Focus on disability: Cost - benefit Analysis of De-institutionalisation
Sunday, February 22, 2009
O`Neil, D. (1977), examined the costs and benefits of implementing Section 504 of the 1973 Rehabilitation Act.
The Act prohibits discrimination against persons with disabilities, and advocate for more programmes in accessibility, plus the provision of elementary and secondary education. In all cases, results showed that pecuniary benefits provide substantial offsets to the pecuniary costs involved. Even if non-pecuniary benefits are excluded, the cost-benefit results favour the implementation of the regulation. Annual gross cost increase is estimated at around $1.3 to 4.8 billion.
The cost of accessibility programmes and complying with the reasonable accommodation requirement would be less than $100 million annually. Pecuniary costs would be only slightly higher than the pecuniary benefits. However, the analysis is criticised by its exclusion of transfer payments, distribution effects, administrative costs, and costs and benefits of existing law.
A study on the expected benefits from non-handicapping design revealed the two categories of benefits. Tangible benefits, that is those that can be expressed in dollars and cents and so-called intangible benefits which are more difficult, if not impossible, to quantify. Among tangible benefits was the reduction in accidents, their related costs in terms of health services and loss of production.
The reasoning is that accessible environments are also safe environments (see Wrightson and Pope). Examples for safe environment are ramps rather than steps, elevators instead of staircases. According to the World Health Organization (1987) "accidents cause more deaths than any single illness, except cancer and cardiovascular disease". The number of accidents due to stairs and the associated costs to society can be and has been estimated. Another tangible benefit was the increase in housing quality that most access features entail. For example, elevators, wider doors and hallways, kitchens and bathrooms are also quality increasing features that the housing market values in the form of higher rent or property prices.
Among other tangible benefits is the decreased demand for institutional residential living on the part of many older persons who often are forced to leave their own inaccessible dwellings and move to nursing homes or old age homes. Given an accessible environment in their previous home, many of them were strongly believe to be able to manage longer by themselves and stay out of institutions. In 1993 Dunn refers, for example, to a study, which found that 50 per cent of the applicants to a residential centre for the aged in Boston were capable of functioning in the community with appropriate supports and accessible housing.
In some countries the elderly and persons with disabilities are eligible to use public home help or personal assistance services. An accessible environment reduced the need for such services with savings to the public as a result. In places where such services are provided, not by the state, but by the family, a non-handicapping environment results in less work for the relatives; often the daughters or wives who will have better opportunities on the labour market outside the home that resulted in higher production and gains to the national economy. Other benefits are more difficult to quantify such as the improvement in persons with disabilities freedom of movement and social mobility. With non-handicapping environments more persons with disabilities can educate themselves and enter the labour market.
Investigations into intangible costs of handicapping environments are not only hard, but equally challenging, especially when it comes to reporting since they have to leave out many factors that are impossible to quantify, but are decisive, nevertheless. Some of the most important costs of handicapping environments fall in this category.
Briefly, some of the social costs of inaccessible environments are as follows:
1. Inaccessible environments not only discriminate against persons with disabilities in explicit manners, they also affect them in more subtle ways. For example, it makes them both helpless and dependent on other peoples.
2. For the people around them and even for persons with disabilities themselves it is not always clear that the problem is not within them, is not because they are incompetent and passive, but because architects, planners and politicians failed them for equal rights and equal opportunities.
Cost comparisons between institutional and community living for older persons and persons with disabilities were used to estimate the benefits of renovating existing buildings and removing architectural barriers. The analysis contained case studies of three types of residential structures: high-rise apartments, garden apartments, and single-family homes. Only easily measurable economic costs and benefits accruing to individuals persons with disabilities were included.
Cost estimates refer to bringing up the structures to the ANSI standard. The estimated benefits were the market value of personal assistance services that persons with disabilities are now able to provide for themselves due to the absence of architectural barriers. The findings are, renovating housing without barriers yields benefits which amount to 13 to 22 times the level of the renovation costs.
In a comparative study of community versus institutionalisation, Murphy and Datel (1992; see also 57) projected the costs and benefits for 52 mentally ill and mentally retarded patients who were placed in the community from state institutions. The cost for the community care included housing and subsistence, as well as the cost of community treatment.
Benefits included the cost saving of not having to provide institutional care and the wages/fringe benefits were subjected for present value (a 0.08 discount rate was used) and inflation. Murphy and Datel´s results were organised in term of 12 patient categories. Their findings indicated that the 10-year projected benefits exceeded 10-year projected cost of community care, yielding benefit/cost ratios ranging from 0.99 to 11.86. The average ratio was substantially greater than 1, indicating that the community care was superior.
Murphy and Datel´s (192) study, although it considered a broader array of benefits and costs, than most CBA studies and used present value and inflation adjustment procedures, is alleged to have some methodological problems. For example, although it was considered that there are some psychological benefits to patients and their families, and data on such findings as marriage, form of appearance, mobility in the community, and employment were presented, the data was not used in the benefit/cost ratios.
Valuing such benefits is admittedly difficult, but the manner in which Murphy and Datel´s analysis was presented, may underestimate therapy's benefits. Another problem with the study that limits its validity is that patients who refused community placement were not included in the analysis.
These individuals were considered treatment failures and excluded from the analysis. If a significant number of these patients returned to the institution, the criticism continues, costs of establishing them in the community ("set up" costs) and of readmitting them to institutions should be incorporated in the CBA. The study also doesn't consider ratios for an alternative program.
Author: By Muhammed Yahya Bah