On July 4th 2011 (Independence Day in USA), Andrew Dilnot’s commission published its important report on paying for care for the elderly.
You probably already know that it asks the government to commit £1.7bn ($2.7bn) to pay for care so that people don’t have to sell their homes to pay for their own care, by capping the total amount a person needs to pay for their care at £35,000 over a lifetime ($56,000).
This is great news! It’s great news for a lot of people, though they will probably interpret it in different ways: To the politician, this is great news. The elderly tend to vote more, and to think more about who or what they are voting for. So every politician will wrap him or herself in the flag, claim it was their idea, and get voters on their side. Only, of course, until the next band wagon comes along.
To those in financial markets, this is great news. Instead of insuring someone for unlimited care costs (which is risky, and therefore so expensive that most people don’t take out insurance), they can insure them for very limited care costs (£35,000). And because people don’t understand the changes yet, the insurance company can structure in very high fees for themselves.
Care Home providers are a mixed bunch. Some are dedicated to providing the best possible care at the best possible price, and others are dedicated to providing the best possible returns for their shareholders and directors. This group will love the changes – it gives them opportunities to move costs from one budget to another, to maximise their income because the UK government is picking up the tag.
I’m not so cynical that I can’t find anything good. The elderly themselves will be delighted. They don’t need to transfer all of their assets to their sons or daughters, just in case they suddenly need care and it is too late to escape the tax man. They can get old with dignity, paying their way without their way being too expensive. So they will be happy (assuming it all goes through government, of course; the devil is in the detail!).
The sons and daughters of people about to retire or about to need care will see it as a mixed blessing. On one hand, they get to keep more of the inheritable assets. On the other hand, there’s no push to give them control early (and let’s be honest, not all sons and daughters have their parents’ best interests at heart; some have turned the assets into cash and thrown the parent into a care home a little too quickly for comfort).
It’s an exciting time: policy on the basis of ethics and what is right, rather than what the newspaper moghul demands. Let’s see what happens in reality?