People may enter residential care prematurely under Conservative plans to insure older people against the costs of care home fees, Association of Directors of Adult Social Services president Jenny Owen has warned.
Owen said the Tory plan, which does not cover home care, risked creating ‘perverse incentives’ for people to leave their own homes, “flying in the face” of the wishes of most people to remain at home.
Think-tank the King’s Fund issued a similar warning.
The Conservative plan would involve people making a voluntary payment of about £8,000 on retirement and having all fees for permanent residential care met in full in return, to prevent people having to sell their homes to pay for care.
People who spend two years in a care home face costs of approximately £50,000, and the Tories estimate 45,000 people are forced to sell their homes every year to pay for residential care.
Currently, only those with assets of over £23,000 receive any state help with the costs of residential care.
According to the BBC, the Tories believe the scheme would be self-financing as it would be run by insurance companies and only one-fifth of those who paid in would require residential care. The state’s role would be to set rules for how the scheme would work.
King’s Fund chief executive Niall Dickson said that “as part of a comprehensive package of reforms”, the proposal could benefit “older people with modest means who are currently not well-served by the current system”.
But he echoed Owen’s warnings that it could create a perverse incentive for people to choose free residential care over paid for home care, and warned that such decisions were “frequently taken at times of crisis and vulnerability”.
Brown’s free care pledge
The Tory plan follows hot on the heels of Gordon Brown’s pledge to introduce free personal care at home for people with critical needs from October 2010 onwards, at a cost of £670m a year.
Of this, £250m must be funded by local government from efficiency savings, prompting concerns from Adass and the Local Government Association that the policy may not be affordable.
Owen warned that it was equally questionable to concentrate on the costs of home care alone, as residential care, saying the costs of caring for people in both settings, as well as in hospital, should be seen as “a single, indivisible whole”.
Green paper still under consultation
The government’s pledge comes with its green paper on the future funding of care still under consultation.
This proposed the creation of a “national care service”, with a single system of eligibility and assessment for care across the country, some state-funded personal care for all and three proposals to finance other personal care costs, including voluntary and compulsory insurance models.
Under the voluntary insurance proposal, people would pay between £20,000 and £22,500 to insure themselves against future personal care needs, in residential settings or at home, while under compulsory scheme the premium would fall to between £17,000 and £20,000.
Unlike the Tory plan, neither would cover accommodation fees in residential care, which cost an estimated £12,500 a year.