Plan. Background. Markets have been promoted as. Economist recognise that these benefits apply only under certain well-specified conditions

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1 Plan A feminist economics perspective on theories of markets in care Susan Himmelweit Open University, UK s.f.himmelweit@open.ac.uk Economic arguments about the benefits that market provision bring in general Conditions for these benefits to apply What s special about care? Do the conditions for markets leading to good outcomes apply to care? Some reflections on experience of care systems Background Growing use of market provision in publically funded care Common tendency across many welfare regimes Though from different starting points of previous provision: public sector subsidised non-profits not publically funded at all Across different forms of care: residential, domiciliary, even some forms of health care Two main forms of marketisation : Competitive tendering by private firms for state contracts to provide care ( outsourcing ) Direct funding to care recipients to purchase their own care ( individual budgets ) Markets have been promoted as Providing choice: desirable in itself and claimed to be what people want Fairer: to give those dependent on state same choice and consumer rights as those who can pay for their services Empowerment: by involving those needing care in shaping the services they receive Competition promotes efficiency: strong form: private sector seen as more efficient - UK since 1980s weaker form: public sector would benefit from competition many other European countries including Sweden Cost containment: efficiency will ensure costs are contained Enhancing supply: can be expanded to meet need (only) if costs reduced The benefits of markets Economists make two closely related arguments: 1.Markets allow people choice: Choice good in itself empowers, activates, a positive freedom Friedman s Free to choose 2.Markets deliver efficient outcomes for consumers: Consumer sovereignty Consumers determine what is produced Firms are incentivised by the search for profits to produce efficiently Improve quality/cut costs Markets are as good as it gets: market outcomes cannot be improved on without making someone worse off Adam Smith s invisible hand Economist recognise that these benefits apply only under certain well-specified conditions 1) Information Purchasers must have good information: must know what they are buying and be able to assess whether it meets their needs be able to assess quality before purchase must be able to assess the market: have information about price and quality of alternatives

2 2) Incentive structure Purchasers must be able to act on that information And do so in a way that incentivises suppliers to improve quality and charge as little as possible - requiring repeated purchases made frequently and/or costs of changing suppliers must be low For such incentives to have desired effects, there must be scope for raising productivity to cut costs/improve quality 3) No externalities Purchasing decisions take account of total effects Ideally purchaser is only one affected by any decision taken 4) Competition Suppliers must compete with each other to meet consumer demands as efficiently as possible Must operate in a competitive market should not have the power to set terms Ideally: a large number of suppliers of similar products must be true at local as well as national level Whether there are economic arguments for the use of markets in care depends on whether these conditions apply to its provision Relevant characteristics of care It s a personal hand-on service enabling people to meet needs they could not otherwise meet A good relationship between provider and recipient is particularly important in care Needing time to build up, thus continuity of care matters Limiting scope for reducing number of carers without lowering quality of care, at least in active care: There may be potential economies of scale in passive care Relevant characteristics of care (2) Much of it is done by women within family Family care often taken as an ideal type even when carried out in other contexts: a bit of a labour of love: carers are supposed to enjoy caring at least not show that they don t a form of emotional labour, but over a longer period in which relationships can develop Seen as unskilled Relational/ emotional skills seen as aspects of femininity cognitive skills discounted When paid it s usually badly paid/done by vulnerable groups Argument for market provision requires: People are the best judge of what they themselves need They know what they are purchasing Information about market alternatives is easily available and costless to use Scope for higher productivity to reduce costs without decreasing quality Purchases mainly affecting the purchaser That markets are sufficiently competitive Do these conditions apply to care? People are the best judge of what they themselves need People are the experts in their own care increasingly drawn on in discourse on care e.g. in ILM s support for use of direct payments for care recipients Likely to be less true of those whose needs are changing in ways predictable by professionals Tends to underplay skills of care providers in judging needs cf medical care professional skills required to assess need as well as to provide services Feminists would also point to importance of gender and other norms in the evaluation of need

3 People know what they are purchasing Quality of care notoriously difficult to measure Contracts necessarily incomplete Some care recipients may be incapable or inhibited from judging quality The relational nature of care means: quality of a relationship hard to evaluate from outside and particularly at time of purchase, since relationships builds up over time Information about the market is easily available and costless to use Decisions about care (especially about residential care): often have to made in a hurry with insufficient information are rarely made so purchasers have little experience of the market Having to choose can be experienced as a burden Relational nature of care: Carers learn how to care for particular people Continuity of care matters Exit is not costless: changing care-givers is disruptive (sometimes fatal) Scope for higher productivity to reduce costs without decreasing quality Care provision is labour intensive Providers can cut costs only by reducing staff Or by paying staff less Relational nature of care means limited scope for real improvements in productivity, i.e. without reducing quality Staff/client ratios seen as measure of quality Use of technological aids to reduce staffing often seen as dehumanising e.g. telecare May save costs in passive care Purchases mainly affect the purchaser Very difficult to set up markets in care in which the purchaser is the only person affected Giving care recipients their own budgets with which to buy services is meant to ensure this: called personalisation in the UK Ignores that such decisions taken in context of families Interdependence within families structured by gender and other norms Assessments of individual budgets may take account of the existence of family carers The market is sufficiently competitive Markets for care tend to become concentrated Economies of scale in passive care and in management costs Costs of compliance with regulations can exacerbate this Care markets largely local Care markets often dominated by chains and franchises Monopoly profits can lead to failure through overexpansion Consequences of such market failures Inability of consumers to assess quality and act on that assessment results in suppliers competing mainly on price Competition on price results in cost cutting use of fewer or less skilled staff recruited from vulnerable groups reduced quality poor pay and conditions for workforce Cherry-picking of recipients complex needs may not be met

4 What about regulation? Regulation is needed to check that innovations are not just creative ways to hide quality reductions Regulators can have same informational problems as consumers Tendency to regulate easily measurable characteristics may result in competitive cost cutting focussing on the harder to measure characteristics But these may be the essence of god care Similar danger from use of league tables and other forms of published data to guide consumer choice If argument for the market works in encouraging innovation, regulators will always be running to catch up with the latest innovations What has been lost? A system geared to universal provision, equal access on the basis of need: That there are profitable opportunities for providers does not guarantee that Financial incentives crowd out public service ethos and professionalism as motives for high quality provision: Would help if there was a way for providers to signal that they are motivated to provide high quality: some argue that non-profit status can be such a signal Public provision, e.g. UK NHS, trusted for similar reason Some experience from UK Market more efficient? Popularity Direct payments first introduced for younger people with disabilities Could be used to pay for anything, except initially to pay relatives Popular among those who took them up Local authorities required to offer individual budgets to all care recipients Older people see choice more as a burden Nevertheless individual budgets are now being introduced for all Quality by both output and input measures For-profit providers get lower quality ratings than those in public or non-profit sectors Lower staffing ratios and less trained staff in forprofit than non-profit residential care facilities Costs Little evidence of reduced costs Commercial confidentiality For-profit providers not required to provide same data that public sector and non-profits must Concentration Doing some participant observation Large corporations dominate elder care Particularly in residential care Largest provider, Southern Cross, collapsed in 2011 Had over expanded on assumption of high demand Creative property deals Could not pay rents when demand failed to materialise Too big to fail? Moral hazard issues in private sector

5 England vs. France Findings some expected... Generosity of funding mattered Public provision of higher quality Private provision did not go with more say about care unreliable and not always available less expected findings... Easier to separate physical from emotional sides of care than the feminist literature suggests High productivity in the former is very desirable! Skill matters to recipient, not just to worker Feminists may be representing skills in care as too different from other skills Not everyone is an expert in their own care Younger disabled with relatively stable conditions may be Policy needs to be responsive to those whose needs are changing, especially the elderly professionals may know more about what is needed Missing element Family support important not only as a source of care or financial support but fall back position also gives bargaining power in a market system A care system that is to provide a real alternative to family care needs a more substantial form of user power than the market can provide