How can funding of long-term care adapt for an ageing population?
The current long-term UK funding model is unfair, not clear and unlikely to be sustainable in future. How can we improve the system?
As the population ages, demand for long-term care is growing. By 2050 there will be twice as many people aged over 85 and overall costs will increase fourfold. Present rules determining who pays for what are riddled with inconsistencies. Current spending is also too low to provide adequate service levels so, without change, older people will have to pay more from their own pockets.
In this study, Sue Collins from the Joseph Rowntree Foundation suggests the following ways forward:
- fairer and more sustainable methods of funding, including equity release, higher capital limits for care home fees, the doubling of the personal expenses allowance, free personal care for more people in nursing homes, and payment by the State of a fixed percentage of all core costs;
- practice innovations including a co-payments/social insurance scheme and a loan stock/bonds scheme.
What’s the issue?
The current long-term funding model in the United Kingdom is unfair, not clear and unlikely to be sustainable in future.
What are the problems?
- As the population ages, demand for long-term care is growing. By 2050 there will be twice as many people aged over 85 and overall costs will increase fourfold.
- Current spending is too low to provide adequate levels of services.
- Without changes, older people increasingly will have to pay more from their own pockets.
- The present system of paying for care is riddled with inconsistencies in the rules determining who pays what.
- Although the system is designed to ensure support for the worst off, older people with few assets and on low incomes often have no choice over their care or are deprived of their dignity.
- Fairer and more sustainable methods of funding, including:
- Equity release, allowing older homeowners to pay for home-based care by deferring the costs until their home is sold.
- Higher capital limits for care home fees to help those with modest assets.
- Doubling of the personal expenses allowance for people living in care homes supported by local authorities.
- Free personal care for more people in nursing homes to extend public coverage of care costs.
- Payment by the State of a fixed percentage of all core costs, with individual co-payments funding the rest. This would radically redistribute public resources spent on long-term care.
Pooled risk makes it possible to support those least able to afford care home charges. Through its care provision, the JRF demonstrates how some of these solutions work in practice:
- Co-payments/Social insurance scheme - residents pay a monthly fee established at the outset according to their age.
- Loan stock/Bonds scheme - new residents invest in the scheme, giving them to a rebate on their residential or nursing care fee. A bursary fund is generated from excess interest earned, which is used to supplement the fees of residents in receipt of State support.