Aged Care Market Failure
2 minute read
Policy makers’ efforts to reform the aged care sector have relied on using ‘market forces’ for the last couple of decades, and the approach is not going away any time soon. Professor Kathy Eagar recently wrote that the Aged Care Taskforce’s report showed a reliance on “increasing user charges… compatible with a competitive market model of human services.”
It is increasingly common to talk about the market in home support, but does this actually make sense?
The government is focused on trying to increase consumer choice through the introduction of quasi-markets such as in the NDIS and with Home Care Packages. These approaches rely on the theory of the consumer holding an individual budget and buying the services they want from a marketplace of providers.
But the theory has not been delivering as planned in practice. Both the aged care and disability royal commissions found problems with using markets to deliver services. In their Interim Report, the Aged Care Royal Commissioners stated:
The structure of the current system has been framed around the idea of a ‘market’ for aged care services where older people are described as ‘clients’ or ‘customers’ who are able to choose between competitively marketed services. But many older people are not able to meaningfully negotiate prices, services or care standards with aged care providers. The notion that most care is ‘consumer-directed’ is just not true. Despite appearances, despite rhetoric, there is little choice with aged care. It is a myth that aged care is an effective consumer-driven market.
Robert Fitzgerald, NSW Ageing & Disability Commissioner, nailed the problem when he said, “This notion that we can simply open up a market, and let it rip, has been shown to be fundamentally flawed, and governments need to reassess in the light of overwhelming evidence that that it does not deliver for the wellbeing of the group as a whole.”
There’s a better way to think of the home support sector. We need to recapture the role of the communities people live in, and the ties of mutuality that bind a society together.
For example, conceiving of the sector as based on the communities in which support services operate explains why people might choose to volunteer to help others – which cannot be understood when relationships are explained in purely economic terms. This is particularly so when considering so-called ‘thin markets’ such as indigenous communities, culturally and linguistically diverse communities, or rural and remote communities.
Thin markets is bureaucratric speak for markets that do not work, better known in legitimate economic terms as market failure. If market failure in aged care resides with the most vulnerable members of our community, then surely we are talking about system failure as a whole?
An alternative approach to market theory is to think of the home support sector as an important cog in the establishment of a caring society. Historically, concepts such as ‘social capital’ have stood alongside ‘human capital’ and ‘financial capital’ to explain what additional elements a healthy society requires.
Kathy Eagar argues “that aged care could be better framed as a social good, and not just a market.”
Commissioner Fitzgerald said in designing the new Support at Home System it was important to learn from the failures of the NDIS model, which was based on providing blocks of service for a fee.
“One of the tragedies of the NDIS is that it’s transactional,” he said. “You need to create a system that is relational, not transactional. If we don’t the home care system will fail, it will be flawed like the NDIS. It is incomplete if we simply have a model that has turned every aspect of a person’s life into two-hour blocks for which there is a particular fee.”
We have the evidence that market theory is not working in aged care. Now, how can we get the policy makers to listen?
We are busy trying to build an audience for these Essential Briefings, so if you like this article it would be fabulous if you share it with other people you think might like it too.
Continue Reading
