Older people may need 'care insurance'

Elderly people in England may have to take out insurance to pay for long-term care in future
Elderly people in England may have to take out insurance to pay for long-term care in future

By Liz Stephens

Elderly people in England may have to take out insurance to pay for long-term care in future, according to a ministerial green paper published today.

The idea is one option proposed by ministers to reform funding of residential and home-based care. The new proposals are the first step in addressing a potential £6 billion black hole in finances over the next 20 years.

Under the current system of means-tested social care, anyone with a home or savings of over £23,500 receives no state funding for a care home, or help from social services.


This has led to thousands of pensioners selling their homes every year or using their savings to fund long-term care. Critics say this is unfair and unsustainable.

The green paper sets out a proposal for an insurance-based scheme which would allow people to protect their homes and savings. The insurance could be paid for in instalments during the person's working life, or deducted from their estate after death.

Under another option the state could pay between a quarter to a third of the cost of care, with individuals finding the rest. Ministers are also deciding whether to implement a compulsory insurance scheme costing between £17,000 and £20,000 at today's prices.

Health secretary Andy Burnham said the measures would ensure a basic entitlement for everyone and called the proposals "a big step forward".

However, the Conservatives said the government had "broken promises" on the issue and vowed to draw up their own long-term care plans.

Shadow health secretary Andrew Lansley said the government had failed to find a solution to the issue, despite promises going as far back as 1997.

"We don't need to start another debate. One debate always seems to roll into another with this government. We need a decision, and we need serious, costed proposals to be the basis of that decision," Mr Lansley said in his Commons response.

Allan Bowman, chairman of advisory body the Social Care Institute for Excellence, said: "We've got to end this postcode lottery in social care and we've got to find a way of achieving a national approach, that ensures people get the best quality of care at whatever fair price can be achieved."

The government admits the current system is struggling to cope and experts warn demand for social care will only intensify with the number of people aged 85 and over predicted to double in the next 20 years.

At present, there are four people earning for every retiree but in 40 years that ratio will fall to just two to one.

Yesterday the government brought forward a review of the default retirement age, which allows employers to compel staff to retire at 65.

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