A new report has proposed that social care should be funded through a new insurance system.

The NHS Confederation, the organisation that represents NHS trusts, has launched a new debate paper, Funding Tomorrow Today. Written by its policy director Nigel Edwards, the Confederation’s paper argues that social care funding must be fairer if provision of social care is to survive.

The paper suggests that the long-term solution to what it terms “society’s biggest problem – how to fund social care for older people” could be a minimum package of entitlement, paid for through a new insurance system.

It argues that the current situation, whereby social care for the elderly or those with long-term health problems, is means-tested and provided or commissioned by local government –is unsustainable. Local criteria mean that unless a person’s need for social care is essentially critical (life-threatening), the council’s assessments will deem that they are not obliged to provide services. There is also a ‘postcode lottery’ whereby some councils provide more services than others.

Moreover, people with assets and savings above a total value of £21,500 are forced to sell their homes to pay for care. Residents of care homes with £13,000 or less have this sum disregarded in the calculation of what they can afford to contribute towards the cost of their care. Care home residents also have a weekly Personal Expenses Allowance (PEA): currently £20.45.

Savings account approach
Funding Tomorrow Today says that “ a new relationship between the individual and the state is needed that recognises the need for extra resources and organises funding fairly”. The report proposes a basic ‘safety-net’ level of care, backed up by top-ups through social insurance and government support for the poorest. The report suggests that this system would reward those who save; favour prevention over high-cost ‘last resorts’ such as care homes; and hand control of how money is spent to the users rather than the funders of care.

NHS Confederation chief executive Gill Morgan said, “We all have to face up to the issue of who is going to look after us if we get sick or grow old. There is a widespread view that the current system cannot be sustained and will require a constant series of legislative changes. The current system is also seen as unfair. It cannot be right that many people who have saved or invested money wisely feel penalised through, for example, having to sell their homes to pay for care in their old age or if they get sick.

“Decisions around the care of the elderly and the long term sick cause genuine heartache for frontline NHS staff. A system of social insurance that guarantees a level of care to the elderly and sick in keeping with the NHS’s values of fairness and social justice, with top ups for those who can afford it and support for those that can’t offers a fairer way forward.

The funding of social care was last given serious attention by a Royal Commission on long-term care, which recommended that personal care should be free after a need assessment, and that other care should be co-p[aid between the state and the individual. The then-Health Secretary Alan Milburn published the government’s response to the recommendations – a rejection - simultaneously with The NHS Plan in 2000.

The Department of Health website states that “public money spent on social care comes from a combination of central government grants, council tax revenues, and user charges. Some £2 billion is raised through user charges, which accounts for around 14 percent of gross expenditure on adult social care. It is up to individual councils to decide how to use that funding and how much of it to spend on social care. The overall gross expenditure on adult social care in 2005-06 was approximately £13.7 billion.