Stewardship Actions for Market issues in the National Disability Insurance Scheme: A Review of the Evidence

As the Australian National Disability Insurance Scheme (NDIS) progresses through its implementation, calls for stewardship of the new disability market increase. As a personalisation scheme, the condition of the disability service markets are tied to the ability for people with disability to access care services. Market conditions such as thin markets, market gaps and market failure threaten the public policy goals of increased choice and control for NDIS participants. We review the evidence for interventions and other market stewardship actions that can be taken by government to steward a quasi-market that provides care or welfare services. We assess the breadth and quality of the evidence base and apply these findings to the case of the Australian NDIS. We conclude that there is sufficient evidence to take actions to steward the NDIS market, but that considerable resources and governance capacity are needed to do so. The National Disability Insurance Scheme is widely regarded as one of the most ambitious reform agendas in recent Australian history. Internationally, it is part of a growing trend towards ‘personalised’ care, where individuals have more say in the design and type of supports they receive from government (Needham, 2010). While the NDIS promises to improve the lives of more than 400 000 Australians with a disability and their families (Productivity Commission, 2011), the scheme has been marred by a range of implementation challenges (ANAO, 2016; Carey et al., 2017a, 2017b; Productivity Commission, 2017). In particular, there has been much concern over thin markets and market gaps (Carey et al., 2017a; Joint Standing Com¬mittee on the NDIS, 2018; NDIA, 2016a; Productivity Commission, 2017, 2011). Under the choice-of-provider model adopted by the NDIS implementers, meaningful choice and control for participants depends on local ‘market structure,’. That is, the availability of multiple, competing providers. Market deficiencies, such as ‘thin’ markets and market gaps, therefore threaten the public policy goal of increasing choice and control for people with disability (Carey et al., 2017c). More broadly, they present challenges for equity; individuals in particular geographic areas or with less common needs may receive poor quality services or no service at all (Carey et al., 2017c). In response to growing concerns over the development of markets within the NDIS, key bodies such as the Productivity Commission and the National Disability Insurance Agency (NDIA) have begun discussing the need for ‘market stewardship’ (NDIA, 2016a; Productivity Commission, 2017). Market stewardship broadly refers to efforts to address market deficien-cies, such as thin markets, market gaps or other market failures, and is also known as market shaping (Carey et al., 2017a; Gash et al., 2013). While the need for market stewardship is widely recognised, in the scheme design it is clearly envisioned that the National Disability Insurance Agency (NDIA) will only intervene when it can be demonstrated that market failure has occurred (Productivity Commission, 2011). This poses difficult questions about how the NDIA can detect market deficiencies and what strategies it can use to address them. It also means the NDIA must attempt market stewardship before commissioning services to address market gaps. In this paper we draw together the international literature on effective quasi-market interventions in order to shed light on this problem. We analyse interventions that have been Authors: Eleanor Malbon, Research Fellow, Centre for Social Impact, University