From Ros Altmann:economist and pensions,
    investment and retirement policy expert

  • pensionsandsavings.com

    Funding crisis of elderly care services

    Funding crisis of elderly care services

    This blog is an extended version of my letter published in today’s Times. Click here to view.

    May I offer some essential considerations for long-term solutions to the fragmentation and funding crisis of elderly care services, following recent reports by the Institute for Fiscal Studies, among others (Comment article by Paul Johnson).

    In the 1940s, William Beveridge designed the NHS as a ‘make-you-better’ service, offering acute interventions that cure patients who can resume normal life. It was never intended as a ‘look-after-you-for-ever’ service for increasing numbers needing ongoing multi-year care.

    The major policy failure arises because no Government has allocated pre-funding for care needs, despite knowing the demographic inevitability of rising numbers of elderly citizens unable to live independently at the end of their lives. As local authority funding has been cut, rising care demand and costs have resulted in ever-stricter rationing of provision, reduction in preventative or early-stage help, which inevitably increases NHS costs as last-resort provider.

    Recognition of the fundamental differences, but essential interconnectedness, between health and social care are required to avoid the past mistakes. Policymakers must separate short-term interventions of healthcare, from longer-term social care needs.

    Reforms of health and care services in recent decades have focussed on ‘process’ rather than ‘outcomes’, highlighting problems, rather than implementing solutions, as costly re-organisation addressed parts of the system, rather than the whole.

    Care funding should be a core element of 21st Century retirement planning, but pensions or later-life savings have never accounted for this, despite Exchequer reliefs costing over £40billion a year.

    For the immediate looming crisis, kick-starting individual care funding through baby-boomers’ pensions or long-term savings could be facilitated by allowing tax-free pension withdrawals for care funding, or a new inheritance-tax-free Care ISA allowance and perhaps a national equity-release programme. This would need to be combined a cap on individual’s elderly care costs and encouragement of preventive measures that prolong independent living, as well as a rise in the means-test threshold for state funding.

    In addition, National Insurance (or tax) must be extended to encompass elderly care, not just pensions, for the care needs of future generations.

    2 thoughts on “Funding crisis of elderly care services

    1. What is needed for Social Care and the NHS is an insurance policy for everybody to pay into no matter what they earn or where they live. This is the only way the NHS and Social care will survive. Nobody will implement this at all. We baby boomers can spend our savings and give our money to our children why should we save for social care, when asylum seekers come into this country and claim asylum and get every help they need, also they live rent free until they are accepted into this country, where is the fairness to british born people of this country. I believe in looking after our own first.

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