Jules Constantinou, President at the Institute and Faculty of Actuaries (IFoA), considers the complex question of long-term, sustainable funding for the social care system ahead of the government’s long-awaited green paper.
Hardly a day goes by without a story appearing in the news about the pressures facing the creaking social care system. And rightly so.
A perfect storm has emerged over recent years, with local government budgets cut, the care home sector on the brink and the NHS already at its limit. Alongside this, an increasing ageing population has resulted in an inevitable surge in demand for social care.
For the last twenty years, successive governments have tried to reform the system, but with little success. The latest government attempt to address the problem was due to arrive before Christmas after being delayed several times already, only for it to fall victim once more to a lack of bandwidth within a government tied up with Brexit.
We await the social care green paper with great interest. Actuaries have been involved in quantifying and managing long-term care risk in the insurance context since the 1990s, but were assessing mortality, morbidity and investment long before this. We hope our profession’s expertise, through the lens of our public interest remit, will provide an objective and impartial assessment of the options facing the government.
The IFoA is naturally focused on the funding aspects of reform and has published a series of briefings to help inform the debate. In particular, we’ve been considering how the system can be designed in a way so that it is able to provide adequate care for the almost 2 million older people who need care now, as well as how it can meet the care needs of those in 10, 20 and 30 years’ time.
This is no mean feat, particularly when you throw in questions around how to fund the system fairly, specifically between generations. The ageing population will result in a shrinking tax base over the coming decades. When considering how to plug that funding gap, we would caution the government against asking the younger generations to bear a disproportionate amount of the costs for supporting future older generations.
The social care crisis is exacerbated by a lack of public understanding around who is responsible for meeting the costs of social care. A health service which is free at the point of use is not mirrored in the social care system. For many people, it’s not clear when funding will be met by the state and when the individual will be expected to bear the cost.
There needs to be a more concerted effort to raise public knowledge about the way social care funding operates and to encourage individuals who can self-fund to make necessary provisions ahead of time.
The government has recently committed more funding to social care at the last Budget but it’s clear that fundamental reform is required to fix the problems facing the system now and to future proof it against the pressures it will face as the population continues to age.
There is no one-size-fits-all solution and the government should consider multiple funding options to address the social care crisis. This could involve the need for one funding approach for those currently in retirement or with care needs and a separate approach for the working population with potential future care needs.
There is a lot of hope placed on this green paper to deliver the answers the system so desperately needs. Let’s hope it doesn’t join the already long list of failed attempts that have gone before it.