'Where next for care?' ILC-UK and the Actuarial Profession Day Conference supported by Partnership
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'Where next for care?' ILC-UK and the Actuarial Profession Day Conference supported by Partnership

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Following the publication of the Dilnot Report, this event explored the future of care. ...

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.

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'Where next for care?' ILC-UK and the Actuarial Profession Day Conference supported by Partnership 'Where next for care?' ILC-UK and the Actuarial Profession Day Conference supported by Partnership Presentation 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 View slide
  • Fairer care fundingConclusions and recommendations of theCommission on Funding of Care and Support View slide
  • Conclusions and recommendations of the Commission on Funding of Care and SupportThe 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
  • Conclusions and recommendations of the Commission on Funding of Care and SupportThe number of older people is increasingGrowth in the number of older people in England 2010-2030 100% 80% 60% 40% 20% 0% 65-69 70-74 75-79 80-84 85+ 7
  • Conclusions and recommendations of the Commission on Funding of Care and SupportFlexible societies are good at adaptingProportion of UK population aged 65 and over 25% 20% 15% 10% 5% 0% 1901 1921 1939 1961 1981 2001 2021 8
  • Conclusions and recommendations of the Commission on Funding of Care and SupportSocial care is one element of state supportPublic spending on older people in England 2010/11 £150bn Social care NHS £100bn £50bn Social security benefits £0bn 9
  • Conclusions and recommendations of the Commission on Funding of Care and SupportFunding has not kept up with demandExpenditure and demand: older people’s social care (2009/10 prices) £8.0bn Demand £7.5bn Expenditure £7.0bn £6.5bn £6.0bn 2005/06 2006/07 2007/08 2008/09 10 2009/10
  • Conclusions and recommendations of the Commission on Funding of Care and SupportCare costs are uncertain and can be very highExpected future lifetime cost of care for people aged 65 in 2009/10 £300k £250k £200k £150k £100k £50k £0k 0% 20% 40% 60% 80% 11 100%
  • Conclusions and recommendations of the Commission on Funding of Care and SupportFear is the natural response to current systemMaximum possible asset depletion for people in residential care 5% 25% Median 75% 95% Percentiles 100% of housing wealth 80% Maximum possible asset depletion 60% £150k lifetime cost 40% £100k £75k 20% 0% £0k £50k £100k £150k £200k £250k £300k £350k £400k £450k £500k 12 Assets on going into care
  • Conclusions and recommendations of the Commission on Funding of Care and SupportA cap removes the risk of very high costsExpected lifetime costs for people going into care in 2010/11, by percentile £200k £150k £100k £50k £0k 0% 20% 40% 60% 80% 13 100%
  • Conclusions and recommendations of the Commission on Funding of Care and SupportA cap removes the risk of very high costsExpected lifetime costs for people going into care in 2010/11, by percentile £200k £150k £100k £50k £0k 0% 20% 40% 60% 80% 14 100%
  • Conclusions and recommendations of the Commission on Funding of Care and SupportAnd offers significant asset protectionMaximum possible asset depletion for people with £150k residential care costs 5% 25% Median 75% 95% Percentiles 100% of housing wealth 80% Maximum possible asset depletion 60% Current system 40% 20% £35k cap 0% £0k £50k £100k £150k £200k £250k £300k £350k £400k £450k £500k 15 Assets on going into care
  • Conclusions and recommendations of the Commission on Funding of Care and SupportBut we also need to reform the means testThe effect of extending the means test on the amount of support people receive 100% 80% 60% 40% Current system 20% 0% £0k £25k £50k £75k £100k £125k 16
  • Conclusions and recommendations of the Commission on Funding of Care and SupportBut we also need to reform the means testThe effect of extending the means test on the amount of support people receive 100% 80% 60% Reformed system 40% Current system 20% 0% £0k £25k £50k £75k £100k £125k 17
  • Conclusions and recommendations of the Commission on Funding of Care and SupportExtending the means test helps the poorestMaximum possible asset depletion for people with £150k residential care costs 5% 25% Median 75% 95% Percentiles 100% of housing wealth 80% Maximum possible asset depletion 60% Current system 40% 20% £35k cap 0% £0k £50k £100k £150k £200k £250k £300k £350k £400k £450k £500k 18 Assets on going into care
  • Conclusions and recommendations of the Commission on Funding of Care and SupportExtending the means test helps the poorestMaximum possible asset depletion for people with £150k residential care costs 5% 25% Median 75% 95% Percentiles 100% of housing wealth 80% Maximum possible asset depletion 60% Current system 40% 20% £35k cap with extended means test 0% £0k £50k £100k £150k £200k £250k £300k £350k £400k £450k £500k 19 Assets on going into care
  • Conclusions and recommendations of the Commission on Funding of Care and SupportThe reforms reduce the costs individuals face Initial level of wealth Maximum spend on care £40,000 £9,000 £50,000 £12,000 £70,000 £18,000 £100,000 £28,000 £150,000 £35,000 20
  • Conclusions and recommendations of the Commission on Funding of Care and SupportCare for people of working age Age Maximum spend on care Under 40 Free care 40 to 50 £10,000 50 to 60 £20,000 60 to 65 £30,000 65 + £35,000 21
  • Conclusions and recommendations of the Commission on Funding of Care and SupportGeneral 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). 22
  • Conclusions and recommendations of the Commission on Funding of Care and Support All spending: £697bn 23
  • Conclusions and recommendations of the Commission on Funding of Care and Support All spending: £697bn Social care and disability benefits for adults: £27bnEducation: £61bn The cost of reform: £2bn Defence: £44bn NHS: £103bn Social security for older people: £85bn 24
  • Conclusions and recommendations of the Commission on Funding of Care and SupportWe 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
  • Conclusions and recommendations of the Commission on Funding of Care and SupportWho benefits from the reforms?Public expenditure on social care, by income quintile £2.5bn Reforms Current system £2.0bn £1.5bn £1.0bn £0.5bn £0.0bn Bottom 2 3 4 Top 27
  • Conclusions and recommendations of the Commission on Funding of Care and SupportWho benefits from the reforms?Additional public expenditure as a proportion of income, by income quintile 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Bottom 2 3 4 Top 28
  • Conclusions and recommendations of the Commission on Funding of Care and SupportWho could pay for the reforms?Additional tax paid, as a percentage of income, if reform were funded throughdirect taxes, by household income quintile 0.25% 0.20% 0.15% 0.10% 0.05% 0.00% Bottom 2 3 4 Top 29
  • The Future of Care Funding Panel Debate Andrew Dilnot Julia Unwin, JRF Jane Ashcroft, Anchor Jules Constantinou, Gen Re
  • Paying for Care: The International Context Dr. Doug Andrews University of Southampton
  • Paying for Care:The International Context Doug Andrews University 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 Kneale ILC-UK
  • The role of Extra Care:Perspectives from threeExtra Care HousingProvidersDylan KnealeILC-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.
  • Health, social care and housing amongthe ageing population• 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… The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • Extra care housingWhat is it? Little consensus….Wide spectrum of self-designated extra care housingSome 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 The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • Extra care housingWhat 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/Challenges1. Characteristics of residents Descriptive analysis2. Extra care housing as a home for Event history analysis (Lognormal andlife Competing Risks); Propensity Score Matching3. Extra care housing as a healthy Event history analysis (Competing Risks);home for life Propensity Score Matching4. Extra care housing and hospital Zero inflated negative binomial regression;beds? Propensity Score Matching5.N Inferences on the costs and Descriptive analysisbenefits 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.
  • Characteristics of residents Gender Age Living arrangements Additional care needs Health shocks that may predict entry to extra care housing:  Stroke  Dementia  Parkinson‟s disease The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • Characteristics of residentsThe 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 Male 2.6 6.0Gender Female 3.4 6.7 Proportion of extra care residents remaining 1.00 0.75 0.50 0.25 0.00 0 5 10 15 analysis time (years) No additional care needs on arrival Very low care needs on arrival The International Longevity Centre-UK is an independent, non-partisan needs Low - Moderate care needs Moderate to High care think-tank High care needs on arrival Very high care needs on arrival 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 Risk 2: death an institutionAll residents 8.2% (6.7-9.9) 25.0% (22.4-27.5) Male 6.4% (4.3-9.1) 30.6% (26.0-35.3)Gender Female 9.1% (7.2-11.3) 22.0% (19.2-25.1) No additional support 5.5% (4.0-7.3) 16.8% (14.2-19.6) package Level 1 (very low package 12.8% (6.8-20.8) 29.6% (20.0-39.7) needs)Health Status/Care Needs Level 2 (low support 17.5% (11.7-24.4) 39.8% (31.6-47.6)on Arrival package) Level 3 (moderate support 11.9% (5.2-21.5) 41.0% (28.3-53,1) package) Level 4 & 5 (high or very 9.9% (4.9-17.1) 56.9% (46.1-66.3) high support package) 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)Age Group 75-79 9.0% (5.8-13.0) 24.6% (19.4-30.2) The International Longevity Centre-UK is an independent, non-partisan think-tank (21.3-33.5) 80-84 8.0% (4.8-12.3) 27.2% 85+ 12.7% (8.5-17.7) 49.0% (41.8-55.8) dedicated to addressing issues of longevity, ageing and population change.N 1,189 1,189
  • Extra care as a home for life III All community match sample Domiciliary care match sample Age 65+ Age 75+ Age 80+ Age 65+ Age 75+ Age 80+ Model 1 Model 2 Model 3 Model 4 Model 5 Model 6Models adjusted for Sub-hazard Sub-hazard Sub-hazard Sub-hazard Sub-hazard Sub-hazardAge, Sex, Living ratio of ratio of ratio of ratio of ratio of ratio ofArrangements, Year moving to an moving to an moving to an moving to an moving to an moving to an institution institution institution institution institution institution 1.776 1.216 0.905 0.694 0.532* 0.316**Extra care housing (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.
  • Extra care as a healthy home for life Diminution in loss of functional ability? Time to increase in care package 1.00 0.75 0.50 0.25 0.00 0 2 4 6 8 10 analysis time No additional care needs on arrival Very low care needs Low-moderate care needs Moderate-High care needs The International Longevity Centre-UK is an independent, non-partisan think-tank High to very high care need on arival dedicated to addressing issues of longevity, ageing and population change.
  • Extra care as a healthy home for life Conceptualising „risk‟ of health improvement Risk: improvement in health (decrease in care needs)All residents 24.0% (20.6-27.5) Male 25.7% (19.5-32.3)Gender Female 23.8% (19.3-27.5) 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)Health Status/Care Needs on Arrival Level 3 (moderate support 15.3% (7.5-25.6) package) Level 4 & 5 (high or very high 14.9% (7.9-24.0) support package) Court 9.2% (5.8-13.7)Village or Court development The International Longevity Centre-UK is an independent, non-partisan think-tank (27.4-36.8) Village 32.1%N dedicated to addressing issues of longevity, ageing and population change. 603
  • Falls in extra care 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? 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 8 Predicted Annual Incidence Rate of Hospitalisation 7 6 (nights per year) 5 4 Control 3 Extra care 2 1 0 65+ 75+ 80+ 65+ 75+ 80+ Full community sample Advantaged community sample in receipt of domiciliary 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 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.
  • ConclusionsExtra 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 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 informationfor those who are retired and newly retired to plan their housing and financial futures.Furthermore, consumers need reassurance that policy changes will not negativelyimpact their retirement decisions.7. Any National or Local Falls Prevention Strategy should include housing as a keycomponent of preventing further falls.8. Receipt of Attendance Allowance opens a gateway for many older people to accessextra care housing, through helping to finance monthly care costs and to help accessother benefits. We would urge policy-makers to ensure that all who are eligible to claimAttendance Allowance do so which could enable greater numbers of older people tosupport 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.
  • Thanks for your attention Full report available: www.ilcuk.org.uk Further information: Dr Dylan Kneale, International Longevity Centre dylankneale@ilcuk.org.ukThe International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.
  • Housing and Care Julia UnwinJoseph Rowntree Foundation
  • Julia Unwin, Chief Executive, Joseph Rowntree Foundation and Joseph Rowntree Housing Trust
  • Our purpose Search Demonstrate Influence
  • Our work programmes and aims EmpowermentPoverty Place • to examine • to contribute • to identify the root to the ways of causes of creation and enabling poverty, ineq development people and uality and of communities disadvantage, strong, sustai to have and identify nable and control of solutions inclusive their own communities lives
  • Housing matters © Mike Robertson
  • Care and repair
  • Not just about older people
  • Our credentials
  • Extra-care housing
  • Roles and responsibilities contested Decisions to move in Nominations and allocations decisions Different expectations of housing with care Buildings and facilities provision, management & maintenance Health and safety Promoting well –being Safe-guarding and duty of care Managing increasing care and support needs Moving 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
  • Conclusion Housing 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 King More 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
  • Historical Perspective • 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
  • Key Retirement Solutions Research • 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
  • Product Development • Products designed to meet needs • Flexibility • Draw down products • Impaired terms - underwritten
  • Conclusions • 1.4 million hours of care bought each year • Important future for Equity Release in care funding • Further product innovations needed
  • Final Thought… • £4 trillion in housing wealth overall in the UK, which double the value of our pension assets* * Source - FT
  • Housing and Care Panel Debate Andrea Rozario, SHIP Julia 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 Thoresen Association of British Insurers
  • Care Funding: The role of the private sector Steve Groves Partnership
  • The Role of the Insurance SectorSteve Groves18 October 2011
  • The Role of the InsuranceSector 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 IncrediblyObvious........ “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 NeedsAnnuities 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 treatmentInsurer Adequate information to assess likely insurance risk
  • Why Pre-Funded CareInsurance 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 RidersInsurer 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 SocialCare 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 theInsurance 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 Altmann SAGA
  • Private and confidential: not for onward distribution DRAFT / ISSUE x.x Future of Care Funding Role of the Private Sector ILC-Actuarial Profession Conference 18th October 2011 Presentation byDr. Ros Altmann, Director-General, The Saga Group Twitter: @SagaRosAltmann
  • 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 110
  • 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 111
  • 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 112
  • 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 113
  • 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 114
  • 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!! 115
  • Where Next for Care? Concluding ThoughtsBaroness Sally Greengross ILC-UK
  • Where Next for Care? 18 October 2011