All of us who live long enough face the very considerable costs of social care if we need it in old age. Care home fees amount to £470 a week on average (£24,500 a year), slightly more than the average wage, while nursing home care can cost £665 a week (£34,600 a year). Very few people can afford that for long. Government estimates that a 65-year old can expect to need social care costing £30,000 in their retirement, and about one in five will need care costing more than £50,000. So who at present pays this? About 40% of the near-half million care home residents are obliged to pay these sums because their income is deemed too high to merit means-tested help (i.e. the combined value of their savings, stocks and shares, and home is over £23,500). The result if that most people can only meet the cost of the fees by selling their home, which is often much resented by the elderly person’s family. To meet this problem the Government’s Green Paper, published today, proposes 3 options. Significantly, however, it excludes a 4th which certainly ought to be considered.

Option 1 is a partnership idea, with the State and the elderly person sharing the costs, the government paying between a quarter and a third or more for people on low incomes. Option 2 is an insurance approach, with the government again paying a quarter to a third, but individuals then pay £20-25,000 to cover themselves against the remaining care costs. Option 3 is a compulsory State insurance scheme by which individuals who can afford it pay between £17-20,000 in return for receiving free care. Two other options were noted but rejected out of hand: option 4 whereby everyone pays for themselves, and option 5 whereby the costs of care are fully funded out of taxes. These were seen as the ‘extreme’ options, with option 4 only being put forward as a non-starter (it would leave too many unable to afford any care) in order to eliminate option 5 as an equally unfeasible proposal (on the grounds that it would put too heavy a burden on people of working age).
Whatever option is chosen is a big issue because the number of people expected to require care and support is projected to rise by 1.7million by 2025, only a decade and a half away. Within that period the number of persons over 75 with dementia is also estimated to double. Already about half of pensioners pay at least £25,000 for end-of-life care, and some even pay as much as £200,000. So the Government’s criteria are a scheme which will ensure good-quality care in old age for all, without involving anyone in unreasonable costs, but avoiding placing any burden on people of working age. That’s why they were anxious to exclude option 5 by linking it with option 4 which they knew nobody would accept, except the very rich.
But option 5 may well offer the fairest option, based like the funding of the NHS on an implicit contract between the generations. As a State-insured scheme everyone would be equally covered, with payments made at very low levels throughout working life and nobody faced with very large capital pay-outs as they approach old age. It would certainly avoid the real possibility under the Government’s options 2 and 3 that individuals pay out £17-25,000 to protect themselves against future care costs, but then end up not needing care (a fifth of individuals need only £1,000 worth of care in retirement). But the Government, with its bias in favour of privatised arrangements, is ideologically opposed to State insurance schemes, even though that has always been the model for the NHS, the most popular institution in Britain.

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