The Strategic Society Centre has published a discussion paper exploring whether a National Care Fund could be operated and underwritten by the private sector, and how such a public-private partnership would work.
The majority of countries that have gone furthest to address problems of long-term care funding in recent decades have done so through the creation of state-sponsored insurance schemes.
This paper begins from recognition of the failure of consumer insurance for care in England and Wales, the need for new funding in the system and the limited appetite among fiscal policymakers to take on new public spending obligations in relation to social care.
Building on the model of a National Care Fund to fund the personal care of older people, first put forward by the author in 2008, the paper asks: could a National Care Fund for long-term care be operated and underwritten by the private sector? How would such a public-private partnership work?
The paper develops a model built around social investment funds managed on behalf of a National Care Fund, which pay an annual National Care Grant that is used by the National Care Fund to purchase annuities from the insurance industry for all individuals entitled to make a claim in a given year. These annuities would be sold to the National Care Fund, which would then make ongoing payments to claimants.
The paper proposes that a National Care Fund would have a needs-threshold for claims of 3 'Activity of Daily Living' failures and a target income payable of £150 per week. This would require premiums from individuals of around £6825 as a lump-sum cash-payment in retirement, a charge on their estate, or an average £14 per month premium if spread over a 40-year working career.