As part of the NHS Plan issued in July 2000, the Government launched the concept of intermediate care. Intermediate care is not so much about the routine of rehabilitation after an illness or treatment, which is already taken care of by the NHS, but rather about prevention, which as we know, is definitely better than cure.
The Government has backed this initiative with the promise of £900m to provide intermediate care between now and 2003/2004. Some money is being made available from NHS funds and some is coming via local authority budgets. Both are under clear instructions to work together, spending the money to make sure that intermediate care not only happens but succeeds.
Intermediate care means care services that meet the following criteria:
l Care will be aimed at avoiding unnecessary or prolonged stays in hospitals or care homes.
l Care will follow a proper assessment, and involve an individually structured plan for recovery.
l It will be aimed at maximising independence and ideally living at home.
l The care will be short term, often lasting just one or two weeks, and only in unusual circumstances, longer than six weeks.
Such care might provide extra help for a frail person recovering from pneumonia in their own home, for example. A few weeks of intermediate care would make staying at home possible in both the short and long term. This would help prevent irreversible deterioration that could lead the sufferer with little choice but to go into a care home permanently.
Similar help could be provided for people after hip replacements and other forms of surgery, where without extra help at home, the only way for the person to manage their life safely would be by moving into a care home or staying in hospital.
There is little flesh on the bones in the documents released by the Department of Health but the principle makes sense. What the Government wants is results.
Issues for insurers
With much of the need for intermediate care coming from the elderly, it seems that the intermediate care initiative could easily impact on long term care insurance.
But before considering its effect on LTC insurance, the question is 'will it work?' Of course, this cannot be answered until we see some results, but we have every reason to be optimistic. The initiative is based on the philosophy that 'we don't have to accept that things can't be improved they can be, so let's go for it.'
The Government, and in particular the Department of Health, want it to work. The logic seems impeccable, so much so, that one might wonder why it is a new initiative.
In the short term, the initiative is not likely to have a big impact on LTC insurance. The number of people involved will not be huge and few will have arranged LTC insurance. The impact on policy claims and benefit payments, if any, will be minimal.
Those few individuals with policies may find that intermediate care does help prevent their health deteriorating to the stage where they need to claim benefits, but in the short term, LTC insurance will remain unaffected by this development.
However, in the longer term this may change. If resources are targeted at those most likely to need care and produce results, then fewer people will be admitted to homes and fewer people will find that they are unable to undertake activities of daily living (ADLs). This will need to be taken into account by long term care insurers.
But before assuming reductions in LTC insurance premiums as a result of this initiative, it is also important to consider other factors.
Improvements in healthcare and treatments focus on reducing death rates and prolonging life. But if these improvements do not make the lives of the survivors healthy, they may increase, rather than reduce, the total amount of disability in older people and hence the need for long term care services.
So it seems the jury will be out for a good while on the long-term impact of intermediate care.
The role of rehabilitation
But while LTC insurers may not be impacted by the Government's initiative, should LTC insurance be more focused on rehabilitation and prevention? The answer ought to be 'yes', after all, it is what everyone wants, but it is worth thinking deeper than that.
First, the Government has said that intermediate care should be provided free of charge to those who need it. This makes sense providing the care will save money elsewhere in the system hospital beds are less likely to be blocked, so waiting lists should benefit. likewise, those who need local authority funding for care home stays will not need to ask for it.
As everyone is eligible, LTC plans should, in theory, not need to cover this need. However, using the private medical insurance parallel, there may be people who want to opt out of the State system and arrange insurance to provide care independently. After all, it will be the NHS deciding if intermediate care is appropriate and not the individual.
There is the basis for an alternative approach already in existence. Many LTC insurance schemes include an assistive device benefit of one sort or another.
The logic behind this benefit, which sometimes (but not always) kicks in at an earlier level of disability, is that it provides devices and adaptations in a person's home which are aimed at 'keeping them on the move'. This sounds remarkably similar to the principles behind intermediate care.
At present though the basis of calculating this element of the premium is almost certainly limited to what the insurer considers is the probability and incidence of providing 'one off' items for people already failing ADLs.
The insurer will not have included in the premium the probability of paying benefit for someone who is not yet failing ADLs, even if they might not subsequently claim the main benefits, particularly as the benefit might be payable on recurring occasions.
Nevertheless, the seeds are there for this type of benefit to be expanded to provide intermediate care as part of the LTC package.
However, given that the Government intends to provide this type of care free of charge, it might perhaps sit better as an optional extension on LTC insurance policies. It could be selected by those who want to opt out of what the State provides and it would not be the choice for those who are comfortable taking advantage of the State's intermediate care initiative.
And as a standalone policy? The Government believes that the provision of intermediate care will keep people out of care homes. If that is the case, it will become possible to provide a package of care which does just that and will be appropriate for the following:
l Those who are desperately keen to avoid ending up in a home at all costs.
l Those people who have a good support network which could deliver care at home, but might not be able to go the extra mile if their health deteriorates further.
l Those who have no interest in leaving an estate if they need care in a home, but would rather not go into one.
It should be possible for insurers to devise a price for this sort of risk, and to construct a set of trigger points for operating the benefit and claim processes.
However, such a plan on its own would not deal with the issue of paying any other care costs. And there will never be a guarantee that any form of intermediate care, or rehabilitation will actually prevent the need for long term care.
So long term care may still be needed, be it at home or in a home, when people can find themselves needing to pay substantial bills either from their own pockets, or from an insurance policy arranged for this purpose.
This suggests that a plan combining intermediate and domiciliary care benefits should be part of insurance companies' thinking for the future.
Chris Ellicott is technical manager at Age Concern Financial Partnerships
