Frank Field MP, champion of welfare reform has called for compulsory insurance to fund long term car...
Frank Field MP, champion of welfare reform has called for compulsory insurance to fund long term care for the elderly, in the wake of the Government's announcement that it will limit its contribution to nursing care costs only.
Speaking at the cover Protection Forum, the MP for Birkenhead told an audience of IFAs that long term care could be best provided through an extension of National Insurance contributions with an option of additional cover from the private sector.
He said: "The model which I advocate is an extension of National Insurance contributions for the very basic needs of long term care. The insurance cover would be sold on a compulsory basis, not in building up funds as it is proper to do for pension cover, but on a pay as you go basis."
He added: "Currently one in five of us will need fairly extensive care towards the end of our lives. None of us yet know which side of the line we will fall on and on that basis I believe that we can sell to the electorate that the risks here can be pooled more effectively if there is a compulsory scheme."
But he said that the compulsory insurance scheme would not be a State one. "The conversation ought to be with the private sector and the mutual sector on what the framework should be to deliver that side of the bargain," he said.
In Germany long term care is provided through compulsory insurance and its experience has shown that costs did not rise to the extent feared.
Field said: "The national scheme - collective but non-State - would be for the very minimum." Further cover could then be arranged privately, he said.
But some in the LTCI market are not convinced that compulsion will work. Sandy Johnstone, long term care strategy manager at CGU said: "Compulsion would be perceived by the electorate as another form of indirect tax and, as we have seen with the recent fuel crisis, the public does not like indirect taxation.
"If people do not like paying extra tax to use their cars they would not like to see National Insurance increase to cover future long term care costs."
Paul Bennett, marketing manager at PPP Lifetime Care agreed and said that compulsion could be more costly than originally anticipated because there would be less reliance on informal care.
He said: "We would rather that Government encouraged people to make their own plans. At the moment costs are kept down by informal carers but if people know that they are entitled to help they will claim for it."
However, in his speech Field countered the argument that compulsion would be seen as another indirect tax. "Politicians may view National Insurance as a tax, but the public does not," he said.
Field also called for more clarity from the Government. He said: "I believe the worst possible outcome would be a continuation of the current uncertainty of what the Government's plans for long term care are.
"It is difficult for the private sector to mobilise its role effectively if consumers are unsure what their cover will give them in addition to what they may be called upon to pay for from communal provision."
