financing of a new national scheme.

The NDIS introduces a national system of support for people with permanent and significant disability and it is estimated that it will cost $22 billion a year at full implementation in 2019. This funding is more than double the pre-NDIS level and is to be partly sourced from an increase in the Medicare levy. Under the NDIS a person’s support needs are determined by a professional assessment, on the basis of which a budget allocation is made. The person can choose to have the National Disability Insurance Agency (NDIA) manage their funding while they select their preferred service providers; they can opt to manage their funding and arrange their own supports; or they can appoint a person or organisation to manage their funding and supports. Thus the NDIS ‘personalises’ disability support.

The NDIS model of personalisation is a cash-for-care scheme that has much in common with the UK ‘individual budgets’ scheme for adult social care (encompassing disability support and aged care), a scheme that has been in place for some time. What we know from the UK experience is that personalisation of social care through market mechanisms fails in a number of aspects to live up to its promise. The most comprehensive evaluation of that system is offered by Catherine Needham, Professor of Public Policy and Public Management at the University of Birmingham. Needham assessed the evidence concerning the four main claims for positive individual and social benefits from individual-budgets schemes. She found the first claim—that budgets improve individual outcomes—to be supported by the evidence, with this finding stronger for some groups, notably people accessing mental-health services, and weak for others, especially older people. Compared to people receiving social-care support through conventional service systems, people holding an individual budget felt more in control of their lives and welcomed the support they received and how it was delivered. However, the findings also raised questions about the assumption that these positive outcomes are due to providing people with purchasing power through financial control. It seems that the value of budgets systems for individual well-being may have more to do with building relationships with support providers, including through personal-support planning processes.

The second claim, which is a rights-based argument that individual budgets extend choice and control—enabling people to choose, for example, when, how and by whom their care is provided—was also supported by the evidence. However, the exercise of this right depends heavily on equity of access. Lack of clarity and difficulty navigating through complex care systems mean that people with more skills and resources are much more likely than others to be able to access the services they prefer and need. Whether or not this inequity is a result of the marketised and individualised budgets system itself is the subject of fierce debate, but, as Needham notes, under individualised budgets, people who are marginalised continue to be excluded from accessing services.

There was no evidence for the other two main claims made in favour of individual budgets: that they improve financial inclusion—through enhancing financial literacy—and that they correct system-level failings in public services. Indeed, in relation to the first argument, Needham notes ‘the notion that citizenship is enhanced by getting welfare recipients to frugally seek out resources is a troubling one’. In relation to individual budgets fixing problems with systems of social-care provision, the argument is that the market power of individual budget holders will challenge deficiencies such as poor-quality care standards. According to Needham there is no evidence for this claim, and what is apparent is that ‘the use of personal budgets cannot overcome the failures of a poorly regulated market in social care services which is delivering sub-optimal outcomes’.

More generally, the marketised adult social-care system in England is producing some very poor outcomes following massive cuts in public funding, with the government’s first ‘austerity’ budget following the Global Financial Crisis and further cuts subsequently. The vast majority of English social-care provision is now in the hands of private-sector organisations, and there have been some significant market failures, including the collapse of one of the largest residential-care providers in the country, the private equity–funded Southern Cross Group, in 2011. In England, private for-profits have led in providing low-cost, low-quality care, and various government and independent inquiries in the last few years have noted high risks for care recipients and for the social-care workforce, with high levels of below-minimum wages, zero-hours contracts and poor training.

In Australia, the NDIS is not being implemented under the same sort of cost-cutting pressures that have been present in England. However, our new system of disability support is potentially a more radical experiment, as it completely individualises disability support, providing all eligible people with an individualised support package and the ability to choose and change their service providers. While personal budgets account for a high proportion of publicly funded social-care packages in England (around 88 per cent in 2016), service provision is commissioned by local government authorities, providing authorities with some control over the structure of the local market. As the Productivity Commission made clear in its June 2017 position paper on NDIS costs, the Australian landscape of disability-support providers is to be significantly disrupted and reshaped. Service providers must bear greatly increased financial risk and they must manage this risk while also becoming more ‘efficient’ and ‘innovative’.

Prior to the NDIS the vast majority of publicly funded care and support for people with disability was provided by not-for-profit disability-services providers, with a much smaller public-sector service delivery by the states. State governments are now moving to divest themselves of their disability services, including some old institutional-style ones, but also home care and other services in the community. While not-for-profit organisations continue to play the leading role in service provision, for-profit corporations are now entering the market. Their entry is very evident in home care and personal support services where, along with the NDIS, the recent introduction of CDC for older people under aged-care reforms is also marketising social-care services. Among organisations positioning themselves to play a role in the new social-care market are several private health-insurance corporations and the global services corporation Serco, a provider of prison, defence, security and detention services to Australian and other governments. Other new entrants include home-care franchise firms from the United States.

The Productivity Commission and the NDIA have made it clear that the successful development of the new NDIS market will depend on the presence of service providers able to provide disability services at a lower cost than has traditionally been the case. While it has been widely acknowledged that traditional providers provided services for which they were under-funded by governments over many years, there is an implication in the commission’s reports that these organisations are not only inefficient but lacking innovation. New business models and new types of providers are put forward as critical to the development of the NDIS market to meet the expected growth in demand, but it is not exactly clear how these new models and providers are to meet the challenge of achieving greater efficiency. Other than cutting labour costs, there are limited ways to make savings in the provision of these labour-intensive care services.

Indeed it appears that changes to the market and service-provider practices have led to deteriorating job quality and pay for disability-support workers under the NDIS. Industry surveys of providers and research with support workers have highlighted increasing casualisation, reduced training and supervision, and increased unpaid work time as emerging problems in response to price pressures under the NDIS. However, any concerns there might have been about the consequences for disability-support workers and disability-support jobs in the planning stages of the NDIS appear to have been consigned to history. In 2011 the Productivity Commission acknowledged that there was a need to increase disability-support-worker wages, provide workers with career paths, subsidise training and improve working conditions to attract more workers to the sector. In 2017 the imperative to attract more people to disability-support work has strengthened. In a June 2017 paper on NDIS costs, the Productivity Commission reported that the size of the disability-support workforce needs to nearly double over the next three to four years to meet demand and that disability-support jobs are expected to account for 20 per cent of all job creation nationally. However, in its discussion on workforce issues, the commission was virtually silent on job quality and wages for disability-support workers, only touching on the high levels of underemployment among workers when proposing that some workforce shortages might be addressed by ‘taking advantage of the preference of many workers in the disability care sector to work more hours’. Additional options for addressing shortages—canvassed by the federal government and others—include allowing people to pay informal carers, opening up migration schemes to enable disability and aged-care workers to be recruited from overseas, and proposals for Pacific Islanders to work for below-award wages.

As the NDIS is panning out, it is taking on the characteristics of a social-care market found in cross-national studies to produce poor-quality care and poor-quality care jobs: little regulation of care provision, poor regulation of care employment and a cost-containment imperative. Under the NDIS, disability-support provision is very lightly regulated, with few conditions on service providers—and almost none where individuals who are self-managing their funding packages directly engage their service providers. There are no qualifications requirements for individual workers.

While employment in Australia is subject to a reasonably strong regulatory framework, the effectiveness of this system for care workers in the new market is unclear. There is already evidence of non-payment and underpayment of care-worker wages, and the NDIS has driven the growth of so-called self-employed care workers, who are in largely unregulated work in which they bear many of the costs and risks of employment. For disability and aged-care workers, this now includes ‘gig economy’ or ‘Uberised’ care work, mediated by technology-based agencies that appear to have a growing presence in the new market. Sham-contracting legislation—designed to address the misclassification of employees as independent workers—may prevent some exploitation of these low-paid care and support workers, but it does not address the vulnerability of workers that arises from these individualised, insecure work arrangements.

The third factor—the imperative to contain costs—has not been a strong feature of the system to date, although the overall funding increase with the NDIS has obscured the fact that there are strong concerns among service providers and others about the low hourly prices set by the NDIA for personal-support services. These prices, set at around $43 in 2016–17, have to cover not only wages and on-costs but all other costs associated with service provision, including training, supervision, administration, marketing and management. The not-for-profit peak body National Disability Services has argued that prices are too low to meet these costs. Based on the British experience, it appears that there are no savings to be made with individual budgets due to the additional costs associated with them.

In the NDIS market the transfer of risk onto service providers is likely to see the loss of small, niche not-for-profits and the adoption of growth strategies by others. Not-for-profits may find it more difficult to keep a focus on purpose and may have reduced opportunities for collaboration and cooperation. The Australian experience of the competitive Job Network has shown how competition shifts organisational focus strongly to the bottom line (for a discussion of the Job Network’s pitfalls, see Andrew Saunders, ‘The Consequences of Marketising Employment Services’, Arena Magazine No. 144). It has also clearly demonstrated how marketised systems can be highly inequitable, with the most disadvantaged people being the least well served. This problem has already emerged under the NDIS, with a 2017 University of Melbourne study identifying the socially disadvantaged and people with cognitive disabilities as faring worse under the new system.

There is no doubt that disability reform has been needed for a long time and is fundamental to improving the lives of people with disability. But this should not stop debate about the form of the new system. If there is a need to rethink the market basis of disability support under the NDIS, the time to do this is before the market is fully established. We need innovative solutions for all people with disability—including the most vulnerable. Such solutions seem more likely to come from a system that supports collective and collaborative actions and solutions rather than one premised on minimising labour costs.

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Fiona Macdonald

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