I thank you, Chairman, Deputies and Senators for inviting us to make this presentation. This is a very comprehensive report, as members can see, and I have extracted the salient points from the presentation for the purposes of this meeting.
During the week immediately preceding the official launch of the report on 25 June 2003, and that of another report by Professor Eamon O'Shea on the review of the nursing home care subvention scheme, an extraordinarily well timed feature by journalist Breda O'Brien appeared in The Irish Times under the headline, “Carers Deserve Recognition and Practical Help.” I should like to quote the first paragraph of that article:
We are focused on hospitals in Ireland. That's not surprising, given a daily diet of stories of overflowing accident and emergency departments, long waiting lists for treatments and stark inequalities in the system. You would think that any group who help on a daily basis to keep people out of hospital and other expensive residential care facilities would be treated as saviours by the State. You would be wrong. Such a group exists. They are called carers.
Hopefully by the end of my presentation the committee will agree that the report which my colleagues and I have prepared focuses very clearly on this theme, namely the need to recognise and support carers in a meaningful way as part of a new and, in many respects, innovative strategy for providing and financing long-term care. Slide two on page two of the presentation circulated identifies the context in which this report was prepared, and it defines long-term care as, "care provided to those who are unable to look after themselves without support due to long-term physical disability or cognitive impairment disability".
The primary focus of the report is on personal or social care, as opposed to medical care. It is neither appropriate nor practicable to distinguish between the financing of medical and paramedical services for people with long-term disability and the financing of such services for those with other chronic conditions. It also needs to be recognised that two distinct groups - older people and younger people with disabilities - need long-term care. Different issues arise for the two groups. The projections in the report embrace all age groups but costings do not include special needs such as educational assistance for younger people with severe intellectual disability requiring residential care.
I turn to slide three on page three of the presentation. One might reasonably ask why this report should be prepared at this point. The answer is that demand for long-term care will inevitably rise as our population, in common with that of most developed countries, ages. This slide shows the proportion of the population that is over 65 in a number of European countries and the expected growth in the older population from 1995 to 2025. The greying of Europe, as it is commonly called, is due to the combined effects of declining overall birth rates, exacerbated by later family formation, and increasing life expectancy for older people. However, the positive picture from the slide is that at present Ireland has by far the smallest older population, and this will continue to be the case for a very long time. This gives our policymakers the opportunity to plan for future demographic change. To this end our report identifies the immediate and longer-term additional cost of a specific long-term care structure which we have proposed.
The next slide on page four emphasises the need for forward planning by depicting the incidence of disability relative to age. The exponential rise in disability rates within older age groups indicates precisely why long-term care policy must be planned well in advance to meet the changing demographic trends. Slide five outlines very basic numbers that demonstrate that long-term care is a serious and significant risk for all of us. The risk of needing residential long-term care at some stage is one in five for a man aged 65 and more than one in three for a woman aged 65. Average duration of severe disability is three years for a man and five years for a woman. Average nursing home stay is two years for a man and three for a woman.
Slide six indicates that even though the average duration of severe disability is quite short, it must be borne in mind - and this is particularly important in the design of any long-term care system - that a small percentage of older people will unfortunately experience severe disability for a very long time. The committee will see that the graph tails off, but it does go up to and beyond a period of ten years.
In formulating proposals for an expanded system of long-term care we needed to consider the present system as a starting point. The essential elements are set out on slide seven under the heading of "Financing." Financing of the present system is from general taxation and out of pocket expenditure. The public system provides both residential and community services. Funding arrangements favour residential care. We agree entirely with the emphasis in Professor O'Shea's report on the need for "assisted living facilities" and this is very much central to the system we have devised and recommended.
Turning to slide eight, a particular feature of the present system is that family members and friends provide most long-term care informally. A 2001 pilot study suggested that 52,000 people provide 20 hours or more care per week and that 79,000 people provide up to 20 hours care per week. Under the present system the carers allowance is means tested and restricted to those providing full-time care. There is an enormous gap being filled at present by family members and informal carers.
Turning to slide nine, we considered international experience as part of the exercise and found that there is no blueprint solution. Systems have evolved in a myriad of ways. There is no particular system that we can point to as being fair and reasonable and right for the Irish situation. It is abundantly clear, however, that the State must take ownership of this issue and must take the lead. Private insurance is unlikely to make any appreciable impact in solving long-term care needs. Insurance is fine for remote contingencies. However, long-term care is a probable eventuality and consequently insurance will not benefit the generality of people.
There is no obvious fit with Ireland's current two-tier health financing system. Changes in social structures mean that the provision of informal care can no longer be presumed upon. A significant shift in finance is needed towards home care and community care. That is absolutely central to our proposals. A greater degree of consumer choice is also desirable.
I intend to skip through the next few slides quite quickly as they contain a number of figures but all convey more or less the same message - that the numbers of people needing long-term care will grow fairly dramatically as our population ages. Slide ten shows the total number of people needing long-term care, based upon central projections, rising from 153,000 in 2001 to more than 270,000 in about 50 years, and rising reasonably rapidly in the interim. The numbers needing high-level care will also rise quite significantly.
In slide 11 we look at the numbers of those aged over 65 needing long-term care. This category will experience a significant rise of about 50% over the next 20 years or so, potentially doubling in the more distant future. Slide 12 indicates that as projections depend very much on assumptions we have considered a range of projections, but as the committee will see, there are certainly no downward trends. No matter how one crunches the numbers there will be a significant and constantly rising need for long-term care.
Turning to the crucial issue of benefit design, the principles, which we believe should be enshrined in a new long-term care strategy, are set out on slide 13. Subvention should be available for home care. That is absolutely central to our recommendations. The amount of home care subvention should be scaled on the basis of dependency level. Subvention should also be available to those in assisted living facilities. Benefits for home care should be offered as a choice of in kind services or cash alternative. The cash benefit alternative should be intended to support, rather than replace or fully remunerate, informal care. Turning to slide 14, any long-term care strategy clearly has to incorporate provision for residential care as and when it is absolutely needed, even though the emphasis is on home care and community care for the longest possible time period.
We suggest structuring residential care support in the following way: In terms of public provision, the full cost should be provided less 90% of the old age pension; for private provision, where continuous care is need we suggest 90% of cost less 90% of the old age pension up to a maximum of €375 per week - that figure was relative to the time we prepared the original report and is probably about two years out of date now; and for high care need we suggest 90% of cost less 90% of the old age pension, up to a lower maximum of €225 per week. Again, that is an out of date figure and will need updating as time moves on.
Turning to slide 15, for home care we suggest that financial support should vary with the level of care needed between moderate, high or continuous disability, and the care recipient should have the choice of either formal services to the same value as would otherwise apply to residential care or a cash benefit alternative at a level of approximately 60% of the cost of formal services. By not differentiating between the level of financial support available for home care or residential care we are clearly recognising that a new long-term care strategy must encourage home or community care in preference to residential care. The cash alternative is designed to support but by no means fully remunerate informal care.
In slide 16 we looked at some financial options. We do not see private savings as in any way practicable. Home care and any form of long-term care is necessarily expensive, and that simply must be recognised. Equity release certainly has a part to play and there is some interest developing in this concept. We do not see estate tax as a viable policy option, and neither do we see a financing system based on general taxation as a credible policy option. The real problem with this option is that the long-term care strategy would be subject to year-to-year budgetary constraints, and realistically, support for home care would be particularly vulnerable in that context.
So far I have managed to avoid mentioning the dreaded word "cutbacks" so I will continue to do so by ruling out the taxation option. However, that issue would arise immediately if one depended on the taxation option as a means of financing long-term care.
Turning to slide 17, we do not see long-term care insurance as having anything other than a marginal role to play as a means of financing long-term care. It may well benefit the better off as a means of sheltering assets but it will not play any meaningful part in providing long-term care for the generality of people. The possibility of allowing retirees to take an additional lump sum to pay a premium for long-term care insurance may have some merit but I doubt very much if it would have any real impact. Essentially, insurance and tax subsidies simply will not work. They are too expensive and the incidence is too great. I keep coming back to the description of long-term care as "a probable eventuality" rather than a remote contingency. Consequently, insurance will simply not work for the generality of people.
Turning to slide 18, having ruled out so much, what are we ruling in? Of all the policy options available we are firmly of the view that social insurance is really the way forward. There would be good public support for a strong statutory entitlement to benefit financed by enhanced PRSI contributions. The essential difference between the taxation and insurance options is that the latter provides a statutory entitlement and gives rise to a firm sense of ownership, just like the old age pension. One has paid one's PRSI contributions and receives an entitlement based on contributions paid over one's working life. That principal should underpin a future long-term care strategy. The formula is simple - everybody pays and many, if not most, people will benefit.
Turning to slide 19, as regards partnership options for residential care, we have considered two possible structures. One is a "front end" option whereby a non-means tested benefit would be provided for a period of, say, one year, and the benefit would be means tested thereafter. Such a structure would be practicable and would ease the burden on the State very significantly. It would be socially equitable by, for example, enabling assets, including vacant housing assets, to be used to finance long-term care beyond the first year. A possible alternative partnership option is to provide the means tested benefit at the front end for, say, a two year period with the State taking full financial responsibility thereafter. In that event insurance could be used to some extent perhaps to finance two years' care, the difference being that there is an absolute limit on the level of insurance that would apply. Again, however, it would only help the well off and would not benefit the generality of people.
Slide 21 looks at the two options, and we see advantages and disadvantages to either structure. However, we strongly favour the front end option on the basis that it is more practical operationally; it would facilitate and encourage rehabilitation back to home care or community care, and it would thereby alleviate pressure on acute care hospitals, which must be a central aim of a viable system. The back end option, on the other hand, would provide more risk pooling and peace of mind for extended long-term care recipients. However, it would be difficult to administer and is not socially equitable, as it would enable the better off to shelter assets.
Turing to slide 22, our three fundamental conclusions are that social insurance financing offers most advantages; we favour a partnership approach to residential care; and we favour "front end" cover for residential care, with cover for home care throughout the duration of need.
Slide 23 picks up on the issue of costs. A realistic long-term care strategy to meet the needs of a caring society is by no means cheap. We estimate that the additional cost in terms of extra PRSI contributions would initially be 1.5% for each of the three social partners, namely, employees, employers and the self-employed. We would expect this to remain reasonably stable for about 15 to 20 years but it could be expected to rise thereafter if current demographic trends continue.
Finally, slide 24 outlines implementation issues. First, a nationwide and continuous needs assessment process needs to be developed. Appropriate levels of benefit for various levels of dependency need to be determined. A national information campaign should be undertaken to raise levels of awareness. Options for preventative measures need to be considered and "assisted living facilities" need to be further developed.
I opened my presentation with the first paragraph of Breda O'Brien's Irish Times article, and I can think of no better way to conclude than with the final paragraph of the same article:
Most of us will grow old. Some of us will be frail and needy in old age. Many of us would hope that family members would be willing and able to care for us. When we skim over the plight of carers, perhaps we should remember a rather grim application of the Lotto slogan - it could be you.
The only change I would suggest to Breda's conclusion is that on the basis of the figures I have shown the committee this afternoon, the slogan for long-term care should read "it probably will be you!"
