This analysis was sponsored by the Resolution Foundation and carried out by Deloitte & Touche LLP. It describes long-term care in England as a ‘mixed market’, made up of a combination of public and private funding and supply.
There is a widespread expectation that care provision is an integral part of the welfare state, but the reality is that long-term care is now almost entirely provided through private and third sector suppliers, and increasingly, is funded through private means.
The long-term care market does not function as a private market, because a series of intermediary processes such as means and needs testing that distort the interaction between supply and demand. These processes also have an impact on ‘self-funders’ who may face higher prices for similar services as a result of cross-subsidisation.
The analysis identifies key drivers of inefficiency and unfairness across the system, and tests the characteristics of supply, demand, and intermediary processes against indicators of a well-functioning market. This shows that whilst supplier profitability and entry and exit are stable, local markets and intermediary processes can distort outcomes for each individual, even for those who fund their care through private means.
The analysis indicates that the whole of the mixed market needs to be tackled, not just that part funded by the public sector. Innovation will be required by intermediaries, by the financial services sector, the supplier market as well as in the public sector.
The analysis also looks ahead to possible future market developments, including the likely impact of personal budgets on the supply and demand sides, the challenges brought about by demographic change and challenging spending rounds, together with the possible use of integrated policy and technology to shape preventative and early intervention approaches.
The analysis is available from Deloitte. http://www.deloitte.co.uk