LTC lessons from the UK?

Steve Moses, our Fellow on Healthcare Policy, puts out a daily publication available by subscription. But we occasionally, with permission, pass them along here on the OSPRI Blog. Here is one of those times:

LTC Comment: Let me tell you an anecdote from our 2008 National Long-Term Care Consciousness Tour that helps make a key point about LTC insurance marketability.

When I was in Washington, DC with the Silver Bullet of Long-Term Care, I received an e-mail from the Prime Minister’s office of the United Kingdom. They wanted to know if it would be all right to send over a delegation to speak with me, and others, about long-term care financing. It seems Great Britain is unable to pay for its socialized acute care health system, much less for long-term care. They would love to have a private long-term care insurance market to help defray the public cost of funding long-term care.

But when they looked at the United States, where it is commonly understood that no one qualifies for help with their long-term care costs until they have spent down into total impoverishment, they wondered: “If Americans can’t sell long-term care insurance in their dog-eat-dog, capitalist system, how could we ever hope to develop a long-term care insurance market in a socialized health care system like England’s?” (My paraphrase.)

I invited the U.K. delegation of two experts on aging to join me in the “Silver Bullet” at a very nice RV park on the outskirts of DC. I picked them up in the truck at the end of the D.C. Metro Green line, and drove them to the Airstream trailer. It was a hot and humid day, so we had the air conditioning on. The three of us sat in that little 16-foot trailer for three hours talking about long-term care financing. See my interview of the two English experts on LTC in front of the Silver Bullet here.

I learned something very interesting. In the United Kingdom, the most you can shelter in home equity while getting the government to help with your long-term care costs is $42,000. So, we are 10 to 15 times more generous with our scarce public resources for long-term care in the United States as they are in their socialized health care system.

No wonder people don’t buy LTC insurance in the USA. Medicaid protects their most valuable asset, the home. Ironically, private long-term care insurance would be more needed and more marketable in England, where their ostensibly socialized health care system does not protect Brits’ biggest asset.

Update: As you can see in the following BBC article, the British home equity exemption is actually 23,500 British pounds. At current exchange rates, that converts to $38,600 in US currency. Thus, the home equity exemption in the UK varies based on the exchange rate, is usually between $35,000 and $40,000. Compare that to the home equity exemption of $750,000 in New York, California, Massachusetts, and Idaho and $500,000 in most of the rest of the United States.

Special thanks to longtime Center friend and supporter Spencer A. Lehmann for bringing the following article to our attention. Excerpts below. Read the full article online here. Where it refers to “social care,” understand that term includes what we call “long-term care.”


Excerpts from Nick Triggle, “Compulsory social care bill plan,” BBC News, July 14, 2009,, emphasis added.

People in England may be forced to pay as much as £20,000 on retirement to help fund the social care system under plans being put forward by ministers.

It is one of three options being proposed by the government alongside top-ups [private supplementation] and insurance.

In return, the government said a certain amount of social care would be provided free to everyone, while accommodation costs could be deferred.

The current means-tested system is considered unfair and unsustainable.

Social care covers everything from home help with washing and dressing through to full-time residential care.

At the moment, anyone with a home or savings of £23,500 or more is not given any state funding for their care.


o Partnership – The state guarantees certain level of care – maybe up to a third – leaving the individual to pick up tab for the rest. For some this could run into tens of thousands of pounds

o Insurance – The same as partnership, except that the government would help set up insurance schemes for people to pay into to cover extra cost

o Comprehensive – Payments of up to £20,000 to be paid after retirement, in return all social care, except accommodation costs, would be paid for by state

About three quarters of people in the system fall into this category.

This means that thousands of pensioners each year have to sell their homes or use their savings to fund their long-term care.

Experts predict the situation is only going to get worse in time with the ageing population.

Health Secretary Andy Burnham said the government was trying to be bold in a bid to encourage a debate.

“For too long politicians have avoided this issue.

“We have an opportunity to grasp the nettle and confront the debate.

“If we fail to do that we face the prospect of a diminishing quality of care being provided.” . . .

Under all three plans, the poorest will have their full care package paid for by the state.

The government argues many people will be better off under these models as the average cost of social care for a 65-year-old is £30,000 over the rest of their lifetime.

And to end the “injustice” of people losing their homes when they go into care, ministers proposed allowing people to defer the costs of residential care until their death when the bill would be taken from their estate. [Sound familiar? Medicaid estate recovery.]

Ministers said it was now up to the public and social care sector to give their feedback on the plans. . . .

Story from BBC NEWS


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