The Economics of Independent Living

English version of: Alonso, J. Vidal Garcia. 2003. "El Movimiento de Vida Independiente, Experiencias Internacionales." ("The Independent Living Movement: International Experiences.") : www.independentliving.org/docs6/alonso2003.pdf (In Spanish, PDF, 1.46 MB). Parts of the book are available in English.  
United Kingdom.
The Academic Network of European Disability experts (ANED) has current data (2016) about personal assistance and IL in the United Kingdom.

The European Network on Independent Living (ENIL) has a European survey on personal assistance with current data (2013) about personal assistance and IL in the United Kingdom.

Gerry Zarb is a Policy Analyst at the Disability Rights Commission in the UK. He was formerly Disability Programme Director at the Policy Studies Institute. He has extensive research and consultancy experience on a range of disability issues, with a particular interest in independent living.

Contents

1. Introduction
2. The Purpose of Investing in Independent Living
3. The Costs and Benefits of Independent Living
4. A New Way of Thinking about Investment in Independent Living
5. How can we Demonstrate the Economic Benefits of independent Living?
6. Concluding Comments
Footnotes

1. Introduction

This paper looks at some of the key issues in the economics of independent living. The main theme for the paper is that expenditure on independent living schemes should be seen as a form of positive investment.

The term 'independent living' refers to all disabled people having the same choice, control and freedom as any other citizen - at home, at work, and as members of the community. This paper argues that independent living represents the most cost-effective means of supporting disabled people in all of these roles and activities. This is because assistance is precisely matched to individual needs and, over time, is also likely to help reduce the overall level of demand on both social care and other public services. Investing in independent living also reduces dependency on informal or charitable forms of support, such as family, neighbours or the church. Failure to invest in independent living, on the other hand, means that disabled people continue to be excluded from social and economic life.

2. The Purpose of Investing in Independent Living

It is important to emphasise here that investment in independent living means much more than simply paying for personal assistance schemes and similar forms of practical support. Access to personal assistance which enables choice and control for disabled people is of course crucially important, but it is only a means to an end - full and equal participation.

3. The Costs and Benefits of Independent Living

There is increasing evidence on the economic benefits of independent living - particularly the various forms of direct payments schemes which (in the UK at least) are increasingly seen as the main vehicle for such investment. This evidence shows us that direct payments are a very cost-effective mechanism for enabling disabled people to access high quality support which maximises choice and control at equivalent or, often, lower cost than other forms of community based support.

The most detailed study carried out in the UK, for example, showed that support arrangements based on direct payments were on average 30 to 40 per cent cheaper than equivalent directly provided services. This study also indicated very clearly that people receiving direct payments had higher overall levels of satisfaction with their support arrangements than people who used publicly provided services. This was particularly noticeable in relation to reliability and flexibility and the degree of confidence people had in their support arrangements being able to meet their needs. (1

Given that the arguments about both cost and quality have largely been settled it is perhaps surprising that direct payments and similar independent living options are still far from universally available. Why is this the case?

First, although the concept of independent living is all about enabling full participation, the expenditure needed to make this a reality is usually only available from public welfare systems (either community care or social security, or occasionally a combination of both). Independent living and welfare economics are not comfortable partners because public welfare systems are mainly driven by the desire to control expenditure and ration resources. (2)

Second, current debates about public investment in support for disabled people are flawed by the traditional assumption that residential care should nearly always be the option of ‘first choice’ for the majority of older and disabled people requiring higher levels of support. A contrasting approach would be to explore ways in which alternative community based, non-institutionalised, support systems could be developed. The disability movement has developed alternative models on a small scale. Until these are developed more widely - and fully funded - too many disabled people will be denied the opportunity to access alternatives to institutional care.

Third, the development of independent living options for a larger number of older and disabled people is also being held back by the lack of any concept (outside of the Independent living movement itself) that independence could, or should be, established as a basic and universal human or civil right. Despite the considerable expansion in availability of direct payments which is currently taking place, access to independent living is still essentially granted on a discretionary, rather than mandatory basis. This is true even in systems (Germany for example) where - on the face of things - everyone is entitled to access independent living options. This is because, typically, there are still considerable restrictions on both the levels of resources people can receive, and on the ways in which they are allowed to use these resources to organise their support.

One of the main reasons for these restrictions is that removal of all the of the barriers to disabled people's full social and economic participation requires practical action across a variety of social and economic sectors such as education, transport and employment. Public support systems on the other hand typically have great difficulty linking all of these actions together and, instead, tend to have different administrative functions to deal with them separately. So for example disabled people might be eligible to receive direct payments or services to enable them to access personal assistance at home, but not at work. Similarly, assistance with travel might be available for certain activities (going to school or to the shops, for example, but not for participation in social or leisure activities. In practice this often means that, instead of being able to participate freely in the full range of community life, disabled people have to organise their lives around whatever kinds of practical support are available. This might tackle some of the practical barriers they face but rarely all of them.

This almost universal problem is not just about the efficiency (or, more often, inefficiency) of public support systems. More important still is the issue of controlling public expenditure and the negative impact this has on older and disabled people. Put crudely, removing all of the barriers to disabled people's full social and economic participation is considered to be simply too expensive. This is rarely stated explicitly however. Instead, the language of welfare economics tends to describe the problem in more euphemistic terms like 'targeting resources on the most vulnerable members of society', or 'helping those most in need'. In practice, this means that needs are defined by what public support systems are able, or prepared, to afford rather than by the actual barriers that disabled people face in their day to day lives. In the UK, for example, eligibility for community care is mainly determined by the level of risk to people's independence. Assistance is only guaranteed if there is a substantial risk to people's health or functioning (if someone is unable to feed themselves for example). Anything beyond that is largely dependent on availability of resources and the spending priorities of different local and regional administrations (some of whom, to be fair, are much more progressive than others in terms of promoting independent living).

As a result, practically all of the existing support systems place some kind of ceiling - either in terms of cost or eligibility criteria, or often both of these - on the level of resources at which independent living is considered to be cost-effective. This means of course that people for whom independent living is considered to be too expensive are faced with a stark choice between struggling to maintain their independence in the community, or entering institutional care. Effectively, this amounts to putting a price on people's freedom.

4. A New Way of Thinking about Investment in Independent Living

The fact that access to independent living is often denied once a certain level of resources have been reached reflects the widespread concern about the future funding for public services - which is increasingly a major issue for governments throughout the world.

This is understandable up to a point. If public expenditure increases beyond a level that a country can afford all public services begin to suffer and this would in fact disadvantage disabled people more than most. However, all countries and communities have choices about what they choose to invest in and the value they want to place on different kinds of social and economic benefits. The main problem in relation to independent living is that expenditure on disabled people is seen only in terms of the costs, with little attention given to the potential benefits. So, a key aim for future debate would be to shift the existing focus on costs on to viewing expenditure on independent living options as a form of social and economic investment with the potential to bring about universal benefits.

There is also a problem in that existing approaches to the question of expenditure on supporting disabled people are seriously limited by the narrow focus on individual investment decisions (as typified, for example, by the process of assessment for community care). This not only rules out any meaningful discussion of overall costs and benefits but it also tends to systematically exclude individuals and groups at the extremes of the cost scale for whom such investment is not considered to be cost-effective.

Shifting the focus away from individual investment decisions towards consideration of wider social and economic costs and benefits also implies a need to think about the impact of investment in independent living as a process which occurs over time. This is because the expenditure attached to individual investments made at any particular point in time will obviously have longer-term effects and the economic benefits may only be demonstrated over several months or years.

This long-term approach to investment also allows us to take account of the contribution that access to independent living enables people to make as a result of their increased social and economic participation. Most importantly, it also means that costs at one stage (e.g. in older age) can be 'offset' against the benefits at an earlier stage (e.g. when people are working).

However, there is of course a danger lurking within this approach as it could be distorted to ‘justify’ the exclusion of certain groups and individuals (people who are never economically active, for example). However, such attempts to justify exclusion can be logically opposed by reference to expenditure on independent living as a form of social, rather than individual, investment. Any pattern of social investment will always include individual cases with relatively high costs, but this is only relevant when investment decisions are made on an exclusively individual basis. If the issue is redefined in terms of pubic investment rather than individual costs, the key question becomes - what is the overall impact in terms of social and economic costs and benefits? In other words, the fact that particular people have higher costs at some stage does not matter as long as it can be demonstrated that the overall impact of investment in independent living is in a positive direction.

5. How can we Demonstrate the Economic Benefits of independent Living?

Restructuring the debates on future development of independent living options would need to be supported by appropriate evidence to demonstrate the social and economic benefits of investment in independent living. So, how can this be demonstrated?

One of the first tasks which needs to be tackled is a thorough comparison of the costs and benefits of different options for supporting disabled people's participation so that investment decisions can be properly informed. For example, comparisons can be made between the costs and benefits of community and institutionally based support in order to demonstrate which option represents the most positive form of investment over time.

Any comparison between these options must take account of both direct costs, indirect costs (e.g. administration), cost savings, and revenue transfers (such as savings on social security benefits, earnings from employment, and the generation of tax revenues for people who are enabled to become more economically active).

It is also essential that any discussion of cost-effectiveness take account of the benefits associated with alternative funding mechanisms. This requires setting appropriate measures for the quality of outputs associated with the various options. Such measures can then be related to the costs (direct and indirect) involved. In the context of investment in independent living, the principal 'benefits' that we would need to measure are those relating to:

  • how well particular personal assistance options satisfy people’s needs (which could be measured by factors such as reliability, degree of choice and control and so on); and,

  • the wider benefits which follow from the degree of efficiency with which these needs are met (for example, by enabling people to take up employment or participate in social or cultural activities; the impact on family members, and so on).

At the wider economic level, there are three main factors that need to be analysed. These are the relationship between earnings and benefits; the implications for demand for health and social services; and, the potential scope for reducing dependency on informal support.

First, as discussed earlier, one of the biggest problems with current debates about expenditure on independent living is that there is a very narrow focus on the costs to public finances. There is almost no consideration at all of the potential cost benefits or savings that may be produced by a more positive approach to investment. In particular, little consideration is given to the net effect of increased tax revenues and lower expenditure on social security benefits that might be associated with increased social and economic participation. These are likely to be very important, particularly for younger age groups - although it is important to recognise that realising these benefits would also depend on removing the full range of barriers to employment associated with both wider labour market conditions and the organisation of work itself. (3, 4)

Over the longer-term there may also be financial benefits in the form of potential savings associated with a reduction in demand for health and social services. For example, research on ageing and disability suggests that people who have been living independently for longer periods in their youth and middle age may be less inclined to seek assistance from directly provided social services when they are older. Other savings may come from a reduction in demand for acute and/or long-term health care on the basis that full independence may well be associated with higher levels of quality of life and general well being. Where living independently also contributes to increased economic activity then obviously people will also be in a better position to build up their own financial resources for older age. (5)

Another of the potential benefits of investment in independent living could be a reduction in overall levels of dependency, including dependency on informal support from families or ‘carers’ - who would themselves be enabled to increase their levels of participation in other areas of social and economic life. However it is important to keep in mind that this would, in turn, mean a reduction in the existing informal cost subsidy from carers. So, this would also need to be factored in to any analysis of the costs and benefits of investment in independent living.

6. Concluding Comments

Outside of the independent living movement itself, public and professional understanding of independent living tends to be limited to thinking about disabled people only as users of support services. This is both factually incorrect and discriminatory.

In reality, disabled people are customers, workers, students, parents, taxpayers and voters, and community members. The purpose of any form of support should, therefore, be to enable people to overcome the practical barriers they face to participating in all of these roles and activities. This is why expenditure on independent living needs to be seen as a form of positive investment. Increased participation not only benefits disabled people themselves but also produces economic benefits to governments, businesses and communities.

It could be argued however that economic considerations should not be the only justification for investing in independent living. There are of course alternative criteria for guiding public investment decisions - particularly those based on social justice and basic human and civil rights.

One only has to think about a disabled person being forced into an institution on the grounds of cost savings to realise that the argument for a basic human right to independent living is - or at least should be - more than strong enough on it's own. If this can be combined with the force of economic persuasion then the call for all disabled people to have the benefits of independent living could become irresistible. Perhaps one day the question will no longer be, can we afford to invest in independent living, but can we afford not to?

Footnotes

1. Zarb, G. and Nadash, P. Cashing In on Independence: Comparing the Costs and Benefits of Cash and Services, Derby: BCODP/PSI, 1994.

2. Morris, J. Independent Lives? Community Care and Disabled People, Basingstoke: Macmillans, 1993.

3. Barnes, C. Disabled people in Britain and discrimination: a case for anti- discrimination legislation, London: Hurst & Co, 1991.

4. Berthoud, R, Lakey, J and McKay, S. The economic problems of disabled people, London: Policy Studies Institute, 1993.

5. Zarb, G. and Oliver, M. Ageing with a Disability: What do they expect after all these years?, London: University of Greenwich, 1993.


 


Parts available in English from the forthcoming English version of: Alonso, J. Vidal Garcia. 2003. "El Movimiento de Vida Independiente, Experiencias Internacionales."("The Independent Living Movement: International Experiences.") Internet publication URL: www.independentliving.org/docs6/alonso2003.pdf (In Spanish, PDFPDF, 1.46 MB).

 

 

 

English