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The insurance industry will want more

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Health secretary, Andrew Lansley, has finally published the social care white paper, draft care and support bill and a progress report.

While many have been critical of the government for not setting out firm plans for funding reform, credit must be given to it for proposing a number of initiatives, such as better information and advice, and for setting the reform programme in the right direction.  However, as ever, the devil is in the detail and we must review these proposals in depth.

One idea that the government will consider in more detail is the ‘opt-in and opt-out’ approaches to the cap, where citizens will be able to choose whether or not to be protected by the capped cost scheme.

While choice in care funding is welcome, unless the system is clear and simple, there is a danger that some will make the wrong decision. From the perspective of an insurer I see little reason why such a move would encourage more companies to develop suitable products – to do so, the industry will want to see a firm commitment to a sustainable funding system.

Choice in care funding is welcome but unless the system is clear there is a danger some will make the wrong decision

Long term care insurance products, known as immediate needs annuities, do exist that guarantee an income for life to meet care costs in return for a one-off payment.

A significant commitment in the progress report is the proposal of deferred payments scheme, where local authorities provide a loan to the care resident which will be recouped through the sale of the property on death. This is not a new scheme and is already used by some local authorities.

However, the new, universal scheme will allow the loans to accumulate interest.  This proposal merely defers the payment for care – it does not cap the costs of care.  This proposal raises more questions than answers. 

For example where the money will come from to fund it and will local authorities be able and willing to act as a banker of this type; what will the interest rate be; what loan value will be allowed?

However, other aspects of the reforms are more straightforward. One of the most important proposals in the white paper concerns the provision of information and advice. The government is committed to providing a “clear, universal and authoritative source of national information about the health, care and support system”.

Accordingly the government will legislate to ensure local authorities provide a comprehensive information and advice service. This will provide a vital service to the 41% of self funders who navigate the social care system with limited guidance.

I would urge local authorities to prioritise this proposal and include financial information as core, to stem the significant number of self funders (25%) who deplete their assets and fall back on the state at a cost of £1billion a year in England alone. 

Steps have already been made by a number of local authorities, such as Nottinghamshire and Suffolk, to ensure self funders are offered financial advice and guidance, and are proof that this can be achieved with simple, pragmatic steps.

It is vital that the government, local authorities and the sector as a whole work together to ensure the reform programme is developed and implemented. However, while these proposals will help to improve the adult social care system, without clarity about funding, citizens who require care now will continue to face an uncertain financial future. This is why it is vital that adequate financial information and advice for self funders is offered now.

Chris Horlick, managing director of care, Partnership

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