Many experts now believe that implementation of the long-promised cap against catastrophic social care costs, that was recently delayed four years to April 2020, will never happen. Local governments indicated that before new money was spent on the so-called “Dilnot cap” with its 5-year £6 billion price tag, their social care budgets first needed to be “shored up.” Moreover, the private insurance market that was expected to develop never materialized.
Although disappointing to long-term care users and their families looking for relief from catastrophic expenditures, delay of the Dilnot cap gives us time to rethink how best to spend new money on social care. Here are a couple of public policy objectives that might help guide this process of rethinking:
- A normal risk. The most important objective is to treat long-term care as a normal risk of living and of growing old. There is no defensible reason why the costs of long-term care shouldn’t be treated like the costs of medical care. Indeed, the NHS already plays a role in funding part of a nursing home stay. The need for long-term care should not cause severe financial distress to individuals and their families. Social insurance strategies, where everyone pays in and everyone is eligible, should play a larger role in helping users avoid catastrophic out-of-pocket spending on long-term care.
The main drawback of shifting to a non-means-tested strategy is its cost. Though the overall costs are unlikely to change significantly, they will be shifted from the private to the public sector. Any increase in spending associated with broader coverage through public insurance would have to be considered in explicit eligibility and other design criteria. A secondary benefit to moving in this direction is that, by placing medical and social care financing under the NHS umbrella, considerable strength will be added to integrated care efforts.
- A role for private insurance. Design of a public insurance system should take into account how it might work in conjunction with private insurance schemes. The private insurance schemes would need to extend beyond the current immediate-need annuities offered today. Strategies to make private insurance policies more affordable (through tax advantages, supplements, encouraging group purchase or public re-insurance offerings) and coverage more predictable are key factors. The proposed Dilnot cap, for example, where public coverage was to be available only after a spending cap was reached, should have made pricing easier for private insurance products offering cover up to the cap. Although the market can and should grow, and link ins with other savings vehicles explored, private insurance is likely to play only a modest role in financing.
- Targeting the most in need. It is worthwhile to preserve the laudable goal of the Dilnot cap of targeting the most in need. So, when considering various options for how to move from a means-tested to a social insurance strategy, measures of “target efficiency” should be considered. That is, what percentage of expenditures would go to people who otherwise would have incurred catastrophic out of pocket expenditures.
- Delivery system considerations. Finally, I’d like to offer a couple brief comments about the way a reformed system should be designed. First, local governments with their operational experience in managing the system should continue to play design, administrative, and perhaps partial financing roles in a reformed system. Second, people overwhelmingly prefer staying in their home over moving into a nursing home or care home. A payment and delivery system that balances spending on home care with spending on institutional care is highly desirable.
Whether the implementation schedule for Dilnot cap is or is not still on, there are useful discussions that can be had around what we want our future long-term care financing system to look like and these public policy objectives might be a good place to start.
Reference:
"Sharing the Burden: Strategies for Public and Private Long-Term Care Insurance" (1994) by Joshua M. Wiener, Laurel Hixon Illston and Raymond J. Hanley
About the Author
Dr Laurel Hixon brings over two decades of health policy and applied health care research experience to OIPA. She has had academic research appointments in both the U.S. and Australia. She has written extensively about health and long-term care financing and reform
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