This week the Strategic Society Centre put out a proposal for a National Care Fund to fund the personal care of older people, which could be administered and underwritten by the private sector.
Why explore this approach? The pre-funded long-term care insurance market has been a failure everywhere in the world. The demand and supply-side barriers are numerous and well-known.
A number of key figures in the insurance industry told the Centre they believed there will never be an adequate market to respond to the care funding crisis unfolding in England and Wales.
A small number of commentators still argue that with "clarity" from the government, a market would flourish. This is utterly misleading.
First, because no government can tie the hands of future governments and provide certainty over what the rules of the game will be a decade into the future.
Faced with a patchy pre-funded insurance market for care - and the human suffering characteristic of an under-funded long-term care system - a future government will always be likely to explore different approaches, disrupting the "clarity" that some say is required by the market.
Second, because it is anyway extraordinarily difficult for policymakers to spell out what individuals would receive for a defined level of need in the future: talk to a Director of Adult Social Services to find out why.
But, if the private sector could underwrite a scheme, that would be advantageous from the point of view of policymakers.
So the National Care Fund model we proposed is built around a state-sponsored insurance scheme block-purchasing life annuities from the insurance industry. It is cost-neutral and risk-neutral for HM Treasury.
The model transfers to the private sector those risks it can most comfortably handle, and deals with the other risks involved differently, but off the books of the Treasury.
To illustrate the model, we suggested that in return for a £6825 premium, someone experiencing 3 ‘Activity of Daily Living Failures' would receive £150 per week, which would be on top of £72 per week Attendance Allowance and potentially, in future, a much improved State Pension.
Is £150 per week enough? Well, this income could of course be raised by increasing the value of the premium. And, as the paper explores, rather than level annuities, a National Care Fund could purchase disability-linked annuities, so that the income payable increases in line with level of need.
Would the public accept contributions into a National Care Fund? This is why such a scheme could usefully start on a voluntary basis and move to compulsory contributions over time.
The easiest way for individuals to pay the £6825 premium, as it says in the paper, would be for them to defer it as a charge on their estate.
When the government thought it appropriate, it could then look to mandatory contributions from working-age people. We all need to make greater contributions over our life course to protect ourselves against the costs of care, and it is up to the government to find the framework that does most to facilitate these contributions.
Ultimately, as with pension saving, we need a change of culture.
The majority of countries that have responded effectively to the social care funding challenge have done so through the creation of state-sponsored insurance schemes.
Even the USA is now pursuing this approach having expended millions of dollars on tax-incentives and other measures in attempts to grow the private insurance market.
The National Care Fund provides a template for how a state-sponsored insurance scheme could operate in England, but with the insurance industry still playing a critical role.
With the social care system now coming at the part at the seams, there is simply no time left for us to cross our fingers and hope that millions of older people will go out and buy private insurance.
James Lloyd is a director of think tank The Strategic Society Centre
