Abstract

Different market-oriented reforms have characterised the recent restructuring of publicly funded home care. Our work starts from the premise that the interaction between these market-oriented reforms and “path dependency” will affect differently the process of marketisation. Marketisation can be activated through two different routes:

(1) a direct link from public provision to the market, via contracting out and relaxing the regulations, rules and conditions limiting the scope of “for profit” institutions and (2) a direct link from what is paid by the user and/or family (either through copayment or direct purchase), to the regular or more often irregular market, a link which can be supported by public “cash for care” payments or tax credits. First, we examine the impact of marketisation through the lens of the evolution of the mixed economy of supply, emphasising the diversity of actors in the provision of welfare – the state, “for profit” organisations, the third sector, carers directly employed by households, and families.

In summary, in both Germany and England, as a result of the reshuffling of the welfare mix, the “for profit” sector now has a larger size than 10 years ago. In Belgium, however, the growth of the “for profit” sector has been limited to the voucher market (housework), as the law prevents it from entering the home care sector. In Italy, attempts at promoting the regularisation of care workers have favoured “not for profit” organisations (such as social cooperatives) that have tried to take advantage of the system of accreditation. Care workers directly employed by families have an increasing role in Italy and Germany, in the former mostly in the irregular market. In order to assess its effects on the final user, we then investigate how the “market” works, that is, how it is regulated and the role that price and quality competition play both in the care service market and in the care labour market (including the grey market). For those home care services which are regulated by the state, the scope of price competition still appears limited. Constrained by price regulation, providers seem to have taken the competition to other fields, either by diversifying into new, unregulated service segments or by focusing on cost containment, which essentially means containing labour costs.

Finally, given these features, we analyse how the process of marketisation affects the cost paid by the users. When looking at out of pocket home care expenditure, we conclude that co-payments have not increased in recent years. However, public financial resources have not kept up with the rising need for home care, which has led to an increasing number of families having to rely on privately-arranged home care provision, which is not regulated by the state. With the increased use of “cash for care”, this has meant that users have been encouraged to behave as consumers exercising choice in a care market. In this segment of the market, providers’ freedom to set prices has come up against families’ income constraints. In some cases, the labour cost has been reduced through voucher schemes (Belgium) or reduction of social contributions paid by the user (Germany, Italy). Faced with higher prices, families increasingly turn to the irregular market to buy cheaper services (mostly basic home care) not covered by the “public” umbrella (Italy).

Slides