With a growing ageing population and concerns about the affordability of long-term care, both to the individual and the state, there is an increasing debate about how to finance care. One option is a form of private insurance to supplement the state system. We are examining how this option could work.
This project comes at a crucial time in the Government’s timetable for reforming the way long-term care is funded and delivered. A Commission on the Funding of Care and Support, chaired by Andrew Dilnot, was established and reported in July 2011.
The previous government’s Department of Health consultation paper on the financing of long-term care, from 2009, set out a number of options for reforming the care and support system. This paper included two insurance models: one option is a partnership model in which the cost of the care and support needed would be partly met by the state and partly by individuals and voluntary private insurance; the other option is compulsory social insurance for people over retirement age for all those able to pay.
This project to assess social insurance options comes at a crucial time in the reform of long term care in England.
This project, supported by the AXA Research Fund, aims to investigate how private long-term care insurance can supplement state systems, using the UK as a case study.
Although private long-term care insurance has the advantage of pooling the risks of needing care across parts of the population, there have been substantial difficulties in the development of products that would work for both individuals and insurance companies in the UK. This kind of private voluntary insurance is more commonly used in other countries, such as the US and France, where approximately 10 and 12 per cent of the older population are covered.
Working with the colleagues from the Personal Social Services Research Unit at the London School of Economics, Universitat de Barcelona, and the University of East Anglia, our researchers are looking internationally to understand in what circumstances successful private insurance schemes can be developed as a supplement to state systems.
We are using English data to calculate the potential lifetime costs of care, insurance premiums, and total public and private expenditure under different schemes. We plan to draw out lessons for Government and the insurance industry.
Estimating expected life-time costs and insurance premiums for such long-term products involves a great deal of uncertainty, but have the benefit of the four teams of researchers’ combined expertise and can draw on a wide range of information about older people’s care needs and use of services, as well as information on individuals’ use of health and social care services. The Nuffield Trust’s work will draw on novel data sets formed from linking health and social care administrative data at the person level for several areas of England.