Is the government brave enough to let markets fix the social care crisis?
We have all seen, with the direst of consequences, the deficiencies of the current social care system.
As Covid-19 has raged through the UK, tens of thousands have died in under-resourced, under-invested, and ill-designed care homes.
With the focus in those early weeks on protecting the NHS at all costs, central planners sent potentially infectious patients back from hospital and into care homes, risking the lives of those the state was meant to be looking after.
Belatedly, the government has realised the state the care sector is in. Now there is talk of even greater state involvement to fix it.
We have seen before the reflex of Whitehall towards an industry that isn’t working. With rail or steel or the banks, it is never long before there are loud demands for the state to take over completely. It is the same in adult social care — the nationalisers are coming a’knocking.
The trouble is that the problems in the sector are caused by too much government rather than too much market. To fix them, we need to work out ways to get the market working properly again.
We all know the problems. If you need care and have few assets, it is completely free, but if you have even a small amount of savings, you are expected to fund it yourself, which in many cases means selling your home. Council-run care homes are depressingly outdated and substandard, and care at home is delivered by the cheapest contractors, not the best. Mental health and adult social care have been an afterthought for decades.
The whole system is broken, poorly joined-up, and wouldn’t work even if you doubled the budget. Rather than just pouring more money into a failed model, we need markets to bring in new investment and end the perverse incentives that make social care such a mess.
First, rethink how we fund the building of care homes themselves. Pension funds and insurers are desperate for secure long-term investments, particularly with office and retail property suddenly looking less attractive. Why not encourage them to invest in building care homes, tens at a time in order to capture economies of scale, and lease a full-service package to the local authorities? Councils could provide for their caseload without having to shell out billions on building new homes.
Likewise, don’t give care at home to the lowest bidder without regard to quality. We have all heard the horror stories. Instead, build new partnerships with providers using the latest recruitment and training techniques, and employ artificial intelligence and other smart technology to manage care when human beings are in short supply.
Technology isn’t just for the young and strong of heart. It has a life-changing impact on the infirm too.
With these foundations in place, you’ll be able to have functioning markets in other parts of the system. Right now, you can’t insure for social care in later life because there’s a chance that you might need several years in an expensive care home, and insurers can’t price that uncertainty profitably. So let people insure for, say, six years of care, with the government picking up the “long tail” risk.
This would encourage people to plan responsibly for their old age, while given the government more resources to step in when needed — another rational partnership between public and private.
There are lots of other ways to enable the market and the government to work together on providing care: an Australian-style voucher or repayable bond system, for example, or even tax-free personal saving accounts for care purposes.
Campaigners for nationalisation are rightly horrified at the state the sector is in, but the world is full of possibilities beyond the cold, stale option of public ownership.
At this critical time, the government must be brave enough to consider the full range of options — options that are far more likely to end the crisis in social care than the heavy hand of Whitehall.
Fixing Social Care: New funding, new methods, new partnerships is published by the Adam Smith Institute today and is available here.
Main image credit: Getty