The future of social care: the magic of averages
Insurance models of social care funding have long been mooted by political leaders – but will Boris Johnson make it a reality?
Addressing Conservative Party Conference last week, Boris Johnson told viewers his government “will fix the injustice of care home funding, bringing the magic of averages to the rescue of millions”; a reference to his great hero, Winston Churchill, who referred to insurance as the “magic of averages”.
This has caused many to infer that Johnson is considering a National Insurance style system to pay for soaring care home costs.
Whatever his government’s proposals, many will consider them long overdue. Political leaders of all parties have long pledged to create a system which would fix social care funding, but the problems remain. The Covid-19 pandemic compounded the crisis and shone a harsh spotlight onto the endemic problems within the system. However, ministers were forced into crisis management and conversations around long term funding reform were paused.
It has since been revealed that in January and February 2020, just before lockdown, ministers were considering a personal cap on care costs and introducing a specific social care tax. There was said to have been 90% agreement on revisiting Andrew Dilnot’s recommendations. The 2011 Dilnot report suggested there should be a cap on the amount which anyone should pay for their care in their lifetime, fixing the figure between £25,000 and £50,000. It also recommended that no matter what your means were, once you had reached the cap, you did not have to spend any more on care – though you could do so if you wished to.
It contained other recommendations around increasing the £23,250 asset limit at which the social care taper kicked in to £100,000, and for the taper to apply to those assets between £14,250 and £100,000.
This was designed to ensure that people did not need to sell their house in order to fund their residential care.
Boris Johnson would not be the first Prime Minister to attempt to take forward some of these recommendations. On the back of the Dilnot report, Theresa May formulated her own plans to secure the future funding for social care. Her proposal, which meant that people needing social care at home would have to pay for it until the value of their assets – including their home – reached a floor of £100,000, were abandoned in the 2017 election campaign after acquiring the nickname the “Dementia Tax.”
Similarly, David Cameron in 2014 proposed a social care costs cap of £72,000. Minsters revealed that they had expected the insurance industry to introduce products to ensure people would not be forced to find £72,000 themselves.
Insurers, though, proved reluctant to enter the market.
However, ideas for an insurance-based system for social care have not gone away and remained a hot topic for discussion at the recent Conservative Party Conference.
Former work and pensions secretary, Damian Green MP, presented to several fringe sessions his proposals for an insurance-based system modelled on the state pension.
Green explained that the state would provide a basic level of care, as it did with the state pension, and citizens would be encouraged to take out insurance policies to supplement it.
Green echoed the concerns of the former Prime Minister, David Cameron, that the insurance industry needed encouragement to enter the market.
He said that because there were a number of “really, really expensive people” who needed care up and above the norm, there needed to be a cap on the amount of insurance company contributions, or else there would not be a market for provision.
In his report published by the Centre for Policy Studies, Green suggested that the Government should be spending an addition £2.5bn per year on social care.
He argued that the funding gap could be plugged by taxing the winter fuel allowance and finding funding in the comprehensive spending review.
By referring to the "magic of averages” Johnson has made the clearest signal yet that the Government will be looking at an insurance type system.
In encouraging more youthful generations to invest in their care in later life, Johnson is heeding yet more Churchillian advice that there is in the act of preparing, the moment you start caring.
Dean Sabri is Dods Senior Political Consultant and Team Leader for Health, Social Care and Welfare