Britain’s system for paying for long-term care is unfair and incoherent, according to a discussion paper commissioned by the Joseph Rowntree Foundation. It calls for a national debate on how better to share the cost between the state and private individuals, in order to meet the growing care needs of an ageing population. With the number of over-80s set to double in the next 30 years, people of all ages need reassurance that they will be able to get good quality care when they need it, and will not have to impoverish themselves in the process.

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The paper argues that the present system is unsustainable because it provides neither a clear-cut set of entitlements according to how much care people need, nor a well-accepted set of rules about how much they should contribute according to ability to pay. Other countries such as Germany and Japan have in recent years produced much more coherent systems for assessing needs and sharing costs.

Options for a reformed system, set out for discussion, include:

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Improving the system that helps pay for residential and nursing care according to an older person’s diagnosed condition. At present, some people get all costs paid by the NHS and others receive very little, even though they might face similar-sized care bills. A particular anomaly is that some people with dementia who need large amounts of personal assistance with daily tasks may receive little or nothing because they do not require nursing.

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Limiting the extent to which people are required to use the proceeds of selling their homes before they are eligible for local authority help with care costs. Raising the threshold for such help from £20,500 to £100,000 would mean that, even in a worst-case scenario, someone selling an average-priced home would not have to spend more than half the proceeds on paying for residential care. This would create a more balanced sharing of costs between individuals and the state.

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Giving a better deal to those on low incomes, who presently have to give up almost all of their pensions before getting local authority help for residential care. The £18.80 a week they keep in pocket money undermines their dignity as independent adults, and could be doubled for a relatively modest public cost of £240 million.

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The paper points out that a simpler and more balanced approach to sharing the cost of care would be in line with developments in other countries. Japan, for example, has introduced a national assessment system that calculates how much care each individual requires, and covers this through a state insurance system that requires everyone to pay 10 per cent of their care costs.

In 1995 Germany extended its social insurance coverage to pay for long-term care, and uses a uniform assessment to determine everyone’s entitlement. People have an option to take this entitlement as residential care, home care services or cash. This system acknowledges that most care takes place in families, and the cash payment, although lower in value than the services on offer, is a popular option.

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The report’s author, JRF Special Adviser Donald Hirsch, said: « In the next 50 years we will have to spend about four times as much in real terms on long-term care as we do now. If we keep our present system of public funding, most of the increase will fall on individuals, many of whom will find it difficult to pay.

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« But before we can raise the extra public money that is needed, we need a system that is fair and clear to users. If we can create such a system, people are likely to be more willing to contribute the extra tax or national insurance – amounting to perhaps half a percent of national income – needed to avoid an excessive burden on families in terms of financial and direct caring commitments. The private contribution will also grow, and again we need a system under which such contributions are levied on a basis seen to be fair. »

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Sir Christopher Kelly, former Permanent Secretary at the Department of Health, who chairs the group advising the Foundation on long-term care funding, said: « We need to build a new consensus on how we pay for long-term care, and this discussion paper is a first step. One way or another, we will have to pay the growing care bill: if we avoid raising more public resources the burden will fall on hard-pressed families.

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« But, as this report shows, the present system is full of anomalies and is extremely hard to understand even for the professionals who work in it, let alone for individuals. This report gives some examples of possible policy changes, but more importantly it puts the case for change, identifying some key challenges which we cannot duck out of. As with pensions, if we delay for too long in confronting the realities of an ageing population, it will become much more painful to make the necessary changes than if we act now. »

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Note to Editors

Facing the cost of long-term care: Towards a sustainable funding system by Donald Hirsch, which draws on the work of the JRF’s Long-term Care Advisory Group, is published by the Joseph Rowntree Foundation and available from York Publishing Services, 64 Hallfield Road, Layerthorpe, York YO31 7ZQ, price £9.95 plus £2 p&p.

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Read the two-page summary (PDF, 57KB)

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The Joseph Rowntree Foundation is a charity spending £9 million a year on research and policy development work that seeks to understand the underlying causes of social problems and explore ways of overcoming them.

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