What we should do about social care, and why?
This term, the Oxford Institute of Social Policy is hosting a seminar series on different perspectives on social policy within Oxford. Each week features a speaker from another department whose work impacts on the study of social policy. In week 7, the seminar series featured a talk by Sir Andrew Dilnot, CBE, Warden of Nuffield College, who was Chairman of the UK Statistics Authority from 2012 to 2017 and Chairman of the Commission on the Funding of Care and Support.
It’s a pleasure to meet up with old friends. Seminar convener Fran Bennett and invited speaker Sir Andrew Dilnot first met as guests on a radio show. Some thirty years later, the seminar began with a conversation on the “cross-pollination” effect of economics—Andrew’s prime expertise—on social policy.
The first question that the Commission on the Funding of Care and Support, which reported in 2011, considered was: “what’s the problem?” The Commission ended up with quite an economic way of framing it, and Andrew graciously spent a good hour presenting his Commission’s work to our social policy crowd.
Armed not only with an infectious enthusiasm for figures and graphs, but also with a knack for translating such statistics into pertinent points—no surprise, from a former presenter on BBC Radio 4’s More or Less programme about statistics—Andrew’s talk covered widespread population ageing, a consequently greater demand for care of older people, and a proposal to finance such care through a public social insurance scheme that caps the cost for individuals. All with graphs, of course.
Context: population ageing
The first few such graphs touched on population ageing. The modal—i.e. most probable—age of death was 89 years for men and 91 years for women in 2014. With more older people, having this “burden of ageing” falling on society may seem like a scary future prospect, so it might help to look backwards:
(Commission on Funding of Care and Support, 2011a: 5)
Despite the stark increase in the number of older people in the last century, no disaster has struck, either economically or socially. The lesson here: economies and societies are adaptable and flexible.
The provision of social care:
The social care sector must keep up with the rising demand from population ageing. Social care is but one element of state support for older people in the UK—in fact, it’s a small slice compared to social security benefits and the National Health Service (NHS):
(Commission on Funding of Care and Support, 2011a: 7)
The distinction between healthcare and social care is exceptionally difficult: picture an individual receiving a bath because they’re in hospital for cancer treatment (healthcare), vs. receiving a bath because they’re in a dementia care home (social care).
Unlike the sizeable, comprehensive, and universal NHS, the slice of social care is means- and assets-tested, not universal, and provided by local authorities. Andrew briefly covered the need to reform the current means-tested system, in which there’s a cliff edge in social provision for those earning almost £25,000/year, at which point means-tested social provision drops off:
(Commission on Funding of Care and Support, 2011a: 16)
One way we should do more for poorer individuals is to reform this system such that the amount of support people receive gradually tapers, rather than drops, off. As real GDP has increased by 5–6 times since 1948, suggesting that we can’t “afford” such social provision is incoherent: it’s not so much affordability, but budgetary priorities.
Care costs for older people:
(Commission on Funding of Care and Support, 2011a: 8)
This graph is Andrew’s favourite, based on which the Commission on the Funding of Care and Support (2011b: 13) estimated that:
a quarter of people aged 65 will need to spend very little on care over the rest of their lives. Half can expect care costs of up to £20,000, but one in 10 can expect costs of over £100,000. Some could spend hundreds of thousands of pounds. There is no way of predicting in advance what the costs might be for any one person.
What’s interesting about the graph is that the probability distribution is highly skewed—it shoots off, which, to economists, is characteristic of a small subset of goods where we want to pool risks. (Healthcare would have the same trend, except there’d be no one with no needs.)
Since such estimated costs of social care are highly uncertain across individuals, private sector provision of a social care insurance is untenable. On the other hand, the government is able to adjust its budget from year to year, with the flexibility to adapt policy—essentially, the flexibility to amend laws —to ensure the sustainability of social care provision. Note the difference in power, and hence one could argue responsibility, between the private and public sectors: precisely because the government is able to change the rules retroactively in a way in which private companies cannot, the government can ensure the sustainability of its insurance schemes.
The proposed solution? A public social insurance scheme for social care with a cap on costs:
(Commission on Funding of Care and Support, 2011b: 32)
In place of the current means-tested approach to social care, the Commission proposed partial risk pooling between the government and the individual, with a £35,000 cap on the costs faced by the individual. Crucially, this covers the catastrophic risk faced by those who do end up requiring high levels of social care.
As with any policy proposal, the issue of financial costs is crucial. Who should pay for this? Andrew argued that funding should come at least in part from older people. Since disposable income for both non-retired and retired households has increased over the years, there is now a taxable capacity amongst the older population—a capacity that didn’t exist when social regimes were first set up. Moreover, disposable income of retired households has increased relatively more than that of non-retired households, strengthening the case for higher taxation of pension incomes.
Therefore, in answer to what should be done about social care, and why: pooling risks in a social insurance scheme, financed at least partially by a new tax on older people, can address the rising care demand from an ageing population, and guarantee that such care is provided for those who need it most. That way, perhaps we’ll have more opportunities to meet up with old friends in the future.
References
Commission on Funding of Care and Support (2011a) Fairer care funding: Conclusions and recommendations of the Commission on Funding of Care and Support. Available at: http://webarchive.nationalarchives.gov.uk/20130221121615/https://www.wp.dh.gov.uk/carecommission/files/2011/07/CFCS-launch-presentation-WEB.pdf (accessed 15 March 2018).
Commission on Funding of Care and Support (2011b) Fairer Care Funding: The Report of the Commission on Funding of Care and Support. Available at: http://webarchive.nationalarchives.gov.uk/20130221121529/https://www.wp.dh.gov.uk/carecommission/files/2011/07/Fairer-Care-Funding-Report.pdf (accessed 15 March 2018).
About the Author
Tania Loke is a Rhodes Scholar (Malaysia & St Cross, 2017) studying Comparative Social Policy. She completed a Bachelor of Philosophy (Honours) at the University of Western Australia, majoring in Physics and Political Science & International Relations. Before coming to Oxford, Tania worked as research officer to a Malaysian Member of Parliament, where she gained experience in public policy research and community work.