How has privatization affected the UK?

Contemporary historical research
Studies in Contemporary History

  1. Privatization through the back door and
    the "petite bourgeoisie" of elderly care in England
  2. Nursing companies and privatization in
    Federal German welfare state until the beginning of the 1990s
  3. Commercialization by law and care as an economic asset
  4. Conclusion

Remarks

“Little Oaks is a family run residential home owned by Monica & Andy Tillotson. Monica is a registered nurse with a strong vocation for caring and taking charge of the day to day needs of the residents. Andy’s background is in management and makes for an efficient running of the home. He is also a favorite in the kitchen as he is an accomplished cook. «1 The private elderly care home of the Tillotson couple in High Wycombe, 50 kilometers west of London, has been in existence for over 25 years and can accommodate up to 35 elderly people. In England, family-run inpatient retirement homes are not uncommon. Such homes have always existed, but their number rose rapidly in the 1980s. Today they are just as much a part of the care market as Orchard Care Homes, currently one of the largest care companies.

The privatization and marketing of care for the elderly are central themes in contemporary history. Research unanimously states that the countries of the Global North underwent a transformation under the sign of economic liberalism in the last third of the 20th century and in the beginning of the 21st century.2 This finding can be justified above all with a view to social policy. Studies deal with neoliberal think tanks and their influence on organizations such as the OECD and the World Bank. Historians have also worked out how politics and economics found a new relationship in shaping the welfare state, although one can in no way speak of an unbundling

The present article builds on this research. Economization is an ambiguous term.4 In the context to be considered here, three things are primarily meant: Firstly, it describes the increasing proportion of commercial, profit-oriented homes and outpatient care services, which increases competition between providers and can be seen as privatization. Secondly, it is a question of social policy strengthening market-like incentive systems and distribution mechanisms in care for the elderly by law. Thirdly, one can speak of economization to describe that efficiency and profitability principles are increasingly determining the organization and practice of care for the elderly.

The result was called the welfare market, 5 a tension that tries to grasp the new hybrid forms between state regulatory mechanisms and liberal market logics. But the history of the welfare markets or, more specifically, of the care markets, includes not only the economically liberal thinkers and politicians who listened to them and created appropriate laws, but also actors who in practice ensured that care for the elderly became an economic asset.

The focus of the article are the profit-oriented providers of social services for elderly people in need of care. Who was involved in the care of the elderly? Why did the number of providers grow and what incentives or unreasonable demands did the market offer them? What impulses did politics give, and what were the actual effects? With a view to the private sector providers of care for the elderly, the dynamic of the marketization of social conditions in the last third of the 20th century is to be recorded. The owners of homes and care services, which are the focus here, can often be understood as small-scale businesses, some even as "precarious entrepreneurs", i.e. as the third and fourth row in the design of the care market.6 Their respective interests and perceptions can be reconstructed with the help of statements that they addressed to governments and parliamentary bodies. Contemporary studies of empirical social research, which were already dedicated to commercial elderly care in the 1980s, serve as additional sources. They give an insight into the small and small things of privatization and into the marketization of the social as an everyday field of activity.

When it comes to the history of welfare and social security, the focus is on England and the Federal Republic of Germany.7 In both countries there was a trend towards economically liberal restructuring of the welfare state, which was ultimately reflected in profound reforms - National Health Service and Community Care Act (1990) and Care Insurance Act (1995) - which put the care system on a new basis. In England, however, voices in favor of the state's withdrawal from welfare production in favor of the market prevailed earlier than in Germany.8 The different speeds at which economically motivated reforms were carried out draw attention to what the privatization and marketing of care for the elderly did each benefited and who promoted these processes.

The article is divided into three parts. The first is about inpatient care for the elderly in England, which saw rapid privatization in the 1980s. In the second part, the situation in the Federal Republic of Germany comes to the fore, where the home care sector in particular attracted commercial providers - many of them were self-employed or small businesses. Finally, it will be discussed how the care market created by law in the 1990s affected the private sector in both countries.

1. Privatization through the back door and
the "petite bourgeoisie" of elderly care in England

Until the late 1970s, there were only a few privately run, for-profit homes in England. Peter Townsend provided the first figures in his pioneering study "The Last Refuge," for which he carried out systematic studies in old people's homes at the end of the 1950s.9 The vast majority were therefore under the direction of municipal administrative units, the Local Authorities, 10 and non-profit organizations (Voluntary Organizations). In contrast, at this point in time just 9 percent of the facilities were privately owned.

Townsend, a sociologist, encountered a diverse group when interviewing the owners of the commercial homes. Townsend seemed to be typical of the path into private elderly care, a 60-year-old widow he interviewed, who ran a home with seven residents in Burnham-on-Sea, a coastal town in south-west England: “First of all, for a few months I was matron of a voluntary home in Somerset but one of my children was mentally deficient and epileptic and had been in an institution for 14 years. He got pneumonia and I had to make a home for him, acting on the psychiatrist’s advice. That’s why I started this home. «11 Independently running a home gave the widow freedom that she would not have had as an employee, for example to look after her disabled son. Private care for the elderly was a basin for very different people; many of them were women. The 55-year-old former Red Cross nurse, who says she had always dedicated herself to caring for people, was just as much a director of the home as the 45-year-old widower, who gave up his job for what was once run by his wife Boarding house into an old people's home.12 A surprising number were already of retirement age and tried to supplement poor pensions by registering their private houses as homes.13 The majority had no previous experience in caring for people; such were not required either. The formal requirements in the National Assistance Act of 1948 were easily met. 14

According to Townsend's surveys, many elderly people in need of care chose private homes because they believed they could preserve some residual self-determination. In addition, those who opted for a private home could expect to be spared the experience of mass housing. Only a small number of the homes offered more than 30 places, but none more than 60. Most were designed for 10 to 15 people; Even small homes for up to 5 residents were not uncommon. The institutions of the non-profit sector and the public sector, on the other hand, were often among the big ones, i.e. they had more than 100 places, the latter even more than 250 places. Even though the number of private nursing homes for the elderly was well below that of public and non-profit institutions, they were more than a marginal phenomenon. In the heyday of the expanding English welfare state, they filled gaps in the supply of services.15 The owners could not expect big profits from the start, but the opening of a retirement home offered them opportunities that would otherwise have been denied them due to their qualifications and living conditions.

Around 20 years after Townsend's study was published, the situation had changed significantly. The change was clearly reflected in the statistics: In hardly any other country did the private care sector grow as rapidly as in England. Private sector providers were able to increase their share as early as the 1970s. Ultimately, they tripled the number of places on offer between 1983 and 1993. Around 59 percent of the 224,000 or so homes in 1993 were provided by private providers, while the public sector only provided just under 26 percent.16

How can this change be explained? A first approach is the history of ideas. More than in other countries and even more than in the USA, liberal economic ideas shaped daily British politics.17 On the one hand, significant cuts in social policy programs and, on the other hand, the privatization of state-owned companies such as British Gas and British Telecom, especially during Thatcher's second term in office (1983–1987) were among the consequences.18 In the context of a »property-owning democracy«, the ownership rate increased due to the sale of the Council Houses significant.19 The new geriatric care entrepreneurs who entered the industry across the country, but especially in Central England, contributed to the wider distribution of property.

But a look at the regulatory level reveals a surprise. The privatization of care for the elderly was far less intended and less prescribed than the common interpretation of Thatcher's neoliberal turn would suggest. First of all, it should be noted that the course for the growth of commercial elderly care had already been set before the "Iron Lady" took office. The budget that the Local Authorities had available for the expansion of inpatient care for the elderly. The communal Social Service Committees Since then, new construction projects had to be put on hold and even felt compelled to sell individual homes in order to be able to use the proceeds to finance urgent modernization measures in the remaining facilities.20 This affected the private elderly care sector in two ways. On the one hand, it meant that the largest competitor had to restrict its supply, i.e. commercial providers could be sure of growing demand. On the other hand, the latter benefited from the fact that many functional buildings for the care of the elderly found their way onto the real estate market at low prices

From the austerity constraints that the Local Authorities since the mid-1970s, another momentous course emerged. The Department of Health and Social Security (DHSS) in London changed access to wealth-based social assistance benefits. Anyone who decided to move to a privately owned or non-profit-making home has been able to apply for funds since 1979 - provided that their own income was insufficient to pay the monthly fees. The responsible offices only checked the economic need. However, there was no assessment of whether care was necessary in a home. Whereas in 1979 there were only around 11,000 recipients of this form of support, the number a good ten years later was around 280,000.

How little planned the resulting wave of privatization started becomes clear when we look at how it came about that people in need of care received benefits from the DHSS. The idea of ​​making DHSS pots accessible to residents of non-governmental homes was only conceived when actors in the non-profit sector requested support in order to be able to use the funds from social welfare to offset financial losses. Since the budgets of the Local Authorities had been cut, from which they had received extensive grants until then, they had had to fear for their existence.22 At first it was a matter of case-by-case decisions; It was not until 1983 that the DHSS formalized this application option. It happened very silently without the general public noticing. This paved the way for “privatization by default” or “back door privatization”. 23

But the increasing number of applications also meant increasing costs. Within seven years (1978–1985), according to a Labor MP, there was a substantial increase: from 6 to 280 million pounds.24 The rise in costs also continued, despite the measures taken by the DHSS to cap the benefits . In the early 1990s, annual spending finally came to £ 2.6 billion.25 Such a cost increase did not go unnoticed for long. Labor MPs spoke critically of the state-sponsored "Mushrooming Private Profit-Making Sector" .26 But not only the members of the opposition party thought this was a mistake. The government also countered the trend by setting specific regional maximum limits for such social assistance cash benefits.27 Finally, in 1986 the government commissioned the manager Roy Griffiths to present plans for a reorganization of care policy.28 The reforms of the National Health Service and Community Care Act sealed the end of privatization through the back door.

The early wave of privatization in England, as can be seen at this point, confirms those researchers who emphasize that economization did not always go hand in hand with a reduction in performance. Because the growing number of commercial home operators was largely state financed. Private-sector homes took in more and more residents, whose fees were paid by the DHSS. Social expenditures for those in need of long-term care had not been reduced during Thatcher's reign; rather, there had been a shift in costs in the state budget: while the expenditures of the Local Authorities decreased, those of the DHSS increased.

It should also be noted that the Local Authorities Although they had to reduce their involvement in the home sector, at the same time they expanded their range of home care, 29 which gerontologists had been calling for as a socio-political necessity since the 1960s. The one that came into force in 1984 Registered Homes Act also expanded the obligations of Local Authoritiesto monitor private and non-profit homes. In short: there was a privatization of care for the elderly, but no denationalization.

To explain the dynamics of privatization, it is not enough to just look at social policy. A further level should be added here to explain why commercial homes were springing up like mushrooms: the perspective of the private sector itself. What motivated individuals to open or take over a home? The situation in the county of Devon in particular has been analyzed in depth. In 1984/85 scientists at the University of Exeter carried out a large-scale interview study, which in some cases brought surprising results to light. Devon, in the south-west of England, is one of the more rural counties. In the 1980s, the population was mainly divided into small towns and villages; about half lived in the urban centers, which include Plymouth and Exeter. In Devon, the proportion of elderly people was traditionally higher than in other parts of the country, because it was one of the regions that were scenically and climatically attractive for retirees, with the coastal cities in particular attracting retirees.

The proportion of private homes had always been comparatively high here, as in the south of England in general; it continued to grow in the 1980s. Only about 20 percent of the existing facilities had already been opened before 1975, and over 40 percent had been in operation for less than five years.30 Entry into the social service sector was easier than in the small manufacturing industry because less start-up capital was required. In the early days in particular, only few resources were required. Many home operators began their work from within their own immediate environment - almost half of the homes had previously been residential buildings.With the reforms of the banking and credit system in 1982, generous loans were available to those who wanted to open a care facility.31 In general, the road to care for the elderly was not particularly rocky, even for absolute newcomers.

Very few owners had run a home before, and for at least 25 percent it was an unknown industry. Half of the homes examined were managed by trained nurses and geriatric nurses. Two other professional groups catch the eye: people who previously worked in the hotel and tourism industry and those who were involved in the real estate market. Since the British were less and less drawn to the domestic seaside resorts and more distant, some hotel owners converted their accommodations into old people's homes.32 So there were specific opportunity structures that favored the switch to care for the elderly. This became a professional basin in times when other industries stagnated.

However, the new home managers were hardly any crisis profiteers. It is true that a disproportionately large number of facilities were built in economically weak regions because it was possible to employ staff for lower wages.33 Nevertheless, homes were seldom a gold mine, and the money that an old people's home generated was hard earned. 67 percent of Devonian home managers worked and lived in the facility themselves. 43 percent had to rely on family members to do the job. Usually it was married couples who ran the home together (73 percent), or one of the daughters regularly helped with the care of the elderly. Home managers sometimes exceeded the limit of self-exploitation, which was reflected in a high turnover rate among the owners. Almost half of the people surveyed in Devon indicated that they were considering leaving the geriatric care trade.34 The British sociologists David Phillips and John Vincent coined the term “petit bourgeois care” to refer to the petty-bourgeois ways of life and work in the To expel homeowners. 35

The boom in private care for the elderly cannot be interpreted as the work of the “self-made men” and their “right to be enterprising”, as the representatives of the conservative party liked to do, 36 nor do the descriptions of the Labor MPs of unscrupulous people fit Particularly good for profiteers. In fact, not that much had changed since Peter Townsend looked at inpatient care in 1962, at least not for the group of those who ran homes for commercial purposes. As before, private care for the elderly was an option for people for whom self-employed management offered a sometimes necessary rather than a welcome alternative to wage labor. The big difference was that in the 1980s, due to economic, political and socio-cultural changes, many more people belonged to this "petite bourgeoisie". Those who opened private-sector homes to earn a living beyond wage labor contributed significantly to the privatization of care for the elderly. Without them, the reorganization of social assistance would have had a far less dramatic effect, because there would have been a lack of homes to accommodate the elderly, financed by funds from the DHSS. Local Authorities would have found it much more difficult to sell their facilities. The course of privatization in the United Kingdom, as the example of care for the elderly suggests, was also the result of many individual career biographical decisions, which at the same time had structural reasons.

Was this a specifically British development? Had the industrial structural change in the United Kingdom, which had been significant since the early 1970s, created special conditions that favored the socially supported privatization of care for the elderly? A comparative look at the Federal Republic of Germany can help to find more precise answers. Although there was little change in the social policy regulations, commercial elderly care grew and changed significantly even before long-term care insurance was introduced.

2. Nursing companies and privatization in
Federal German welfare state until the beginning of the 1990s

In 1969 one of the first nationwide surveys took place on the available places in homes. It showed that only about 9 percent were provided by commercial providers, whereas the majority of the total of 248,000 places that were available at the time were in institutions of the municipalities and charities.37 Another parallel to England can be drawn: also In the Federal Republic of Germany, commercial homes had significantly fewer beds on average than the homes of the welfare associations and municipalities: 22 compared to 75. As in England, the private sector organizations in the Federal Republic of Germany came much closer to the ideal of small homes recommended by gerontologists as their competition.38 The majority of the houses were run by owners; it was not uncommon for family members to help keep costs down. In 1973, the majority (52 percent) of the homes organized in the Federal Association of Private Retirement and Nursing Homes (BPA) had 16 to 50 places. Only 29 percent had more, and the rest, at least almost 20 percent, had fewer than 15 places in each case.39 Entrepreneurs who ran several institutions and made large profits were rather the exception. Although the federal German welfare state was organized quite differently than the English one, the initial situation in geriatric care is very similar with regard to the provider structure. But how should the further development in the Federal Republic be classified?

In 1983, the S. Maximilian Kolbe retirement and nursing home, supported by the Catholic Church, opened in the south of Hamburg. The construction was financed, among other things, from funds from the ARD television lottery "Ein Platz an der Sonne". The absolute number of home and care places provided by non-profit organizations rose slightly in the 1980s. The share of the non-profit stationary sector remained constant in this decade, while the public sector reduced its supply and the commercial providers were able to increase their share. Architecturally, new buildings were increasingly oriented towards assisted living concepts.
(ddp / United Archives)

The proportion of commercial homes and the number of places they provide has increased steadily, albeit slowly, since the 1960s. A dynamic development, as it was with the privatization boom in England, can only be spoken of if the outpatient area is included. The fact that social services for elderly people in need of care were increasingly becoming an economic asset also had to do with a structural change: care for the elderly was increasingly taking place outside the walls of homes.

Actually, with the Federal Social Welfare Act of 1961, the legislature had set the first incentives for the expansion of domestic services required by gerontologists. However, the actual offer was only slowly expanded in the following years.40 It was not until the 1970s that municipalities and finally also the federal government visibly increased their efforts to create outpatient services. But the promotion of home care was not aimed at privatization. The social stations, which various state governments and the federal government sponsored for the expansion of outpatient care, only involved public and non-profit organizations.

Nevertheless, the number of commercial care services increased. Exact details are lacking, but there is some evidence that there was a wave of privatization in outpatient care in the 1980s. This is suggested by a study published in 1985 by the Kuratorium Deutsche Altershilfe, which examined the reasons for the expansion of “small-scale, freelance and alternative private care services.” 41 When a study by Infratest in 1998 first provided concrete figures, it was found that 43 percent of the approximately 11,600 outpatient services were operated commercially. Long-term care insurance had led to a surge in start-ups. However, a random sample (which did not differentiate between carrier groups) showed that around 66 percent of the services had started operations before 1993 and 39 percent even before 1989.42

The growth in commercial care stands out all the more as there are hardly any socio-political incentives for it - on the contrary. In times of welfare state expansion, the pressure on politics to push back or completely eliminate commercial and thus profit-oriented welfare production increased much more strongly than in England. According to newspaper articles, it was "[u] n-moral to make profits out of frailty." 43 Many critics generally mistrusted private homes: They feared that old people would be degraded to commodities. Hadn't some of the homeowners, especially those who ran multiple houses, previously worked in completely different industries? Friedrich Poths, who worked in Hesse, repeatedly attracted media attention, who, as a trained fine bag maker and forwarding agent, made good money in the 1970s by running nursing homes. By declaring that caring for the elderly was "a task like any other production task in society," he confirmed the reservations that existed against private providers.44 "Frail entrepreneurs" ran "sick businesses" and dealt with "more defenseless ones." human goods ”, so the tenor of many media reports.45 It appeared problematic that commercial providers who worked for-profit capitalized on the suffering of others. The care rates of the social welfare office or the fees that residents paid privately did not flow entirely into care. The goal of profit to some inevitably reduced the resources available. In addition to these considerations, the argument of unlawful enrichment played a role. For those who questioned the existence of commercial homes, care for the elderly was more a service than a profit-oriented service. Such statements testify to the widespread notion of the moral superiority of public and non-profit welfare production.46

The reservations about private homes were also reflected in regulatory policy. With the restructuring of welfare through the Federal Social Welfare Act (BSHG) in 1961, the legislature laid the foundation for a state and federal care policy. The provisions on care assistance and care for the elderly were among the most innovative contents of the BSHG.47 They expanded the possibilities of elderly people in homes to fall back on social assistance if their own resources were insufficient. Formally, this did not depend on the supporting structure of the facility. Residents of commercial homes could also receive benefits - like residents of communal or non-profit houses. However, there is evidence that individual municipalities rejected private elderly care. For Freiburg i.Br. and Castrop-Rauxel is aware that social welfare offices excluded private providers from subsidies as early as the 1960s and that they also did not refer social assistance recipients to such institutions. Little has changed in this regard despite the increasing pressure in demand.48

Finally, in 1967, the federal German legislature took the first steps to regulate old people's homes within the framework of the trade regulations. Since then, the federal states have been responsible for regulating the qualifications of the home managers, personnel keys, structural requirements and requirements for medical care, as well as checking compliance with the regulations. To protect the very old, the public sector noticeably curtailed the freedom of trade. The discussion about the regulation of homes did not end there, but only really got going. In 1971, the criticism of the nursing business reached a climax when the working group of social democratic lawyers demanded that "the state and non-profit institutions should build more old people's homes and eliminate private companies here." Presumption that some old people would have died prematurely as a result of this.50 The working group of social democratic lawyers also met with a response outside the SPD with their demands.

Despite all the criticism, however, there was never a ban on commercial care for the elderly, rather completely different voices increasingly mingled in the discussion. Remarkably, the controls that were carried out within the framework of the trade regulations helped to reduce reservations about private homes. In its first report on experiences with the new Home Ordinance in 1969, the Federal Government came to the conclusion "that serious deficiencies in the operation of commercial homes in the federal states had only been found in isolated cases." The previous controls had "not confirmed the impression that the public may have occasionally evoked by press reports on allegedly catastrophic conditions in commercial homes" Homes. Contrary to what was initially thought, however, it extended to all providers: commercial, public and non-profit.52 In retrospect, the criticism of commercial homes proves to be a catalyst for more intensive quality control of the entire inpatient care for the elderly.

Although the general reservations of many social policy-makers towards private sector providers were disappearing, it was not possible to speak of state funding for profit-oriented private care for the elderly until the 1990s. This is particularly evident for outpatient care. There were hardly any welfare state incentives that lured geriatric nurses and nurses into self-employment. On the contrary: private-sector care services initially had no guarantee that health insurances would cover the costs for the services they provided.53 Difficulties in reimbursing costs were one of the main reasons why many who had gone into self-employment and founded care services after a short time had to give up again.54 This fundamentally changed with the introduction of long-term care insurance.

But what were the reasons for the previous privatization of care for the elderly? What conditions promoted this development? Those involved in the privatization are to be traced elsewhere, namely in the ranks of the owners of commercial homes themselves. In the 1960s, that is, at the time when a front was forming against the activities of commercial providers in the care of the elderly, closed some of them form interest groups in order to be able to better counter the criticism.

One of the most important was the Federal Association of Private Retirement and Nursing Homes (BPA), founded in 1964. In 1973 it represented a good 20 percent of the approximately 750 private old people's and nursing homes that existed in the Federal Republic of Germany at the time.55 The association demanded that the state should use commercial providers as well as public and non-profit institutions when providing social services. Even before the market-creating rules of the Long-Term Care Insurance Act took effect, the BPA was working towards a change in competition. Measured against the laws and court decisions of the coming decades, which favored the activities of private sponsors, the association was successful. In terms of tax exemption and care rate negotiations, the management of the BPA was able to prevail: in 1980, they achieved that private retirement and nursing homes could benefit more from the sales tax exemption than before. If two-thirds or more people in need of help lived in the respective facility, the tax was waived.56 Finally, in 1993 the private sector sponsors succeeded in obtaining the repeatedly required participation in the care rate negotiations with the communal cost bearers. This gave them the opportunity to have a say in pricing, which until then had been reserved for charities.57

However, the private providers were able to hold their own in the market above all if they could prove that they were not ordinary businesses. The management of the BPA obtained tax exemption regulations with the argument that the homes it represents would undertake joint welfare state tasks. According to the statutes, the BPA organized the »social entrepreneurs for private care for the elderly« .58 The organizations affiliated to the BPA had chosen its name with care. You deliberately spoke of an association of "private" homes in order to free them from the "disreputable odium of the" commercial ". 59 The association management also tried to enforce such a language regulation in legal texts. If such attempts failed in the case of the Home Law of 1974, the long-term care insurance law of 1995 consistently uses the adjective "private" instead of "commercial" institutions or "commercially operated" homes. This had a positive connotation, as it also meant familiar, personal and familiar - attributes that old people and their relatives valued.

What about the outpatient area? In addition to the interest groups, such as the Home Nursing Working Group founded in 1984, the individual care services themselves must also be considered.In the 1980s, commercial outpatient care rested largely on the shoulders of nurses and geriatric nurses who had previously been employed in homes and social centers. In 1990, Ursula Zawada, who emerged as one of the first lobbyists, estimated their number at 50,000. The path taken by nurses and geriatric nurses to become self-employed was part of a general development. In the 1980s, the decade-long trend that the number of self-employed people was falling came to an end. There was even a slight increase.60 At the end of the 1980s, a survey of participants who obtained information about the basics of home care as a field of work in seminars showed that they would get a higher income and more professional independence from freelance work and expected greater design options. The overload of nursing staff in homes, as a result of staff shortages and shift work, also played a role.61 As with most other service professions, the step into self-employment was made easier by the fact that - unlike in the case of the goods-producing industry - there was only a low one Start-up capital was required. Expertise and already established networks were the crucial resources.62 A typical case was those nurses who had previously worked in the hospital. There they inevitably were confronted with the need for home care, because older patients could often not be discharged because they lacked the necessary support in their private sphere. The contacts to the former workplace made it easier for the new self-employed to acquire customers. 63

Commercial activity, as shown by interviews and portraits of care service operators from the very beginning, was sometimes a stopgap measure. Some escaped unemployment when hospitals cut jobs. Others who had already planned to leave their careers, which was comparatively common in nursing, hoped for new perspectives in order to still be active according to their training. Biographical decisions were partly behind the growth of commercial outpatient care. Some nurses and geriatric nurses who became self-employed and founded care services can be described as new entrepreneurs and actors in the privatization of welfare state production. Others, on the other hand, fit into the globally growing group of those who found themselves in extremely precarious work constellations.64 With their employment they had given up social security and were often exposed to great economic uncertainties. Many accepted irregular working hours because they were only able to assert themselves against the public and non-profit services, which mostly did not yet provide this, through offers such as 24-hour care, weekend and holiday presence

In 1987 Caroline and Michael Biedermann, both trained in nursing, founded the nursing service "Home Nursing C. and M. Biedermann" (today "Sozialstation Biedermann GmbH"). The first office was at Jagowstraße 35 in Berlin-Moabit, where the siblings clearly used the premises of a shop. The two-person company grew over time: in 2012, the nursing service, which offers short-term care in addition to home care, employed over 100 people.
(Social station Biedermann GmbH, archive)
The first vehicle at the Biedermann welfare station was a self-painted VW bus. Most outpatient care services have company cars so that the carers can look after the geographically distributed customers. The vehicles also serve as advertising media. In some places there are now efforts to promote the use of electric bicycles for outpatient care.
(Social station Biedermann GmbH, archive)

On the eve of long-term care insurance - this can be summarized at this point - the private elderly care sector was already growing. Commercial providers had expanded their presence, particularly in the field of outpatient care. Interest groups such as the BPA or the later-founded Home Nursing Working Group had gradually made things easier for their members.66 Nonetheless, parts of the commercial, outpatient nursing staff in particular were more difficult than likely to keep their heads above water. They expected a lot from long-term care insurance. While there were many elderly people in need of help, it had been shown that most were unlikely to pay appropriately for care. "There are always people," said a nursing service operator in 1991 to the "Spiegel", "they'd rather bumble around in their apartment than attack their savings." 67

3. Commercialization by law and care as an economic asset

In the 1990s, a new type of social security for the need for long-term care took place in England and also in the Federal Republic of Germany. Parliament passed the as early as 1990, at the end of Margaret Thatcher's third and final term in office National Health Service and Community Care Actwhich came into effect gradually over the next three years. After long negotiations, the liberal-conservative coalition in the Federal Republic of Germany implemented long-term care insurance in 1995 and added another pillar to the previous social security system. Both sets of laws aimed to market care for the elderly. However, the social politicians in both countries chose very different paths.

In the UK case, the steadily increasing spending on welfare benefits had put pressure on the government to undertake major reforms. Since 1985, commissions of inquiry and experts have been set up almost every year to investigate the situation of the homes and home care, whereby in particular the proposals of the report drawn up by Roy Griffiths have been incorporated into the design of the National Health Service and Community Care Act flowed in. As mentioned above, Griffiths was commissioned by the government in 1986 to analyze the nursing situation. He was CEO of the Sainsbury's supermarket chain for many years. This was the second time that he was in Thatcher's service, as he had already drawn up a reform plan for the NHS in 1983 and pleaded for the expansion of management structures

With the introduction of the law, the weights shifted back to that Local Authoritieswho, however, were encouraged to see themselves as buyers rather than providers of social services. They received a fixed budget based on the size of the population. With this, they should not expand their own homes or create outpatient offers themselves, but rather buy services from the so-called independent sector. The Local Authorities had to spend 75 percent of their care budget on services of non-profit and private-sector organizations. The case managers of the Local Authorities From then on, it was incumbent on to organize tailor-made care packages for the individual care recipients, whereby care within one's own four walls was to be given greater weight.69 The internal market aimed to increase the competitive pressure on the providers and thereby increase efficiency.

In the Federal Republic of Germany, market ideas entered the debate about the coverage of the need for long-term care very late. The need for profound reform had been discussed since the 1970s. The Health Reform Act passed in 1988 could not satisfy those who demanded fundamentally improved services in the case of long-term care. The German unity had further increased the need for regulation, because the question arose of what should happen to the roughly 500,000 people who had received a flat-rate care allowance in the GDR.70 After tough negotiations, the pay-as-you-go long-term care insurance finally came into force in 1995. Since then there has been compulsory insurance for those with statutory health insurance and - this was new - also for those with private health insurance. The employer's share was compensated by the fact that from now on (with the exception of Saxony) the days of penance and prayer were no longer a public holiday.

Compared to England, three specifics of the German solution stand out: the cap on services, the priority of non-profit and commercial providers over the public and the options. The German social politicians also attached great importance to cost control; therefore they opted for a partially comprehensive and not a requirement coverage principle. People in need of care were given a legal right to benefits, but these were standardized and limited according to the care level in which they were classified. A greater variety of providers was to be achieved by the fact that, in contrast to earlier regulations, the law gave priority not only to non-profit services over public ones, but also to private ones.71 Unlike in England, however, the recipients had more choice. It was up to them and not case managers to decide whether they wanted to use inpatient or home services. People in need of care could choose between cash benefits and benefits in kind - or a combination of both.

But what happened to those for whom the reforms of the 1990s were supposed to make access to the market easier? What did the providers of private elderly care think of National Health Service and Community Care Act or long-term care insurance? The figures show a clear expansion of private elderly care. In both countries, the number of publicly funded homes and services fell. On the other hand, the proportion of non-profit providers, especially that of commercial providers, grew. In the Federal Republic of Germany, the latter were able to increase their share of inpatient care, measured by the number of homes, to 38 percent by 2005 (in 1991 it was around 28 percent). Also in 2005 private care services in the outpatient sector had a market share of 58 percent. In England in 1999 it was as much as 69 percent of the places that were in commercial homes. The public and non-profit sectors lagged far behind with 17 and 14 percent respectively.72 The private sector providers were also able to expand their presence in the provision of outpatient care services.73

But there were counter-movements. In England in particular, research has assumed that the introduction of market mechanisms, especially in the health care system, would rather strengthen rather than reduce state regulation. The reason for this is seen, among other things, in the heavily centralized and bureaucratic control model in England, which offered only limited room for maneuver for marketing concepts.74 For elderly care, too, it is clear to what extent the introduction of internal markets strengthened the control competence of the public sector. The case managers of Local Authorities had a central position in evaluating the needs of the elderly and in organizing the services that were available to them.

It was precisely this regulation of the internal market that caused a lot of displeasure within the private sector. A few years after the introduction of the National Health Service and Community Care Act. After the Labor government was elected to office in 1997, it set one Royal Commission on Long Term Care for the Elderly one, especially to discuss the question of funding for elderly care. The more than 2,000 letters received by the Commission include numerous letters from commercial care providers. In January and February 1998, for example, Tony C., the owner of a nursing home, contacted the Royal Commissionto complain about the consequences of the current legislation: “As a nursing home owner I am acutely aware of the enormous damage done since the introduction of care in the community. The continuing closure of very many homes is not due to reduced patient need, but because of the previous government’s action of delegation the responsibility for funding geriatric care to local authorities. There is much evidence to show that social service departments are cumbersome, bureaucratic, focused on self-preservation and hostile to the private sector on ideological grounds. «75

Since the introduction of the National Health Service and Community Care Act Tony C.'s nursing home stumbled, and so did others. Social scientists who continued to observe the care industry in Devon found in a renewed survey of home operators in the mid-1990s that almost 70 percent were working close to the profitability limit, in some cases even below.76 The occupancy rates were across the country sometimes only 85 percent, which got many operators into trouble.77 Similar to Tony C., others also looked for the culprits with the Local Authoritieswho suspected they were not acting as neutral buyers of social services, but primarily using their own homes to capacity. Of course, things were more complicated, and the lines of conflict did not just run between the public and private sectors.

The smaller commercial homes had had since the introduction of the National Health Service and Community Care Act especially to fight with the competition of large providers. The law encouraged a concentration movement in the care market and the rise of companies, each running several hundred homes. In 1999 the three largest providers of inpatient care provided a good 8 percent of the total bed capacity. Large homes and care chains found it easier to cushion fluctuations in occupancy and they were able to keep costs lower, which they believed Local Authorities to more desirable contract partners than many of the small homes. The more owners of small homes had to give up because of the financially superior competition, the more real estate was ultimately available for the further expansion of such large providers.78 Only some of the private-sector providers thus benefited from the introduction of internal markets, which was brought about by the nursing reform in 1990 were created.

What was the effect of the German reform variant? In the Federal Republic of Germany, too, long-term care insurance marked a turning point for commercial geriatric care providers: They very much welcomed the fact that they had finally achieved equality with non-profit organizations in the inpatient and outpatient sectors. However, they sharply criticized the lack of funding for long-term care insurance. While the drafting of the law was in full swing, the advocacy groups expressed their concerns. In addition to the BPA, other organizations, such as the Federal Working Group on Home Nursing and the Employers' Association of Outpatient Nursing Services, were asked to submit statements and to present their positions in the hearings of the competent Bundestag committee. The management of the BPA accused the government of violating the "humane mandate of the welfare state principle". The representatives of the private care sector warned that the budget with which the government draft was operating was far too low: the number of individual outpatient care deployments was unrealistic, and it was to be foreseen that the budgeted funds would not be “in front or behind” 79 When the CDU member Karl-Josef Laumann urged the representative of the employers' association of outpatient care services during the hearing to give a specific figure for the cost of a care assignment, the latter threw a figure into the room that was almost twice that was as high as that used in the model calculations.80 So the commercial care providers were not to be had cheaply either. The COP and other advocacy groups for private homes and services added to the group of those demanding more money for services from the state. The privatization of care for the elderly not only had cost-reducing effects, but also potentially cost-driving effects. There was little evidence of competition between providers when the law was being drafted. Both non-profit and commercial organizations agreed on the goal of making long-term care insurance as generous as possible. The positions of BPA, the Federal Working Group on Home Nursing and other interest groups in private elderly care coincided with those of the welfare associations in essential points.

This did not change much in terms of the tight budget. The implementation of the partially comprehensive principle in long-term care insurance broke with the principle of needs coverage anchored in German social insurance. An initial picture of the mood among care providers, which the institutes I + G Health Research and Infratest Burke Sozialforschung produced on behalf of the federal government just a few years after the reform, demonstrated the widespread dissatisfaction. Almost 60 percent of the respondents from the field of outpatient care services said that the services did not cover costs; only 5 percent considered it sufficient. The criticism was directed, among other things, at the fact that the time limits were too tight and that travel costs were not taken into account, which was particularly noticeable in rural areas.81 It was no different for home providers. Almost 40 percent complained that long-term care insurance had a negative impact on their economic situation, and only 9 percent were consistently positive.Many home operators rated negatively that the law had increased the administrative burden immensely and that the fees would not cover the costs.82

Long-term care insurance did not stimulate business as many had wanted it to. Profits could only be made with the welfare state. At first it looked as if the high-priced homes in particular were booming, but it soon turned out that those establishments in particular "where a lot of money from the state, long-term care insurance and social assistance flows into" were successful in the long term financially strong providers. In the 1990s, more and more large companies operated on the care market, some of them as stock corporations.84 How much the latter relied on benefits guaranteed by the welfare state is shown by the fact that Curanum AG, founded in Munich in 1981, had its own care rate department, which - so CEO Hans-Milo Halhuber 2003 - "was in a position to be an adequate partner for the health insurance companies." 85 Such large companies had the critical mass to set up their own administrative units. Privatization and bureaucratisation intertwined here.

The success of outpatient care services also depended on the welfare state. Long-term care insurance not only created beneficiaries, but also helped to turn them into solvent and willing customers.86 It was only with long-term care insurance that many people experienced "fixed sums", 87 which were explicitly for the payment for activities that up until then mostly female family members performed informally, namely dressing, washing, feeding, diapering or lifting people out of bed were shown. The welfare state benefits also stimulated the self-pay business. 16 percent of those who lived at home and received services, according to a figure determined in 1998, stated that they bought additional professional aids. This was mainly done by those who received outpatient or partial inpatient care as part of long-term care insurance.88 Long-term care insurance contributed to changing the population's attitudes towards long-term care as an economic good that has a price.

The German care market finally developed in unexpected directions that did not come in handy for many commercial providers. This refers to a certain segment of the market, namely care by foreigners, most of whom were illegally employed. This form of care, which took place in the shade and therefore largely eluded documentation, is difficult to grasp with sources for precisely this reason. Nevertheless, there are indications that the demand from private households for foreign nurses rose in the 1990s.89 A large raid by the Frankfurt public prosecutor's office in 2001 revealed that the employment of foreign nurses had become a widespread model. The search of 350 houses and apartments led to 200 deportations because the foreign nurses usually did not have a residence permit. Outraged people in need of care and their angry relatives found forums in the daily press and in specialist articles to defend themselves against what they perceived to be injustice. The television presenter Frank Lehmann, who had employed a woman from Slovakia to look after his father-in-law, made himself a prominent spokesman.90 He and others described illegal employment as having no alternative. Concern about caring for their elderly relatives justified it in the The eyes of many who acted in such a way as to break the rules of migration, taxation and labor law. As a result of the media debate - despite vehement opposition from care services and home operators who feared this low-cost competition - there was relaxation in migration policy. This made it easier for foreigners to work in home care. 91

Is there a connection between the introduction of long-term care insurance and precarious employment in home care? Cross-country comparisons show a high rate of privately employed foreign carers in those countries where those in need of care receive cash benefits instead of or in combination with benefits in kind. The prerequisite is that there are no requirements that recipients must prove that they have been used. This is the case in Germany, and the same applies to Italy, where a “migrant in the family” model has dominated care for the elderly since the early 1980s. This is in contrast to England, where people in need of care and their relatives receive vouchers (Voucher) and cash benefits, the use of which must be proven. The number of privately employed foreign nurses is comparatively small there. Anyone who thinks this has more to do with the geographic location of England than with the conditions for access to social benefits should refer to the case of the Netherlands. In Germany's western neighbor, precarious employment of Eastern Europeans is common practice in many branches of the economy, but not in care for the elderly. As in England, proof of cash benefits from long-term care insurance is required. 92

With long-term care insurance in Germany, not only a welfare market emerged, but also a long-term care market with a view to privately and mostly illegally employed foreigners, in which welfare state benefits boosted demand, but the state hardly intervened to regulate. If one looks at this aspect, the dynamic of the marketing of elderly care extended further in the German case than in England.

4. Conclusion

In 1996, one of the first OECD publications on the subject of care for the elderly stated: “There is a growing concern about the future provision of care for elderly people who are frail or disabled. This is a marked departure from debates about welfare policies as recently as the early 1980s. OECD countries did not, for example, highlight this as a significant problem during a conference in 1980 on ›The Welfare State in Crisis‹. «93 The head of the social policy department within the OECD, Patrick Hennessy, made no secret of how much he was himself and his employees underestimated the risk of needing care in old age. The publications he initiated in the following years documented the different reform paths the individual countries are now taking - including England and the Federal Republic of Germany. Unlike in the case of the privatization of old-age provision, 94 for which studies have shown the importance of international organizations as a source of inspiration, the beginnings of economization in elderly care are particularly evident when one looks at the national, regional or local level. Sometimes answers can only be found in the cosmos of individual homes and care services.

Which theses can be formulated about the process of privatization, the care market and the market-creating laws of the 1990s? What insights do we gain by looking at the private, profit-oriented providers that was opened up in this article? The number of commercial care providers has not only increased in England since the 1980s; In Germany, even before the market-creating long-term care insurance was introduced in 1995, there was a very similar trend. This is all the more interesting because, unlike there, there were initially no legislative changes that would have favored privatization. Rather, inpatient and outpatient providers often had to reckon with rejection from the health insurers and social welfare offices when it came to paying for their services. A decidedly market-creating policy did not exist in Germany until long-term care insurance.

It also becomes clear that the private sector was heterogeneous and that this increased in both countries during the period under study. In addition to individual small facilities, many of them family-run, there were large care companies that operated several homes in different cities and even across national borders. In Germany, outpatient care opened up a business area in which nurses and geriatric nurses could start their own business alone or with just a few employees. The privatization of outpatient care for the elderly, which can already be observed in the 1980s, resulted, among other things, from professional biography decisions.

Taking over a home or setting up a nursing service was sometimes more of a makeshift than a lucrative business in England, as in the Federal Republic of Germany. The privatization spurt in the 1980s was based in no small part on precarious small and micro entrepreneurship. The privatization and marketing of elderly care went hand in hand with an increase in insecure work and a precarious economy. This finding applies to the liberally constituted welfare state of England as well as to the conservative-corporatist welfare state Germany.

The historical perspective on the creation of the care market also emphasizes once again that there was no unbundling of politics and economy. The term »welfare mix« 95 coined by political and social scientists, however, requires a temporal development dimension. The public, non-profit and private-sector sectors were intertwined with one another, even fused together. This is evident in England, where care companies denote their operational properties Local Authorities bought off. In Germany, on the other hand, it was the nurses and geriatric nurses who were comprehensively trained in schools run by welfare associations and the state who, after having worked for state or non-profit providers for years, founded the outpatient geriatric care trade.

Finally, it should be noted: The market-creating laws of the 1990s, the National Health Service and Community Care Act and the Long-Term Care Insurance Act, each had a different impact on the commercial sector. In England, large care companies benefited, while the innovations for smaller homes often meant the end. In Germany, the reforms stimulated competition between providers far more than many providers (including commercial ones) would like. The recipients of the care services and their relatives made use of the options and used the monthly amounts of money for a market that in many cases eluded state control: a shadow economy of care emerged that weighed on the shoulders of mostly poorly paid foreigners. While sociologists are now intensively researching their present-day manifestations, it is historians who shed light on the temporal context of their development and pursue longer lines. In this way it can be shown how socio-political decisions and societal ideas about care favored the development of such a "gray" welfare market. Right now, a historical perspective is more important than ever, because the corona pandemic has put the situation of care for the elderly in a glaring light and has enormously increased the pressure on politicians to act. The decisive factor will be whether this temporarily increased attention can be used for reforms that take sufficient account of the origin and development of the care market in order to be sustainable.


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