Government Green Paper
Full Details of the New Government Green Paper on Elderly Care
Elderly people in England could be required to pay up to £20,000 to guarantee basic social care and support if they need it, under government proposals unveiled today.
The compulsory insurance scheme is one of three options for funding a new national care service, designed to end the current "cruel lottery" under which some elderly people have to sell their homes and use up most of their savings to pay for care, while others pay nothing.
Launching a consultation on the future of social care, the health secretary, Andy Burnham, told the House of Commons he wanted to create a system which was "fair, simple and affordable" to all.
He has already ruled out full state funding from general taxation, on the grounds it would place too great a burden on people of working age, and retaining the "pay for yourself" system, which is unfair to those who need years of care for conditions such as Alzheimer's.
Today he called on the public to give their views on three possible solutions:
• A "partnership" approach, under which the state would pay around a quarter to a third of the cost of basic social care and support, leaving individuals to find the remainder;
• A voluntary insurance scheme, under which the state would pay the same proportion, but would also make it easier for individuals to take out insurance - at an estimated cost of around £20,000 to £25,000 at today's prices - to cover the rest;
• Compulsory insurance for all, costing around £17,000 to £20,000 at today's prices and providing free care for all who need it.
The national care service would offer assistance with needs such as dressing, washing and moving around at home, but individuals who need to go into residential care would continue to pay the cost of accommodation and food themselves, whether they had taken out insurance or not.
However, new national arrangements would allow for bed and board costs to be deferred and paid as a lump sum after the individual's death.
The Department of Health is also consulting on whether insurance costs should be deferred until after death, paid in instalments or handed over in a single lump sum when an individual reaches retirement age.
Under all three options, those with little or no savings or assets would continue to receive free care.
At present, apart from those on low incomes or disability benefits, all elderly people are expected to pay for the full cost of social care, which can eat up all of their savings - including the equity in their home - to a threshold of £23,000.
Around 20% need care costing £1,000 or less during retirement, but 50% need more than £25,000 and 20% more than £50,000, while a few can run up bills of £200,000 or more. The average 65-year-old today can expect to need care costing £30,000 - with the burden on women averaging £40,400 and men £22,300.
Burnham said the figures contained in today's green paper, Shaping the Future of Care Together, were "indicative" but all three options could be expected to cost the state around the same as the current £14.7bn annual budget.
He said the cost of care at the end of life was "the stealthiest tax of all".
"It is a real injustice that people who have worked all their life and paid taxes all their life, if they are unlucky enough to develop a condition like Alzheimer's in later life, they get no help to deal with the implications of that condition," said Burnham.
"The way we look after our older people defines what we are as a country and I believe we can do better than we are today."
A national care service would get rid of "inequities and inconsistencies" by ensuring care needs were assessed and paid for in the same way everywhere in England and were based on personal circumstances and needs, he said.
Consultation on today's proposals will continue until November, and firm plans are expected to be published in a white paper next year, to be phased in over a number of years from 2014.
In a foreword to today's document, the prime minister, Gordon Brown, wrote: "The fact that as a nation we are now living longer is clearly a cause for celebration, but it also means that the pressures on our care and support system are greater than ever before.
"A care and support system that reflects the needs of our times and meets our rising aspirations is achievable, but only if we are prepared to rise to the challenge of radical reform."
Radical changes to the way care for elderly people is funded were outlined yesterday in a green paper that confronts the soaring costs of looking after an increasingly old and frail population.
Elderly people could be compelled to pay up to £20,000 to insure themselves against the cost of being cared for at the end of their lives. The proposals are designed to replace a system that the government describes as unjust with one that is "fair, simple and affordable for everyone".
The health secretary, Andy Burnham, said there was an urgent need to reform the structure of funding that forces some people to pay up to £200,000 for care, while others receive it free. At the moment, 50% of people pay more than £25,000 for their end-of-life care, while 20% pay more than £50,000.
Reform is needed because healthy life expectancy is not keeping pace with life expectancy. By 2026, there will be an estimated 1.7 million more adults requiring care and support in England.
"More of us are living longer - life expectancy is going up and advances in medical science mean that people with a disability are living longer. This is worth celebrating but does mean we need to radically change the way care is provided and paid for," Burnham said.
The green paper stresses that there is not enough money in the system to pay for the care people will need in the future. "If we want to meet the needs of all those who require care in the future then, as a society, we are going to need to pay more for care and support. The question is where this additional money is going to come from," it says. Three possible funding options are set out in the Shaping the Future of Care Together document, all of them conceived as national proposals, which would bring an end to the postcode lottery that sees local authorities setting out different criteria for financial support. The three options are:
• A partnership approach, which proposes that the government and the individual who needs care share the costs, with the government paying between a quarter and a third or more for people on a low income.
• An optional insurance-based model, which would also see the government paying between a quarter and a third of the costs, but would allow individuals to pay £20,000 to £25,000 to cover themselves against the remaining costs of care.
• A compulsory state insurance scheme under which everyone who can afford it pays between £17,000 and £20,000 - and receives free care in return.
Two alternative ideas were rejected: a scheme whereby everyone pays for themselves (ruled out because it would leave too many unable to afford any care), and an entirely tax-funded scheme (rejected because it places too heavy a burden on people of working age).
The government is not proposing to make new public funding available, but has proposed to end the disability living allowance for elderly people - which is not a means-tested benefit - to free up about £6.1bn that would then be returned to the budget for means-tested social care.
The threshold of £23,000 of assets beneath which individuals might receive care paid for by the state would remain at about that level, said the care services minister, Phil Hope.
Government funding and insurance payments would go only towards the cost of care, while accommodation and food would have to be met separately by individuals - stripping accommodation out of the costs of residential care homes for elderly people, which are calculated together. These costs could be deferred and charged to the individual's estate when they die.
The green paper proposes creating a national care service, which would emphasise preventing people having to go into care homes by keeping them active and offering home rehabilitation services.
Burnham appeared to apologise for the government's failure to launch this debate earlier.
"It is a difficult debate that raises difficult questions about funding. Politicians have flinched from this debate because it is difficult. The way that we look after our old people defines what we are as a country and I believe that we could do better," he said.
Age Concern and Help the Aged welcomed the green paper as an attempt to fix the "broken care system".
Michelle Mitchell, director of Help the Aged, said: "All political parties and the public must now look beyond the short-term squeeze on our national finances to agree a fairer way to pay for care."
Some Questions & Answers re the New Proposals
How expensive is long-term care?
Eye-popping. Care homes, especially nursing care, need trained staff and specialist accommodation. Today, care home fees nudge an average of £470 a week (£24,500 a year), says Age Concern/Help The Aged. It's much higher for nursing care, at £664 a week. The annual Saga Cost of Care report this year showed that care home fees vary by almost 50% across the UK, and are typically three times the average monthly mortgage payment. Selling a home to pay for fees is, unfortunately, the only way out for many.
Will the state pay if I, or my parent, have to go into a home?
Not if you live in England and have more than £23,500 (£22,500 in Wales) in "capital" - the combined value of all your assets. You'll be assessed by your local authority as fully able to meet the total cost of your care home. It's slightly different in Scotland: care is not free: instead, the Scottish state is prepared to pay for nursing and personal care costs. The bill for accommodation still has to be paid for by the individual.
In England, if you need a care home place and have less than £23,000, you'll also find yourself on a sliding scale of financial support from your local council. At its minimum, if you have less than £14,000, you'll qualify for maximum support, although you'll still have to contribute some income minus £21.90 per week for personal expenses. As a rule, if your assets are between £14,000 and £23,000, you'll pay a "capital tariff" of £1 a week for each £250.
Are there any exceptions?
Yes. A home can often be excluded for financial "counting" purposes, taking the individual well beneath the £23,500 threshold. For example, it will automatically be overlooked if a surviving partner, or other relative aged over 60, continues to live in the property.
It sounds as if those who save most get hit the hardest
Technically, yes. Plenty of middle-class families who invest/save over a working lifetime have expressed deep anger at being asked to pay for a service that is offered free to those who don't set aside any savings.
So what will change?
The Green Paper sets out three proposals: "partnership", "insurance" and "comprehensive". It has ruled out two other choices - care being 100% self-funded or being tax-funded - on respective grounds of social injustice and cost.
The first, "partnership", would see basic care and support costs shared between the individual and the government, with the latter shouldering a set percentage of the fees: between a quarter and a third of the annual bill.
Less well-off individuals could even be given more, as much as two-thirds of the costs, the paper suggests. A 65-year-old in England will need care and support that costs on average £30,000 during their retirement, it says, so an individual who got the basic offer of a third or a quarter paid for might need to pay around £20,000 or £22,500.
"Insurance" would mirror the shared costs described in the partnership deal, but also include an element of insurance paid for by the individual: this could set you back between £20,000 and £25,000, paid either in a lump sum or regular instalments; or even after death.
Finally, a "comprehensive" option instead would see everyone who can afford to pay being asked to pay between £17,000 and £20,000 over a likely working lifetime to benefit from a new "state insurance" scheme; your care home costs would then be free.
Is there anything I can do to protect my savings from being used for care home fee calculations?
There is, but a lot depends on your age and current status. Options include putting your house into "trust", splitting your savings to reduce the amount means-tested by the council, putting cash into an investment bond (exempt from mean-testing) or even deferring payment until your death, as long as the council has the funds in the meantime. It is worth visiting a specialist care fees adviser who has the CF8 qualification (a care funding qualification).