Ageing England ‘left behind’ in terms of global social care funding

11 September 2018 8 min. read
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As Britain faces the impact of an ageing population, a damning new report has found that the English social care system which many elderly people will come to rely on in coming years compares “rather badly” to those of nations in a similar situation. Incisive Health and Age UK found that the UK charges more out-of-pocket for social care than many other leading economies, while still seeing many left behind by the system.

The UK is one of a number of major economies facing the protracted effects of an ageing population, with 18% of the population aged 65 and over and 2.4% aged 85 and over. Births continue to outnumber deaths, meaning the population is rising, however this is largely thanks to the average life expectancy having steadily risen in recent years, and the baby boomer generation finally approaching that milestone. As seen elsewhere, this is placing notable strain on the National Health Service and the country’s pension pots, however, it is also placing a growing demand on social care, as the growing number of senior citizens no longer capable of caring themselves require support to see out their final days comfortably.

While Britain is no different to countries such as Germany, France, Spain, Italy and Japan, however, a new report has highlighted a severe lack of funding regarding the tackling of this last issue in particular. Instead, the study, commissioned by Age UK and completed by consultancy Incisive Health, has found that elderly people are unfairly carrying the burden of costly social care and are receiving much worse service than pensioners in other countries. Commenting on the results, Age UK said it was concerned that the UK’s largest nation is lagging behind its international peers in the race to make sure social care provision is keeping up with demand from an ageing population.

Total long-term care (health) funding per capita, current prices (£) 2015

Age UK’s Charity Director Caroline Abrahams lamented, “Sadly, this new report shows that England has been left behind in the race to update the funding of care for older people, compared to some other similar nations… The reality is that an entire generation of older people in England has lost out, given that Germany embarked on care funding reforms in 1995 and Japan in 2000. It is crucial that the forthcoming Social Care Green Paper isn’t yet another failed exercise.”

Green Paper

The Social Care Green Paper has consistently been delayed by the incumbent UK Government, leaving numerous verbal commitments by Parliamentarians unfulfilled, after eight years of Conservative led administrations. Postponement until the autumn of the policy green paper was announced in July, with the legislation already deferred since last year. The proposals themselves have already proven almost universally unpopular, as the UK’s Executive was accused of bending over backwards to avoid creating a universal social care system similar to the NHS.

Instead, the Green Paper will recommend putting housing assets into the means test for people needing personal care at home as well as those in residential care, puts a floor of £100,000 on assets. Soon after this was announced, however, a report from two highly respected think tanks, the Kings Fund and the Health Foundation, found that the idea of increasing the number of people paying for care, and how much they pay, put forward in the Conservative manifesto during 2017’s general election, would be almost as costly as making all care free.

Percentage of GDP spent on long-term care (health) through voluntary schemes/ household out-of-pocket payments compared to total percentage of GDP spent on long-term care, 2015

Since then, warnings have persistently been issued of a pressing need to bridge funding gap facing crisis-hit social care services by 2025. James Jamieson, Vice Chair of the Local Government Association, recently placed that gap at a £3.5 billion, and even addressing this would be “just to maintain existing standards of care.” Jamieson added that years of underfunding meant adult social care was at “breaking point”.

In agreement with this statement, according to Age UK and Incisive Health’s report, the social care system of England compares “rather badly” to those of Germany, France, Spain, Italy and Japan. This is the state of play, even though the proportion of the population aged over 65 has remained steadfastly less than those found in the other nations since 1990, including Japan’s, which has rapidly neared the 30% mark.

The system of means testing people in England currently sees anyone with savings or assets of more than £23,250 pay all the costs of their long-term care. With regards to this, the paper also found that despite two Government consultations into the unpopular system, as well as two official commissions, five Green or White Papers and one Act of Parliament, England’s funding set-up remains broadly unchanged.

A tax on age

At present, 1.8% of GDP is spent on long-term care in the UK, however this is largely spent by service users themselves, rather than the state, with the UK having one of the largest out-of-pocket contributions to care seen in the study. Only people with savings or assets of £14,250 or less are entitled to have the local council pay for their care at present. As a result, the overwhelming majority of long-term care in England is provided by informal carers such as friends or family. The number of unpaid carers in England appears to have increased from 4.9 million in 2001 to 5.4 million in 2011.

Percentage of people who need care receiving formal long-term care (cash or in-kind) from states

In contrast, Japan similarly spends 1.8% of GDP on the funding of long-term care, while hosting an even older population. Roughly one-half of revenue for Long-term care insurance (LTCI) comes from general taxation, one-third from premiums from people aged between 40-64 (at a rate of 1% of income), and one-sixth from people over 65 (according to a fixed tariff of premium rates). User co-payments account for the rest. Japan has struggled with financial viability of the model, however the scheme does provide support to all those above a certain level of need, irrespective of their financial situation.

Elsewhere, Germany spends a lower 1% of its GDP on long-term care, having created a national care insurance fund in 1995, funded out of deductions from pay, with employers matching these individual contributions. It is currently in good health, in 2015, it took in €31 billion and spent €29 billion of that, while reserves grew to €8.3 billion. The individual contribution rate is currently 2.55% of wages payable up to a contribution ceiling, while childless adults pay 0.25% more as they are less likely to receive informal support from family in old age. People in need of long-term care are assessed by the Statutory Health Insurance Medical Review Board, and if they meet the threshold for care, they are allocated it according to their needs. Eligibility for support is dependent on how often help is needed with personal care and housekeeping, and also the amount of care provided by informal carers, which compared to the UK is lower.

Responding to the negative assessment from Age UK’s document, a Department of Health and Social Care spokesperson told the press, “We have provided local authorities access to £9.4 billion in dedicated social care funding over the last three years. Our Green Paper due in the autumn will set out our plans to reform the social care system to ensure it’s sustainable for the future.”

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