England & Wales Health and social care

A Better Insurance Market Would Help Meet Rising Costs of Adult Social Care


A group of more than 60 government advisors, charity directors and independent experts have signed a letter to yesterday’ Daily Telegraph demanding radical reform to care and home help services. They urged the government to build a cross party consensus and to seize the opportunity presented by the forthcoming social care white paper to deliver a care system fit for the future.

There’s no doubt that the funding of adult social care is one of the most pressing political issues of our time. Life expectancy in the developed world rises by about two years every decade (equivalent to your death receding by about five hours every day). As we live longer, more and more of us will spend longer periods of our old age needing significant amounts of care. Last summer, the Dilnot commission found that people were frightened of this prospect because they did not know what costs they would face.

Press coverage of this issue and today’s letter to the Telegraph tends naturally enough to focus on the national picture and on the costs of care as a proportion of national spend, but in reality this issue is most pressing for local government for whom adult social care is their biggest area of expenditure by far: about £14bn a year.

Councils directly fund about 59% of those in care but they also end up funding about 25% of those who initially fund their own care once they deplete their resources and fall back on the state.Independent Ageing, a recent report by the LGiU found that councils were largely unaware of this ‘hidden’ cost estimated by insurers Partnership to be up to a billion pounds a year nationally.

Dilnot argued that no one should pay more than £35,000 for care bills during their lifetime. The government should implement this suggestion. This will not avoid people having to apply substantial ‘hotel costs’, but introducing a cap will allow an insurance market to expand to fund care home places, pooling the risk among a wider group and reducing the numbers forced to sell their homes.

A better market for insurance to meet care costs is exactly what LGiU argued for in Independent Ageing but this relies on people receiving advice from appropriately qualified independent advisors. Local authorities would be helping their citizens and their own financial interests if they connected people with such advice: but at present only 3% of them do so.

It remains to be seen how the government responds to Dilnot and whether the forthcoming white paper constitutes the “urgent, fundamental and lasting reform” the authors of today’s letter call for.

Irrespective of the national response, however, there are already simple, low cost steps that can be taken at a local level to ensure that people get advice on how to manage their finances and reduce the chances of them falling back on state funded care. That’s a financial issue of course, but it’s also, most crucially, a way of giving people self-determination and dignity in the old age that’s an increasingly common destiny for us all.