Is the current longterm care policy in the UK sustainable

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Is the current long-term care policy in the UK
sustainable?

• David Bell
• University of Stirling

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Long-Term Care in the UK

• Demand
• Supply
• Funding
• Solutions?

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Proportion of Population Aged 80 2005-2050
Source UN World Population Prospects 2004
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UK Population Pyramid 2004 and 2044
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Population Pyramid Eileen Siar and Rural
Scotland in 2024
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Projected Change in Single Adult Households
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Heads of Household Aged 65 Living Alone as
Percent of All Households
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Summarising demand

• UK internationally middle-of-the-road
• But varied spatial impact, due to age-specific
  migration
• Even under optimistic health assumptions demand
  will increase sharply in future
  
• What about the quality of care demanded?
• Will the baby-boomers be different?

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Supply - Providers

• Health Service
• Free at the point of delivery for health care
• Local Authorities
• Means tested charges for social care
• Suppliers of care homes and care at home
• Voluntary Organisations
• Provide care at home and care homes
• Services often commissioned by local authorities
• Private Sector
• Mainly operate in care home market (more modern
  capital stock than local authorities or voluntary
  sector)
• Now expanding into care at home
• Also provide financial products to insure against
  care needs
• Informal carers

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Health Care Provision (NHS)

• Expensive compared with other forms of care
• Health service not allowed to charge for care
• Poor quality of life
• Delayed discharge (bed blocking) problematic for
  efficient health care management
• Focus on older people dependent on the incentives
  written into the contracts agreed with primary
  care providers

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Local Authorities

• Funding allocation for older people in each local
  authority determined by central government
• Little local autonomy to influence revenue
• Responsibilities for older people lie with social
  work departments, which are also responsible for
  a range of issues concerning children and younger
  adults.
• Allocation for older people is not ring-fenced
  can be spent on other priorities or more can be
  added to the budget
• Local authorities can charge for care services
  most follow nationally agreed charging guidelines
• Operate their own care homes, but now cutting
  back on provision
• Voluntary organisations and local authorities
  employ a large number of care workers ....

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Care Assistant Working Conditions
Weekly Income
Weekly Hours
Source ASHE 2005
In a buoyant labour marketPossible role for
young old and/or immigrants?
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Care costs highly skewed
Six per cent of clients account for one third
of costs
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Weekly Cost by IoRN
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Contributions to Total Cost by IoRN
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Informal Carers

• 5.2 million informal carers in England and Wales
  (2001 Census)
• Over a million provide more than 50 hours care a
  week
• From our own research
• No reduction in informal care when formal care
  subsidised (SE/ESRC)
• Probability of provision decreases with
  education/distance (SE/ESRC)
• No evident baby-boomer effects (SE/ESRC)
• Presence of informal carer reduces local
  authority costs by 40 per week (Welsh Assembly)

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The Balance of Care

• Geriatric long-stay
• Delayed discharge highly costly
• Geriatric long-stay twice as costly as nursing
  home care
• Care homes
• Monopsonistic purchase by local authorities
• Alternative uses of land are important in
  determining profitability of usage as care home
• Care at home
• Relatively cheap
• But a minority of cases very costly
• Policy focus on shift towards care at home

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Funding Long Term Care

• Disparate sources of funding.
• Some public sector asistance means-tested, some
  not.
• Central government
• Benefits to offset costs of disability
  Attendance Allowance (not means-tested)
• Local government
• Relies on central government for 80 per cent of
  funding charging usually means-tested
• Financial sector
• Market for pre-funded LTC insurance is very weak
• Most popular is the immediate needs annuity
• Female age 80, 54,000 premium for 12,000 p.a.
  contribution to residential nursing care
• Equity release products tend to be used for
  immediate consumption or to supplement pension
• Individuals
• No incentive to save if assets (including
  housing) less than 21,000
• Most older peoples wealth held in housing assets

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Funding
Central Government
National Health Service
Grants not ring-fenced
Local Government
Taxpayer
Insurance Company
Disability-related Benefits
Commissioned Services
Private Sector
Voluntary Sector
Charges
Health Services
Care Client
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Humpty Dumpty sat on a wall .......
Services provided free at the point of delivery
by government
Health Care, Low Income
Societal
Tipping points Continuing care (England) Meal
preparation (Scotland)
Risk
Individual
Solutions
More shared risk? Wanless
Client pays most costs
Fewer clients meet hard boundaries?
Personal Care, Domiciliary Care Moderate or High
Income
Change the categories?
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Funding Social Care in the UK

• Many sources of funding
• Does it provide value for money?
• Does it provide quality care?
• Is it service led or client oriented?
• Will it be sustainable in the light of future
  demographic change?
• Lets not apply spreadsheet economics

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The Distribution of the Costs of Care
Total Annual Cost 16bn
Source Wanless Review
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Use housing assets to fund care?

• UK Housing Stock Value 3.3 trillion
• Assets exceed housing secured debt by 2.4
  trillion
• 39 per cent of homes owned with a mortgage
• 30 percent of homes owned outright
• Most of it held by older people

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Solutions?

• Assume that increased income/indirect taxes
  unacceptable ...
• Take more equity out of housing wealth
• Devote inheritance tax to long-term care
• Tax capital gains on housing
• Revitalise financial sector involvement in
  care-related products
• Offer government guarantees e.g. after 3 years
  care, government takes up the costs of care
  provision
• Offer tax relief on contributions to care
  insurance

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Solutions?

• Encourage innovation in care provision
• Have mechanisms in place to roll out good
  practice
• Support informal care?
• Cash payments/respite care
• Establish joint planning/budgeting/resource
  transfer between health service and local
  authorities
• Carefully evaluate preventative care to determine
  its potential for reducing costs
• Review housing regulations?
• Think through the policy implications of the
  drift to the countryside among older people