The Dilnot Commission is due to report in July and in true political style they have decided to fly some kites before making any formal announcements. In an interview with The Daily Mail, Andrew Dilnot dropped out clear hints as to the direction of his teams’ thinking.
The biggest of these is the idea of setting a £50,000 cap on how much elderly people will have to pay for their own care before the Government steps in and picks up the cost. This is a clever intervention in several ways:-
- Firstly, it can be portrayed as being a universal subsidy and therefore it is better than the current open-ended commitment that has to be shouldered by asset rich people. This means that if you have to sell your own home, you won’t have to use all the proceeds to cover care costs.
- Secondly, it creates a platform of limited exposure for the insurance industry, which should stimulate more competitive long-term care insurance products. That should enable people to insure themselves against the risk of needing long-term care, which currently is prohibitively expensive.
- Thirdly, from a treasury viewpoint, it still leaves the biggest burden of costs to be funded by elderly people themselves. 80% of older people are now homeowners and won’t qualify for immediate state support which will still be means tested. Additionally, most people admitted to residential care survive for less than two years so many will never reach the £50,000 cap.
This is a simple and clever solution which neatly puts a level of certainty into the cost of care. Although it still leaves a burden to be paid by elderly people themselves. That is no different to the current situation and there is evidence to suggest that older residents and their relatives would accept this trade-off.
One hurdle that has still to be jumped is that this is a subsidy to the wealthiest older people and will require additional funding from somewhere. As the next election approaches, this hurdle will no doubt be easier to negotiate when politicians realise votes are at stake.