Some of us will need a great deal of care support in our final years, others will remain largely healthy and active until virtually the end. Because of the uncertainty about who will need nursing home care and who will need none, risk sharing, or some form of insurance, looks like a good solution for all.
These issues were explored in two major reports, the Study to Examine the Future Financing of Long-Term Care in Ireland (2002) from Mercer, and the inter-departmental Report of the Long-term Care Working Group (2006). The Mercer report recommended that social insurance contributions be raised with a view to bridging the funding gap for long-term care, while the working group favoured a co-payment scheme by nursing home residents based on ability to pay, and taking both income and assets into account.
In 2006, the minister for health Mary Harney announced the Fair Deal scheme which aimed to provide access to nursing home care for all those who needed it. It sought to close this major gap in State support for older people.
Up to the introduction of the scheme, the degree of subvention depended on whether someone was in a private or a public nursing home bed, and about one in five nursing home residents received no subvention at all. The elderly and their families could be under huge financial strain in meeting the cost of care.
Fair Deal introduced a common regime of support, irrespective of whether someone was in a private or a public nursing home bed. The setting up of Hiqa and the introduction of regulation and inspection of all nursing home facilities, public and private, is providing an increasing level of assurance that the quality of care will be good in the future.
The problem with the Fair Deal scheme is that it is underfunded and a waiting list has built up. And it is likely to worsen as, thankfully, most of us are living longer. The problem of funding the care needs of an ageing population is only beginning.
In the case of nursing home care, it is predominantly an issue for those aged 85 and over. Table 1 shows that more than 20 per cent of those aged 85 and over were in long-term care in 2011, with a much lower rate for those under 85. This year, the cost of such care will be around €900 million (0.5 per cent of GNP).
However, as shown in Figure 1, with rising life expectancy, the share of the population aged over 85 is likely to double in the next 15 years and to treble in the next 25 years.
Capped contributions
The 2006 working group report forecast the cost of residential care for over 65s rising from 0.6 per cent of GNP in 2005 to between 1.8 per cent and 2.4 per cent of GNP in 2051, depending on the proportion of the population requiring nursing home care at end of life.
The current version of the Fair Deal scheme is part-funded by contributions from individuals benefitting from it.
However, their contribution is capped at 80 per cent of their income and, more importantly, at 22.5 per cent of their financial assets. In the case of the family home, the liability can be met from the sale of the house at a person’s death so that it does not have to be sold up-front (there are special provisions for married couples to provide for a surviving spouse).
While the income contribution is not unreasonable, and has not met major resistance, the cap on financial assets seems extremely low. The effect of the cap is that, while the Fair Deal scheme remains underfunded, the value of the inheritance passed on to children remains substantially intact.
As most nursing home residents are in their mid-80s or over, the principal beneficiaries of the cap are adult children who are likely to be in their 50s or 60s when they inherit. Raising the contribution from assets would not so much disadvantage the individual receiving end-of-life care, rather the effect would be to reduce the value of inheritances to those in middle-age.
It would be important to exempt provision for adult children with a disability from any changes contemplated to the financial model.
While the working group on long-term care did not recommended any particular figure for the contribution from assets, the language of their report did not suggest that the greater share of asset value should remain exempt: “Further issues requiring decision are whether depletion of the full value of the primary residence should be required or if the assessment of financial means should exempt a certain amount of the value of the primary residence.”
Ironically, the losers from the current situation are the people who cannot get a place when they need it but who could help fund a proper level of service if the cap on contributions was raised.
The backlog of people requiring nursing home places, and the long-term financial challenge as the population ages, requires an urgent rethink of the financial model. If this service is to be provided as it is needed, the cost will rise very rapidly.
While the initial impact of a change in the cap on individual contributions would be small, it would build up over time and help fund a better service.
Now is the time to make that change in the interest of the elderly who need long-term care.
