where next for care?' ilc-uk and the actuarial profession day conference supported by...
DESCRIPTION
Following the publication of the Dilnot Report, this event explored the future of care. Since 2008, the International Longevity Centre-UK has been at the forefront of the debate on the future funding of long-term care. Our proposals for a social insurance-based National Care Fund and the development of a private market in care insurance were extremely influential on the development of policy under the previous Government. The Commission on Funding of Care and Support has been tasked by the Government to review of the funding system for care and support in England. Andrew Dilnot, the Commission Chair expects to report in July 2011. In 2011, ILC-UK organised a seminar series with Partnership to explore some of the outstanding issues ahead of the publication of the Dilnot Commission report. Our activities culminated in the autumn when we held a day conference for up to 100 opinion formers and decision makers at the Actuarial Profession premises in Holborn. This conference, supported by Partnership, took place on 18 October 2011. This event e place after the publication of the Dilnot Commission, but before the Government will formally respond to the recommendations.TRANSCRIPT
Where Next for Care?
18 October 2011
Welcome
Baroness Sally Greengross, ILC-UKJane Curtis, Institute and Faculty of Actuaries
The Future of Care Funding
Andrew DilnotCommission on Funding of Care
and Support
Conclusions and recommendations of the Commission on Funding of Care and Support
Fairer care funding
Conclusions and recommendations of the Commission on Funding of Care and Support
The Commission’s remitThe Government asked the Commission to recommend:
– how best to meet the costs of care and support as a partnership between individuals and the state;
– how people could choose to protect their assets, especially their homes, against the cost of care;
– how, both now and in the future, public funding for the care and support system can be best used to meet care and support needs.
Setting the context
7
Conclusions and recommendations of the Commission on Funding of Care and Support
The number of older people is increasing
0%
20%
40%
60%
80%
100%
65-69 70-74 75-79 80-84 85+
Growth in the number of older people in England 2010-2030
8
Conclusions and recommendations of the Commission on Funding of Care and Support
Flexible societies are good at adaptingProportion of UK population aged 65 and over
0%
5%
10%
15%
20%
25%
1901 1921 1939 1961 1981 2001 2021
9
Conclusions and recommendations of the Commission on Funding of Care and Support
Social care is one element of state supportPublic spending on older people in England 2010/11
Social security benefits
Social care
NHS
£0bn
£50bn
£100bn
£150bn
10
Conclusions and recommendations of the Commission on Funding of Care and Support
Funding has not kept up with demandExpenditure and demand: older people’s social care (2009/10 prices)
Expenditure
Demand
£6.0bn
£6.5bn
£7.0bn
£7.5bn
£8.0bn
2005/06 2006/07 2007/08 2008/09 2009/10
11
Conclusions and recommendations of the Commission on Funding of Care and Support
Care costs are uncertain and can be very highExpected future lifetime cost of care for people aged 65 in 2009/10
£0k
£50k
£100k
£150k
£200k
£250k
£300k
0% 20% 40% 60% 80% 100%
12
Conclusions and recommendations of the Commission on Funding of Care and Support
Fear is the natural response to current system Maximum possible asset depletion for people in residential care
5% 25% Median 75% 95%
0%
20%
40%
60%
80%
100%
£0k £50k £100k £150k £200k £250k £300k £350k £400k £450k £500k
Assets on going into care
Max
imum
pos
sibl
e as
set d
eple
tion
Percentiles of housing wealth
£150k lifetimecost
£100k
£75k
13
Conclusions and recommendations of the Commission on Funding of Care and Support
A cap removes the risk of very high costsExpected lifetime costs for people going into care in 2010/11, by percentile
£0k
£50k
£100k
£150k
£200k
0% 20% 40% 60% 80% 100%
14
Conclusions and recommendations of the Commission on Funding of Care and Support
A cap removes the risk of very high costsExpected lifetime costs for people going into care in 2010/11, by percentile
£0k
£50k
£100k
£150k
£200k
0% 20% 40% 60% 80% 100%
15
Conclusions and recommendations of the Commission on Funding of Care and Support
And offers significant asset protection Maximum possible asset depletion for people with £150k residential care costs
5% 25% Median 75% 95%
0%
20%
40%
60%
80%
100%
£0k £50k £100k £150k £200k £250k £300k £350k £400k £450k £500k
Assets on going into care
Max
imum
pos
sibl
e as
set d
eple
tion
Percentiles of housing wealth
Current system
£35k cap
16
Conclusions and recommendations of the Commission on Funding of Care and Support
But we also need to reform the means testThe effect of extending the means test on the amount of support people receive
Currentsystem
0%
20%
40%
60%
80%
100%
£0k £25k £50k £75k £100k £125k
17
Conclusions and recommendations of the Commission on Funding of Care and Support
But we also need to reform the means testThe effect of extending the means test on the amount of support people receive
Reformed system
Currentsystem
0%
20%
40%
60%
80%
100%
£0k £25k £50k £75k £100k £125k
18
Conclusions and recommendations of the Commission on Funding of Care and Support
Extending the means test helps the poorestMaximum possible asset depletion for people with £150k residential care costs
5% 25% Median 75% 95%
0%
20%
40%
60%
80%
100%
£0k £50k £100k £150k £200k £250k £300k £350k £400k £450k £500k
Assets on going into care
Max
imum
pos
sibl
e as
set d
eple
tion
Percentiles of housing wealth
Current system
£35k cap
19
Conclusions and recommendations of the Commission on Funding of Care and Support
Extending the means test helps the poorestMaximum possible asset depletion for people with £150k residential care costs
5% 25% Median 75% 95%
0%
20%
40%
60%
80%
100%
£0k £50k £100k £150k £200k £250k £300k £350k £400k £450k £500k
Assets on going into care
Max
imum
pos
sibl
e as
set d
eple
tion
Percentiles of housing wealth
£35k cap with extended means test
Current system
20
Conclusions and recommendations of the Commission on Funding of Care and Support
The reforms reduce the costs individuals face
Initial level of wealthMaximum spend on care
£40,000
£50,000
£70,000
£100,000
£150,000
£9,000
£12,000
£18,000
£28,000
£35,000
21
Conclusions and recommendations of the Commission on Funding of Care and Support
Care for people of working age
Age Maximum spend on care
Under 40
40 to 50
50 to 60
60 to 65
65 +
Free care
£10,000
£20,000
£30,000
£35,000
22
Conclusions and recommendations of the Commission on Funding of Care and Support
General living costs− People in residential care would need to
make a contribution towards their general living costs (such as food and heating).
− People have to pay these costs if they live at home.
− Believe this contribution should be fixed - recommending between £7,000 and £10,000 p.a. (as the maximum possible contribution).
23
Conclusions and recommendations of the Commission on Funding of Care and Support
All spending: £697bn
24
Conclusions and recommendations of the Commission on Funding of Care and Support
All spending: £697bn
NHS: £103bn
Social security for older people: £85bn
Education: £61bn
Defence: £44bn
The cost of reform: £2bn
Social care and disability benefits for adults: £27bn
Conclusions and recommendations of the Commission on Funding of Care and Support
We are also recommending other reforms− A major campaign to improve
information and advice
− Better information and needs assessments for carers
− More consistent, portable assessments with a national eligibility threshold
− Better integration of health and social care
We also think there will be an opportunity for the financial services sector to help people with their contributions.
Thank youCommission on Funding of Care and Supportwww.dilnotcommission.dh.gov.uk
27
Conclusions and recommendations of the Commission on Funding of Care and Support
Who benefits from the reforms?Public expenditure on social care, by income quintile
£0.0bn
£0.5bn
£1.0bn
£1.5bn
£2.0bn
£2.5bn
Bottom 2 3 4 Top
Reforms
Current system
28
Conclusions and recommendations of the Commission on Funding of Care and Support
Who benefits from the reforms?Additional public expenditure as a proportion of income, by income quintile
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
Bottom 2 3 4 Top
29
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
Bottom 2 3 4 Top
Who could pay for the reforms?Additional tax paid, as a percentage of income, if reform were funded through direct taxes, by household income quintile
Conclusions and recommendations of the Commission on Funding of Care and Support
The Future of Care FundingPanel Debate
Andrew Dilnot Julia Unwin, JRF
Jane Ashcroft, Anchor Jules Constantinou, Gen Re
Paying for Care: The International Context
Dr. Doug AndrewsUniversity of Southampton
Paying for Care:The International
Context
Doug AndrewsUniversity of Southampton
October 2011
Overview
• The views expressed are mine and not necessarily those of my employer or any professional body of which I am a member
• Provide background on a project in progress for the Actuarial Profession
• Outline differences in approaches to funding
• Draw some conclusions about insurance
Objective of Actuarial Profession’s Project
• To identify gaps in the publicly available literature regarding LTC, particularly with respect to funding
• Actuarial Profession wishes to be in position to play its part in the public interest by working collaboratively with other bodies and disciplines to develop long term solutions
Background on Project• University of Southampton
awarded project based on a response to a call for proposals
• Large research team & partnering required
• ILC-UK conducted primary research for 5 countries
• NASI conducted primary research for USA
• Andrews, Power, Stott – key report writers
• 5 other researchers & many expert reviewers contributed
Steps in the Process
• Conduct primary research• Produce gap analyses• Write interim report• Forum held Oct. 14 to provide
input to the Actuarial Profession• Write the final report
Primary Research• Gathered information on 10
countries• Developed a template based on
information requested • Used a referencing approach for
both general and country-specific references
Types of Gap Analysis
• Gaps in publicly available information regarding LTC data and information
• Gaps in the use of Private Financial Services Solutions (PFSS) by country
Oct. 14 Forum Considered
• Data and gaps identified, especially in respect of funding LTC and the development of PFSS
• Opportunities for collaboration to contribute to the development of funding and PFSS solutions and to provide information regarding the costs and benefits of implementing Dilnot’s recommendations
Spectrum of Funding Approaches
• Norway – largely state provision but unfunded
• Germany – compulsory funded national insurance
• In between – mix of state provision, self funding, and PFSS
• Adopting Dilnot would increase state provision and reduce self funding required
Developed Pre-funding: Singapore’s ElderShield
• Provides for people with severe disabilities
• Covers residential facilities or home-based costs but on indemnity basis
• Premiums paid from age 40• Means-tested subsidies• 3 private insurance providers• Minimal state provision –
personal responsibility
Developed Pre-funding: USA
• Highly fractured financing system
• Medicaid available to those of very low means
• Comparatively large PFSS market• Traditional PFSS products:
gradual shift from reimbursement to cash benefits
• Other PFSS include disease-specific insurance, annuities and reverse mortgages
Developed Pre-funding: Japan
• 79 aspects of health assessed • Determines eligibility for 7 levels
of support• Financing is shared
responsibility: 50% from public funds & 50% by premiums (age 40)
• Accommodation, utilities & meal expenses excluded from insurance benefit
• Sickness Hospitalization Insurance most common followed by Cancer Insurance
• PFSS market is shrinking
The Pressure of Demographics
• Countries with greater aging challenges have tended to take more action
• OASR indicates actives per elder (65 and up)
• Japan: 2.63 in 2010, 1.24 in 2050• Germany: 2.98 in 2010, 1.56 in
2050• Norway: 3.97 in 2010, 2.28 in
2050• UK: 3.60 in 2010, 2.41 in 2050• USA: 4.61 in 2010, 2.58 in 2050
Questions Regarding the Mix
• Different countries have different preferences for government-provided and mandated approaches
• All countries recognize that family should play some role
• Mental health needs to be addressed
• Upper bound of 4% of GDP for all care costs – but how should the cost be borne?
Reasons Given for Not Purchasing PFSS
• Price too high• May not require care• Uncertain what the state will
provide & often over-estimate state provision
• State provision may change by the time care is required
Concluding Observations Regarding Dilnot
• Would define state provision• Would specify the extent of the
individual’s responsibility• Would remove questions
regarding eligible expenses• All positives for a PFSS market• Questions remain about the cost
Lunch BreakAfternoon session will resume at 13.15
Welcome Back
Housing and Care
The Role of Extra Care
Dr. Dylan KnealeILC-UK
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
The role of Extra Care: Perspectives from three Extra Care Housing Providers
Dylan Kneale
ILC-UK and Actuarial Profession Day Conference, October 18th 2011
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
• Housing:
• Lived in same house for 40+ years (17% 1993/4; 24% 2007/8)
• Rising levels of under occupancy?
• Rising levels of housing wealth?.....Rising inequality? (Older people
still biggest consumers of social housing)
• Less retirement housing being constructed
• Health care:
• Compression of morbidity? (Zaninotto et al 2010)
• Non communicable diseases (stroke, dementia)
• Social Care:
• Rising cost; Unequal provision; Who pays?
• Rates of receipt of domiciliary care at home declining…
Health, social care and housing among the ageing population
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
What is it? Little consensus….
Wide spectrum of self-designated extra care housing
Some common principles of extra care housing:
Ergonomically designed
Flexible and continually adapting care packages delivered onsite
Communal facilities
Group activities
Independent homes within small-medium sized retirement communities
Usually age specific
Leasehold tenure as well as rental tenure
Community balance of care needs
Extra care housing
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Extra care housing
What do we know about extra care housing?
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Research Questions 1. What is the social profile of extra care housing
residents and how does this compare with residents in the
community setting?
2. Can extra care housing be considered a home for life
for older people?
3. Does residence in extra care housing facilitate healthier
and more independent life?
4. What impact does residence in extra care housing
have on the uptake of overnight hospital beds?
5. What inferences can be made about the costs and
benefits of extra care housing?
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Data and Methods Data: Longitudinal data from 3 partners on almost 4,000 residents of extra
care housing since 1995;
British Household Panel Survey; English Longitudinal Survey of Ageing;
Survey of English Housing (descriptive)
Limitations/Challenges
1. Characteristics of residents Descriptive analysis
2. Extra care housing as a home for life
Event history analysis (Lognormal and Competing Risks); Propensity Score Matching
3. Extra care housing as a healthy home for life
Event history analysis (Competing Risks); Propensity Score Matching
4. Extra care housing and hospital beds?
Zero inflated negative binomial regression; Propensity Score Matching
5.N Inferences on the costs and benefits of extra care housing?
Descriptive analysis
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Gender
Age
Living arrangements
Additional care needs
Health shocks that may predict entry to extra care housing:
Stroke
Dementia
Parkinson’s disease
Characteristics of residents
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Characteristics of residents
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Extra care as a home for life I Length of time until exit (all exits)
First quartile (25%) Median (50%)
All residents 3.1 6.5
GenderMale 2.6 6.0
Female 3.4 6.7
0.0
00.2
50.5
00.7
51.0
0P
rop
ort
ion s
till
resid
ent
0 5 10 15analysis time (years)
No additional care needs on arrival Very low care needs on arrival
Low - Moderate care needs Moderate to High care needs
High care needs on arrival Very high care needs on arrival
Proportion of extra care residents remaining
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Extra care as a home for life II: Competing Risks Framework
Risk 1: moving to an institution
Risk 2: death
All residents 8.2% (6.7-9.9) 25.0% (22.4-27.5)
GenderMale 6.4% (4.3-9.1) 30.6% (26.0-35.3)
Female 9.1% (7.2-11.3) 22.0% (19.2-25.1)
Health Status/Care Needs on Arrival
No additional support package
5.5% (4.0-7.3) 16.8% (14.2-19.6)
Level 1 (very low package needs)
12.8% (6.8-20.8) 29.6% (20.0-39.7)
Level 2 (low support package)
17.5% (11.7-24.4) 39.8% (31.6-47.6)
Level 3 (moderate support package)
11.9% (5.2-21.5) 41.0% (28.3-53,1)
Level 4 & 5 (high or very high support package)
9.9% (4.9-17.1) 56.9% (46.1-66.3)
Age Group
50-64 6.8% (2.8-10.9) 10.2% (5.8-16.3)65-69 6.2% (3.1-11.0) 13.0% (8.2-19.1)70-74 6.0% (3.4-9.8) 18.2% (13.3-23.7)75-79 9.0% (5.8-13.0) 24.6% (19.4-30.2)80-84 8.0% (4.8-12.3) 27.2% (21.3-33.5)85+ 12.7% (8.5-17.7) 49.0% (41.8-55.8)
N 1,189 1,189
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Extra care as a home for life III All community match sample Domiciliary care match sample
Age 65+
Model 1
Age 75+
Model 2
Age 80+
Model 3
Age 65+
Model 4
Age 75+
Model 5
Age 80+
Model 6
Models adjusted for Age, Sex, Living Arrangements, Year
Sub-hazard ratio of
moving to an institution
Sub-hazard ratio of
moving to an institution
Sub-hazard ratio of
moving to an institution
Sub-hazard ratio of
moving to an institution
Sub-hazard ratio of
moving to an institution
Sub-hazard ratio of
moving to an institution
Extra care housing
1.776 1.216 0.905 0.694 0.532* 0.316**
(0.659) (0.471) (0.463) (0.207) (0.167) (0.121)
N 1714 1034 624 1630 1028 634
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Diminution in loss of functional ability?
Extra care as a healthy home for life0.0
00.2
50.5
00.7
51.0
0
0 2 4 6 8 10analysis time
No additional care needs on arrival Very low care needs
Low-moderate care needs Moderate-High care needs
High to very high care need on arival
Time to increase in care package
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Conceptualising ‘risk’ of health improvement
Extra care as a healthy home for life
Risk: improvement in health (decrease in care needs)
All residents 24.0% (20.6-27.5)
GenderMale 25.7% (19.5-32.3)
Female 23.8% (19.3-27.5)
Health Status/Care Needs on Arrival
No additional support package 30.8% (24.7-37.1)
Level 1 (very low package needs) 16.3% (9.4-24.8)
Level 2 (low support package) 26.0% (19.1-33.5)
Level 3 (moderate support package)
15.3% (7.5-25.6)
Level 4 & 5 (high or very high support package)
14.9% (7.9-24.0)
Village or Court developmentCourt 9.2% (5.8-13.7)
Village 32.1% (27.4-36.8)
N 603
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Falls (fractures), stroke and heart disease account for the
main financial burden of older people’s health care
Within extra care setting, most accidents represent falls (“loss
of balance”, “got up too quick”, “turned around”)
Ergonomic adaptations? Group exercise classes?
Compare rates for small sample size with sample from ELSA
Matching indicative of a lower rate in extra care (49% vs 31%)
Sample size – caution – indicative evidence
Men susceptible to falls in extra care setting?
Falls in extra care
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Extra care and overnight hospitalisation I Number of available beds for geriatric medicine declined by 61% (1987-
2008); Bed blocking an issue
Comparison group
Inverse care law – evidence in BHPS (or other effect?)
Incidence rate is higher than in overall community sample BUT reflects
length of stay
Number of episodes of admission consistently lower in extra care sample
i.e. less people go to hospital in the extra care sample, but those that do
stay longer
Closely matched comparison group overall incidence lower in extra care
sample
Mechanism?
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Extra care and overnight hospitalisation II
65+ 75+ 80+ 65+ 75+ 80+Full community sample Advantaged community sample in receipt
of domiciliary care
0
1
2
3
4
5
6
7
8
ControlExtra care
Pre
dict
ed A
nnua
l Inc
iden
ce R
ate
of H
ospi
talis
atio
n (n
ight
s pe
r ye
ar)
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Extra care and inferences on costs
Social care costs (median community care package and extra care)
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Extra care and inferences on costs II
Initial social care costs of extra care housing may be higher
than if remaining in the community
But, because of higher probability of transition to institutional
accommodation , long-term costs lower
– Planning for retirement
Cost of lower rate of hospitalisation
Cost of reduction in package
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Extra care housing:
1. Supports some of the most vulnerable in society
2. Appears to be a home for life for the vast majority
• Compared to those with similar characteristics appears to be
lower rate of transition to institution; plausible mechanism (age,
living arrangements, gender, in receipt of care at home)
3. Associated with fewer inpatient stays
4. Associated with fewer falls
5. Is a healthy home for life
Conclusions
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Policy Recommendations I1. Policy-makers need a co-ordinated response to providing housing,
health care and social care for our ageing population.
2. Policy-makers should make specific pledges to increase the level of
provision of extra care housing.
3. The proposed National Planning Policy Framework should champion far
more robustly the housing needs of older people.
4. Policy-makers should recognise and encourage private sector
development of extra care housing.
5. The findings in this report suggest that policy-makers drafting the Health
White Paper should explicitly consider and make specific pledges to
increase the role of housing with care.
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Policy Recommendations II6. Policy-makers should enhance and sustain programmes of education and information
for those who are retired and newly retired to plan their housing and financial futures.
Furthermore, consumers need reassurance that policy changes will not negatively
impact their retirement decisions.
7. Any National or Local Falls Prevention Strategy should include housing as a key
component of preventing further falls.
8. Receipt of Attendance Allowance opens a gateway for many older people to access
extra care housing, through helping to finance monthly care costs and to help access
other benefits. We would urge policy-makers to ensure that all who are eligible to claim
Attendance Allowance do so which could enable greater numbers of older people to
support a stay in extra care housing.
9. Further research is needed into the extra care housing sector.
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.
Full report available:
www.ilcuk.org.uk
Further information:
Dr Dylan Kneale, International Longevity Centre
Thanks for your attention
Housing and Care
Julia UnwinJoseph Rowntree Foundation
Housing and CareJulia Unwin, Chief Executive, Joseph Rowntree
Foundation and Joseph Rowntree Housing Trust
Our purposeSearch
Demonstrate
Influence
Our work programmes and aimsPove
rty • to examine
the root causes of poverty, inequality and disadvantage, and identify solutions
Pla
ce
• to contribute to the creation and development of strong, sustainable and inclusive communities
Em
pow
erm
e nt
• to identify ways of enabling people and communities to have control of their own lives
Housing matters
© Mike Robertson
Care and repair
Not just about older people
Our credentials
Extra-care housing
Roles and responsibilities contestedDecisions to move inNominations and allocations decisionsDifferent expectations of housing with careBuildings and facilities provision, management
& maintenanceHealth and safetyPromoting well –beingSafe-guarding and duty of careManaging increasing care and support needsMoving on and end-of-life
Common cross-cutting issues
Regulation, complaints, user consultation and involvement
Costs and affordability
Older people’s preferences being overlooked or not heard
ConclusionHousing with care not a solution for everyone
But is a valuable option
Better housing and support for older people is needed
We need a range of housing, health and social care services for the whole ageing population – across generations and across different stages of our lives
Joseph Rowntree Foundation
Visit our website www.jrf.org.uk
www.twitter.com/jrf_uk
www.twitter.com/juliaunwin
www.facebook.com/JosephRowntreeFoundation
Housing, Wealth and Care
Jon KingMore 2 Life Ltd
Introducing
Jon King
Managing Director
More 2 Life Ltd
Structure
KRS Group(Holding Company)
Equity Release & Care Fees Lifetime Mortgage Lender Planning Service
• Link between Equity Release/Care
• Problem of resident status in the home
• Gradual move to domiciliary care
• Estimated 750bn of housing wealth held by people 65 years and over*
* Source – KRS Group
Historical Perspective
• 84% of those aged 65 years and above would choose care in the home
• One in five people aged over 65 could pay the £35,000 cap proposed in Dilnot
• Only 2% of the over 65’s have made financial provisions for ill health in retirement
Key Retirement Solutions Research
• Products designed to meet needs
• Flexibility
• Draw down products
• Impaired terms - underwritten
Product Development
Conclusions
• 1.4 million hours of care bought each year
• Important future for Equity Release in care funding
• Further product innovations needed
• £4 trillion in housing wealth overall in the UK,
which double the value of our pension assets*
* Source - FT
Final Thought…
Housing and Care Panel Debate
Andrea Rozario, SHIPJulia Unwin, JRF
Dylan Kneale, ILC-UKJon King, More 2 Life Ltd
Care Funding: The role of the private sector
Care Funding: The role of the private sector
Otto ThoresenAssociation of British Insurers
Care Funding: The role of the private sector
Steve GrovesPartnership
The Role of the Insurance SectorSteve Groves 18 October 2011
The Role of the Insurance Sector I am going to jump around a little!!! Aim to identify the role of the insurance sector over the
medium to long term To address question requires consideration of three not
necessarily aligned groups
– Consumers
– Policymakers
– Insurers
Taking the policy environment as read given previous speakers
The Dilnot Review
Much to welcome
– National assessment
– Public Debate about Care
– Need for better information and Advice
Overall adds an important third option to the debate
Some Concerns
– Widely misinterpreted
– Complex to implement
Statement of the Incredibly Obvious........
“The role of the Insurance Sector
is to take Insurance Risk”
[Steve Groves, FIA]
The Traditional Small Print.....
Care Annuities at point of need are a classic insurance proposition
– On an individual basis the outcome is highly uncertain
– On a portfolio basis its relatively predictable (for those with 15years of high quality data)
– Insurance industry exists to pool these risks and allow consumers to swap uncertainty for certainty
Pre-Funded Care Insurance actually has two problems to overcome:
– No one wants to buy it
– No one wants to provide it
Why Immediate Needs Annuities WorkConsumer Customer understands need; no longer an issue
with denial / priorities Simple to explain Deal known at outset; no subjectivity No claims assessment – automatically pays until
death No uncertainty over future social and political
landscape Reasonable Tax treatment
Insurer Adequate information to assess likely insurance risk
Why Pre-Funded Care Insurance doesn’t WorkConsumer Denial; “It will never happen to me” Prioritisation; “Live for today” Claims assessment; scepticism that insurers will pay out Reviewable premiums Too Complex Economic Free Riders
Insurer Impossible to assess insurance risk accurately enough to guarantee
terms Guessing how many people will claim And how long they will live in claim Over a 50 year plus timeline So product have reviewable premiums and deal is not known at outset
If I were Minister for Social Care Accept Consumers will not save specifically for Care
Focus on Middle England
– Poorest will always be state funded
– Richest will always be self funded
Drive ISA and Pension Savings
– Woefully low at the moment
– More assets in the hands of retirees is key to a medium term solution
Tackle Free-Rider Issues
– Want people to save and secure guaranteed income via either Pension or Care annuities
– Free up product regulations so pension annuities can be more efficient for care funding
– Partnership model via Disregard on Guaranteed Income (analogous to MIR in Pension Reform)
Therefore the Role of the Insurance Industry is....... Help Customers understand the need to accumulate assets for Later Life
– Engage at outset
– Communicate progress and implications
Focus Not just on High Net Worth but also on “average” customers
Deliver simple, high quality, low cost accumulation vehicles
– ISA
– Pension
Manage Care Longevity Risk
– Provide guaranteed annuity products
– Innovate to combine with Retirement pension products
Care Funding: The role of the private sector
Dr. Ros AltmannSAGA
Private and confidential: not for onward distribution DRAFT / ISSUE x.x
Future of Care FundingRole of the Private Sector
ILC-Actuarial Profession Conference
18th October 2011
Presentation byDr. Ros Altmann, Director-General, The Saga Group
Twitter: @SagaRosAltmann
110
Care in Crisis
Worse than pensions crisis as population ages and care needs rise
No money set aside privately, not enough publicly
Can’t just tell people to wait longer!
No integration of Care with NHS – no incentives to save money on NHS
Local authorities cutting spend from already inadequate levels– No ring-fencing of new money
NHS is the most expensive option – and the safety net!– NHS will run out of resources
111
What’s gone wrong – funding of care?
Policymakers focus later-life income on only pensions
No private pre-funding for care (and billions in pensions is not enough)– No savings incentives for care
Insurance can’t deliver unlimited costs cover
Public funding falling as demand rises– New money not being ring-fenced
Stark means test: £23,250 – many use all their assets and fall back on state
112
Vital elements to improve care funding - Challenge to Government
Information and education – only 7% of self-funders get proper advice
Tax incentives for care saving plans – workplace incentives?– Care ISAs– Care Annuities– Insurance (pricing?)– Family Care Plans
Equity release
113
Using the home
A house could be considered precautionary savings or insurance policy
Asset is there, but not for care! - political problem
1 in 4 over 55s still has a mortgage, – Average mortgage £61,000, average house value £231,000– But would people then be slower to repay their mortgage?
Local authority deferred payment plans
114
Insurance
Immediate needs annuities – only 8,000 a year
Standard annuities provide regular income but won’t cover high care costs
Long-term care insurance is a market failure
Pooling risk makes sense
Developing insurance could improve prevention – e.g. burglar alarms, locks for house insurance
115
Conclusions
Two big challenges: – Delivery of care efficiently and cost-effectively– Funding care adequately in advance, not at point of need
Partnership approach makes sense
Role of private sector to help pre-funding
Will it encourage new products for care? Not on its own
You can argue with the detail but reform is essential – avoid long grass!!
Where Next for Care?Concluding Thoughts
Baroness Sally GreengrossILC-UK
Where Next for Care?
18 October 2011