This cap on the cost of care

Under the plan, which could be announced next week, elderly and disabled adults will be given state protection against unlimited care home fees for the first time.

But it will not be implemented before 2015 and will still require individuals to pay care bills up to the level of the cap.

It may make little difference to many families, it is feared.

Pensioners will be told to buy private insurance to cover them up to the new limit, expected to be between £65,000 and £75,000. Individuals could be offered the choice of taking a lower lump sum when they retire, and converting the rest into care protection insurance.

Dunno if it\’s the right number but the principle seems sound enough. It\’s social insurance, pure and simple.

As with the old age pension itself.

There\’s some amount that it\’s rational to try and save during your working lifetime to pay for retirement. We all certainly hope to get there even if some of us don\’t make it. And that rational amount is to save enough to live the average lifespan. And some (50% actually) will live longer than this, longer than the rational amount that they should have saved. Having a societal insurance mechanism for the risk of outliving your savings seems reasonable enough.

So it is with care: there\’s a rational enough amount to save to pay for things. But inevitably some will require vastly more than this: those who spend a decade with Alzheimer\’s say. Others will be entirely hale and hearty until the stroke or heart attack that kills them. I don\’t see any reason at all why there shouldn\’t be some insistence that we all pay that amount that we should rationally have saved. Yes, even if, especially if, it means selling the house. But to have societal insurance to support the outliers, the victims of simply bad luck in the mode and method of their dying.

Whether £75k is the right amount I\’ve no idea. But the thought that only one in 8, one in 10 maybe, will be affected by that cap tends to suggest that it\’s around and about the right sort of sum. It shouldn\’t be £10k and so near everyone gets the free care. And it shouldn\’t be £1 million so that about three people get it.

Insurance: that\’s simply what it is, social insurance.

9 comments on “This cap on the cost of care

  1. Agreed – there’s a further benefit to changing this system in that it should remove local authorities from organising and administering provision of adult social care.

    If you (and I’m sure you’ve better things to do) were to glimpse at a local council budget – say Manchester – you’ll see that central goverment grant is entirely directed to provision of care. Remove the need to provide care through an insurance system and local authorities should be more-or-less independent of central government financing.

  2. Sorry, but I simply can’t see how the financial side of this is going to work.
    I’ve been trying to manage the care costs of my parents for the past year. My father’s alone would hit that cap in a couple of years. Yes, it’d be really great if the State was going to step in & preserve my inheritance but he never would have contributed to any of the fund that would do it. Which is why he was able to accumulate the wealth we’re now spending. So where’s the money to come from? Some of course will come from the taxes he’s now paying, the level of which is why there’s a sizeable gap between income & outgoings right now. (Which does ask a question. Why are we taxing the income streams the elderly are using to finance their own care?) But essentially we’ll just be digging ourselves into the same hole that was started back when my great grandparents were still alive. Drawing an old age pension they hadn’t contributed to. Eventually we’re going to hit the bottom where the last generation can’t afford all the accumulated obligations.

  3. A so-called “partnership plan” has been adopted in a growing number of U.S. States under their Medicaid plans.

    In such “partnership” plans, the individual purchases private long-term care insurance that pays first and must be exhausted before the individual can qualify for Medicaid benefits.

    If or when the private insurance runs out and Medicaid begins to pick up the long-term care cost, Medicaid permits long-term care recipients to keep their primary residence and certain other assets.

    Before Partnership programs existed, many people needing long-term care qualified for Medicaid by “spending down” their assets and selling their homes – – i.e., they impoverished themselves.

    The Partnership programs clearly do not affect the truly poor. So why do they exist? Because in recent years, many non-poor Americans faced with catastrophic long-term care expenses have taken the “spend-down” approach in order to receive Medicaid benefits. This transferred a huge financial burden to Medicaid.

    The partnership plans alleviate that burden with respect to people who are able and willing to purchase the private insurance.

  4. @bloke:
    “I’ve been trying to manage the care costs of my parents for the past year. My father’s alone would hit that cap in a couple of years.” The Tel suggests that the new rule would cover only the “care” part of the fees, not the hotel parts.

    “Eventually we’re going to hit the bottom where the last generation can’t afford all the accumulated obligations.” Yup, that’s probably inevitable in a democracy with a universal franchise and a welfare state.

  5. You seem to ignore the social insurance that already exists – the state picks up all the bills after you’ve run your spendable cash down to £20-oddk and, above that level up to something quite large there’s a sliding scale. Spendable cash does not include your house if your partner is still living in it. You only have to sell your house if your husband/wife is dead or also in care.
    Dilnot’s proposal means cancelling a small or possibly very large debt in order to hand over as an inheritance not just the net assets of the parent but most of the gross assets. Also it pays no heed to the austerity or luxury of the “care” provided.
    Much of the cost will be borne from taxes paid by people who do not have £20k in spare cash. I want to leave some cash to my kids but I shall not demand that the taxpayer pays my bills at the Ritz when I become infirm in order that I may do so.

  6. bloke in spain – “Eventually we’re going to hit the bottom where the last generation can’t afford all the accumulated obligations.”

    Have you met the Liverpool Care Pathway? There is an obvious way to solve this problem and I think they are consciously working their way to that end.

    Still, as De Toqueville said democracy lasts until the voters discover they can vote themselves other people’s money. We just had an entire generation of Baby Boomers do that with the savings of their parents and leaving their debts for their children.

  7. saving sounds good. But can you see what things will be like in fifty or more years time.
    Not forgetting the inevitable recessions and initiatives , reforms and sore feet.

  8. live the average lifespan. And some (50% actually) will live longer than this

    A little bit of pedantry – no, not necessarily 50%. You’re thinking of median.

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