While I was investigating home care in England last year, my family in America was receiving home care. My stepfather, in his 80s, had a range of health conditions which meant he was no longer able to look after himself. He became increasingly frail. My mother, who is a small business owner, was not able to give up work to look after him. She didn’t have to. While still acting as a carer, she had care coverage while she was at work. When his condition declined further and he made the decision that he didn’t want any life prolonging treatments, he had specialist end-of-life care at home until he no longer required a care package. And how much did this cost? They spent very, very little out-of-pocket during his time of need. Not only that, but they spent very little emotional energy arranging care at a time when they needed their psychological resources for other things.
They’d taken out care insurance which not only saved them from a big financial hit, but also kept my mom economically and socially active and my stepfather cared-for and comfortable until he died. And care was largely arranged for them. Sadly, that’s not really an option available to families here. Perhaps in the American context, where people know that they have to cover their own care costs, it’s easier to promote a product like that. In the UK, of course, there’s still a lot of confusion about who pays and how much for care, with many people still assuming that social care is part of the NHS funding remit (and confusingly sometimes it is). Of course, not everyone will need care, or need it for long, but as we live longer, more of us probably will.
The development of pensions freedoms, it was hoped, would stimulate the market for care insurance products in the UK as well as other financial products to support an independent and comfortable old age. While there has been some stimulation of different financial options, there still isn’t a sufficiently well-developed mass-market approach to providing financial advice – according to the recently published At a cross-roads: understanding the future likelihood of low incomes in old age a white Paper from the International Longevity Centre.
Worse than the lack of advice is the lack of products marketed to people of working age who are planning ahead for the cost of care. The BBC surveyed leading insurance companies earlier this year and found that none of them had products planned. The insurance companies cited lack of consumer interest and demand for such products.
The Dilnot reforms were meant to provide a safety net of sorts to those who will have to pay for their own care. Raising the asset disregard to £118,000 and capping the cost of expenditure by to £72,000 would mean that more people would qualify for at least some financial support if they needed care. But the £72K spending cap really wasn’t as good as it sounded; it was complicated, you had to get the clock officially started, only certain money counted and a lot of people wouldn’t live long enough to reach the cap. The asset disregard would have helped many more people, but would have had a significant impact on local authority expenditure – particularly as the spending cost only impacted on care costs, whereas those who fell below the £118K wealth threshold would have been eligible for at least some support on care and hotel costs.
But Dilnot has now been kicked into the long grass of a 2020 start with rumour and speculation that we may never see Dilnot reforms implemented at all.
There are many reasons that delaying Dilnot reforms may be a reasonable choice, at least for now. Councils already face a funding gap for social care on the current rules. The LGA asserts the “the funding gap is widening by £700m a year and is set to be at least £4.3bn by 2020. Postponing the Dilnot changes will save almost £3bn by 2020, including an estimated £590m in 2016-17,” according to The Guardian.
There was also some nervousness about the ability of councils to implement the advice, support and advocacy services that went along with Dilnot reforms. Individuals would have had the right to get advice and support, including having the council arrange care for them. Councils have already reduced social care budgets and more than half of projected budgets cuts are planned to come out of social care as other budgets have already taken big hits, and this might have been an unaffordable additional service. Councils had been allocated money for Care Act Dilnot reform implementation, and are they are now urging ministers not to claw that money back, but instead use it to shore up the existing system.
Having the council arrange your care meant taking advantage of the local authority purchasing power. But there were fears, too that this would destabilise local care markets, because it would expose and erode the cross-subsidies that currently exist from self-funders paying higher care fees than local authority clients. The County Councils Network recently published a report County Care Markets: Market Sustainability and the Care Act (available on their website) which makes sobering reading.
So while there were bound to be implementation issues, delaying Dilnot still means that individuals of even modest wealth can be left with catastrophic care costs without a fall back and without necessarily a good source of support and advice. That has to change. And, of course, people being unable to or reluctant to arrange care because of the cost then becomes a drain on the NHS. According to Age UK, the numbers of older people stuck in hospital because of lack of social care in the community is rising by 19% a year. While not the sole cause of such rises, staying in hospital by dragging out decision making to avoid overwhelming choices around care and finances when you already aren’t very well is a rational choice.
Councils have been doing some great work on debt advocacy and financial wellbeing and planning ahead for old age as well as making provision for potential care costs could certainly come into that. And, of course, councils also do provide advice and information provision around care and have a duty to do so under the Care Act. However, there is a for role national government to nurture financial products and markets if British consumers have not yet awoken to the need for them.
I am not an expert on financial products (though I’d be happy to hear from those who are), but here are some of the ideas that I’ve heard that seem to make sense and need investigating:
- A modified life insurance product. Payouts for those who need care and payouts on death if you don’t.
- Straight up care insurance. Perhaps subsidised based on need. Perhaps nation-wde insurance pools to spread risk.
- A compulsory national insurance product, earmarked for care.
- An enhanced pensions product – additional payment and perhaps government matching or government support for employer contributions.
- Tax-deferred (or exempt) care savings accounts or care bonds These could even be shared inter-generationally with children both contributing to accounts pre-tax and inheriting remainders for their own potential care needs.
There is an urgent need to address these issues. The wrong time to make choices about care is at the point when you need care. With a mounting care bill we cannot afford to provide everyone care from the public purse. We have to find new ways for people to pay for their own care while they are still economically active. It’s not enough to simply shore up a system which leaves so many without palatable choices.
We have just published a briefing on the Care Act and the delays in the second part of implementation which is available to LGiU members.