Whether to make or buy long-term care services – market developments in old-age care in selected European countries
Objectives: This paper reviews evidence from selected European countries on existing experiences with competition and choice in long-term care (LTC) systems. It aims to analyse the roots and key stakeholders involved in these experiences in order to provide policy lessons on the ‘make or buy’ decision and its impact on outcomes for users, on quality of care, and the organisation of care markets. Data and Methods: The analysis is based on an analytical framework for case studies involving four countries deemed to be representative of different welfare regimes in LTC, namely England, Denmark, The Netherlands and Germany. Data gathered for analysis followed a two-step approach. Firstly, a desk research of existing peer reviewed articles, studies, policy documents and legislation was carried out in order to gather contextual information on the introduction of competition and user choice, but also on the national institutional and regulatory settings. 60 Secondly, this information was complemented by semi-structured expert interviews with public officials at different levels of government and representatives from providers and purchasers of care, on the experiences with quasi-markets in the respective countries. Main results and policy implications: The LTC sector in Europe has undergone a reorganisation of care provision based on the introduction of quasi-markets, diversification of service providers (forprofit and non-profits providers) and enabling of user choice (voucher systems, cash benefits). Given the dissimilar starting points and institutional contexts of European welfare states, these processes have been shaped differently and thus provide opportunity to draw lessons for research and policy in relation to market and government failures in LTC provision. The paper surveys existing evidence on the effects of quasi-markets on the quality of care services, transaction costs and outcomes for users. The paper highlights some common trends in the trajectories of quasi-markets, namely, how public authorities initially retained purchasing power through monopsonic public purchasing before slowly providing end users of care with agency to purchase care. The traditionally dominant providers all lost preponderance in the process, although to different extent and in different ways. While new for-profit providers in home and residential care became important stakeholders in Germany and England, their access to care markets in the Netherlands and Denmark remained limited to home care services. Despite these common trends, the case studies also reveal important insights on how different preponderant actors and theories formed LTC provision in each country. The paper argues that the present provision of LTC in all four countries is thus very much influenced by specific national stakeholders, for example, organisations of disabled people, and by different legacies and pathways, for example, in terms of incumbent providers. This explains why users of care have agency over different dimensions of choice in the four countries analysed, and the differences in how quasi-markets function in each of these countries, despite the common emphasis on cost containment by competition and user choice.
2 September 2014