Actuarial Profession, Staple Inn Hall, High Holborn, London, WC1V 7QJ, 16:00, 10 November 2009

Supported by the Nuffield Foundation

It has finally happened. After many years in the political wilderness, the issue of long-term care funding has entered the mainstream of political debate. Despite the global recession and ‘credit crunch’, it is increasingly recognised that one of the biggest challenges confronting the UK remains how to best fund long-term care for older people.

In February 2008, the ILC-UK published “A National Care Fund for Long-term Care”. This report proposed a state-sponsored insurance fund to pool the risk of needing care for the post-retirement phase, into which individuals with sufficient means would contribute whether as a lump-sum at 65, through income payments or as a charge on their estate.

July 2009 saw the publication of the Government’s Green Paper on social care: “Shaping the Future of Care Together“. This ambitious and far-reaching document sets out a vision for a ‘National Care Service’ with reforms proposed across social care delivery, organisation and the funding of older people’s long-term care.

The Green Paper set out three different options regarding care funding, but which exclude consideration of the ‘hotel costs’ of residential care. The first ‘partnership’ model continues the current system of means-tested co-payment state support, but with disability benefits reallocated via the proposed ‘National Care Service’ and levels of support more precisely proportional to need.

The second and third options both propose state-sponsored insurance schemes for the retirement phase with individuals given full flexibility in when and how to pay, including lump-sums paid on retirement or as a charge on their estate. One option would be mandatory, which would ensure maximum coverage and enable progressive contributions, but would pose a political challenge. The other option proposes a voluntary approach to insurance, together with the possibility of individuals using a private sector market for long-term care insurance products, rather than a state-sponsored insurance fund.

However, in recent weeks, this agenda has taken a surprising turn with the Government announcing a policy of free personal care in the home for individuals with the ‘highest needs’.

Days later, the Conservative Party proposed a voluntary insurance scheme: individuals would pay an £8000 lump-sum at 65 to insure against all potential residential care costs, albeit ignoring the cost of personal care in the home. The Conservatives say this insurance could be operated by existing private-sector insurers using branded products.

This debate explored the questions:

  • Should the state adopt a mandatory or voluntary approach to insurance for long-term care?
  • Should insurance be left to a private sector market or organised by the state? What are the likely benefits of each approach, such as levels of take-up?
  • Should insurance schemes for long-term care focus on personal care, residential care, or both?
  • What are the trade-offs between a national and locally organised system of care funding?
  • How can means-testing eventually be eliminated from the long-term care funding system so that everyone has an incentive to save for retirement?
  • What are the opportunities and pitfalls associated with long-term care funding becoming a mainstream political issue?

Speakers/ Panel included:

  • Baroness Sally Greengross, Chief Executive, ILC-UK;
  • Ian Sissons, Actuary, Munich Re;
  • James Lloyd, Senior Research Fellow, Social Market Foundation and author of “A National Care Fund for Long-term Care”;
  • Professor Julien Forder, University of Kent and co-author of the Wanless social care review: “Securing good care for older people: Taking a long-term view”;
  • Stephen Burke, Chief Executive, Counsel and Care; and
  • Sue Regan, Chief Executive, Resolution Foundation.

A copy of the following presentations can be downloaded: