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What Britain can learn from Japan and Germany’s social care fix

What Britain can learn from Japan and Germany’s social care fix
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In both countries new taxes were introduced to pay for comprehensive care

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Elderly people

In both countries new taxes were introduced to pay for comprehensive care


In Depth

Holden Frith

Monday, July 27, 2020 – 2:55pm

After more than a decade of delay and several failed attempts, the government is reportedly gearing up for another shot at solving the UK’s social care crisis.

“The system that officials are considering is a modified version of how Japan and Germany fund social care,” The Guardian reports.

“Both are widely admired for having created a sustainable way of financing social care to deal with the rising needs an ageing population brings.”

What’s wrong with the UK system?

“The current system is widely regarded as unfair, complex, confusing and failing to meet growing care needs in the population,” says the Nuffield Trust.

It varies widely not only between England, Scotland, Wales and Northern Ireland, but also between different local authorities within each part of the UK.

While some people’s care is paid for by the state, others have to use up most of their savings before they can receive government support.

How does social care work in Japan?

Japan has “one of the most comprehensive social care systems for the elderly in the world”, says The Conversation. It was introduced in 2000 after a long debate about how to care for the world’s oldest population.

“The system is partly funded by a national insurance fund that all over 40s pay into and partly out of general and local taxation,” says the Nuffield Trust. Individuals pay 10% of the costs out of their own pockets.

“Japan has traditionally relied on hospitals to provide care for the long-term sick,
although use of residential care is increasing,” says the King’s Fund. “Residential care institutions are not allowed to be profit-making,” but in-home care is provided mostly by private companies.

Eligibility for services is determined by a medical assessment carried out by a care manager, who is then responsible for arranging the necessary support.

“At the heart of the Japanese system is a strong commitment to long-term prevention of loneliness and ill health,” says the Nuffield Trust.

This represents “a stark contrast to England’s short-term approach, driven by budget constraints, which is focused increasingly only on those with highest needs”, it adds.

How does social care work in Germany?

In 1994, Germany launched a “universal and equitable funding model, supported by both main political parties”, says the London School of Economics.

Less generous than the Japanese system, it is intended only “to cover basic needs”, says the King’s Fund. But the care provided is identical throughout the country and is determined by an individual’s need rather than his or her ability to pay.

Although wealthier individuals are expected to top up government contributions with their own money, they’re not expected to pay the whole cost of their care – as they are in England. Poorer Germans can apply for means-tested benefits to cover the funding gap.

To fund the system “everyone starts paying into a fund from the time they start working”, says City A.M.. “Currently 1.5% of every person’s salary, and an identical sum from employers, is safeguarded to pay for care in later life.”

The contributions are “administered by health insurers”, says the King’s Fund, and used to pay for a wide variety of support. “Nearly all social care, including institutional and home care, is delivered by private providers,” it adds.

What can the UK learn from Japan and Germany?

Proposals to increase taxes for people over 40 to fund universal care in old age “are emerging as the government’s preferred solution to the social care crisis, after Boris Johnson last year promised to fix it ‘once and for all’,” City AM reports.

If Johnson is to succeed where many of his predecessors have failed, he will have to persuade a sceptical public that his proposals will work for them.

In Germany, there is a broad understanding that “long-term care is a social risk requiring social protection,” says the LSE. “This is not a partisan position.”

In the UK, by contrast, previous attempts to reform social care have foundered on party politics.

“In 2010 the Labour government was accused by the Tories of planning a ‘death tax’ with proposals for a levy at the time of death to fund a universal national care service,” The Independent reports.

“In turn, Theresa May’s Conservatives were met with hostility after the party’s 2017 election manifesto included proposals for more people to pay for social care by selling their homes. The policy was branded a ‘dementia tax’ by the opposition.”



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