‘A Fair Deal on Long-Term Nursing Home Care’ – Speech by Mary Harney, T.D., Minister for Health

Today’s announcement goes to the heart of why I’m glad to be Minister for Health. From the outset, I made it clear that I have a particular commitment to older people. To make a real difference to the individual lives of elderly citizens.

Context: three current initiatives

This policy is part of three very important initiatives the Government is taking this December on services, standards and cost-sharing.

First, we are major funding increases to provide services for older people in their homes. In the last two Budgets, we’ve added €400m to funding for services for older people. There’s never been an increase on this scale before.

We are bringing the number of home care packages to 5,000 from 1,000 two years ago. We are expanding home help services throughout the country – nearly 2 million more hours of help compared to two years ago. As we set out in detail last week, we will fund 1,210 new long term care beds in 2007, the majority of them, 860, in the public sector.

Second, we are bringing forward new legislation to set high standards and give new, stronger enforcement powers to an independent inspectorate for all nursing homes places, both public and private. That Bill will be considered by government tomorrow and we aim to publish it this Thursday. We are recalling the Dail earlier than planned in January to begin its passage through the Oireachtas.

And third, we are introducing this new, Fair Deal on nursing home care.

Policy for Older People

In the past, policy has tended to address the needs of older people through the wrong lens. Through a lens that sees them as passive, dependent recipients. That’s not to say that we’ve shown a lack of commitment to older people. Not at all. We’ve taken care of older people. We are increasing pensions. We have introduced innovative schemes such as free travel, free fuel, free TV-viewing.

That was OK when old age was predictable, passive and short. It isn’t predictable, passive and short any more. Like many other countries, worldwide, we have more people living to their seventies, eighties and nineties. The overwhelming majority of those older people – nineteen out of every twenty – will live in their own homes and will live healthy, fulfilled, independent lives.

So policy related to old people has treat people as equal citizens doing what Ted Kennedy once defined as what makes us human: shaping their own world.

The policy and operational changes I’m announcing today are built on that view of our older citizens. And from the fact that many of us here will be so described within a relatively short time.

People of 65 years of age and older are equal and full members of society. They have worked to build our country, have paid their taxes and raised another generation. In return, they are entitled to security.

It’s vitally important that older people should have security about the availability and affordability of residential care, if they ever happen to need it.

Delivering that security is central to the Fair Deal on Long-term Nursing Home Care I’m announcing today.

The Fair Deal on Long-Term Nursing Home Care will start operating from the 1st of January, 2008. It will make residential nursing home care for older people:

  • Accessible
  • Affordable and
  • Anxiety-free.

Contrast with present unfairness

That’s not the reality, at the moment. At the moment, the support systems around long-term nursing home care are scrappy, inconsistent and unfair. They turn the issue of going into a nursing home into a trauma. For the individual. For their family.

One of the worst aspects of the present system is the matter of imputed income from your home. Imputed income is one of those factors that makes perfect sense on paper. It means that if you own a house, 5% of the value of that house is taken as an income for the purposes of working out how much you should contribute towards the cost of long-term nursing home care.

That’s called “imputed income.” Of course, it isn’t really an income. It’s not cash. Someone has to go and find the cash and that is a pressure no older person should face. And it doesn’t matter if the value of your house goes up – you still don’t get any money into your hand. Nobody does. But with rising house prices, the 5% of imputed income continues to rise, without any actual increase in disposable income.

It makes sense on paper. It makes no human sense at all.

This has to stop. We have to have a new deal that makes human sense and is fair to everybody, no matter where they live.

In January, 2008, a new arrangement will apply to all older citizens. It’ll be clear, fair, uniform and anxiety-free.

The new, fair deal will mean nobody will be impoverished. Nobody need be anxious. Nobody need fear the cost of long term care.

Right now:

People on the same incomes can end up with vastly different care costs.

Under the Fair Deal:

Contributions will be clearly based on individual means and assets.

Right now:

People are unclear and anxious on costs to themselves and their spouse/family.

Under the Fair Deal :

They’ll be clear from the outset and reassured about implications for relatives.

Right now:

Private nursing home beds are unaffordable for many, even with subvention.

Under the Fair Deal:

Contributions will always be below disposable income – and the State, not families, will now take on the task of managing rising costs and getting the best prices.

Right now:

Some family members pay as much as €35,000 or more for their parents’ nursing home care from their own income.

Under the Fair Deal:

No need for cash contributions from family members. Instead, a charge will be made against the older person’s home: a maximum of 15% of its value. If a couple lives in the house, and one needs care, it’s half that – 7½%. And the charge is deferred – neither the older person nor their family have to pay it at the time. It’s settled when their estate is settled.

Right now:

People have to come up with 5% of the value of their house in cash, immediately, for as many years as they are in a nursing home.

Under the Fair Deal:

If a person stays in long term care more than three years, no further charge on the house will be made, no matter how long their stay.

Right now:

People face having to sell or mortgage their homes to pay for care.

Under the Fair deal:

That will simply never happen.

What the Fair Deal on Nursing Home Care, 2008 means is that the one in twenty of our older people who need long-term nursing home care will get it in a fair, simple, anxiety-free way. This is the commitment being made here today by the Government:

  • That every older person will find quality long term residential care affordable and available.

From January 1, 2008:

  • Everybody will be asked to contribute towards their long-term nursing home care according to their means.
  • Everybody’s contribution will be measurably less than their income. They will always retain one fifth of their pension or other income.
  • Everybody will be sure they won’t have to sell or mortgage their home.
  • Everybody will be sure their family won’t have to come up with cash to pay for their care.
  • Everybody will be guaranteed that payments levied against their home will:
    • Never exceed 15% of its value, and 7½% if one person in a couple needs care
    • Be deferred until the settlement of their estate.
  • Everybody’s need for long-term nursing care will be assessed the same way by the HSE.
  • Everybody’s financial situation will be assessed the same way by the HSE.
  • Everybody will receive financial support from the state towards that care – except where they clearly don’t need such help.

We are providing a number of examples in our information pack today. I would like to give just one to illustrate the new system.

Take a couple, each with a €200 pension, living in a house in Dublin now worth €500,000, and no other income or assets. The man needs nursing home care, and the cost is about €50,000 per year.

His cash contribution would be €160 per week, €8,300 a year. That is all he himself would pay. The deferred contribution would be 2½% of €500,000 – €12,500 – for each year he is in care, up to a maximum of three years. The HSE would pay the nursing home the full cost of €50,000, and would receive the cash contribution of €8,300 from the man and €12,500 from his estate after he and his spouse or partner had died.

So clearly, the State would still fund the majority of the cost of care. If he stayed more than three years, the State will meet an even greater share of the cost of care.

There is maximum assurance to the man and his spouse at home that their home is always theirs and need never be mortgaged; that their contribution is clear and predictable; that the deferred charge on the house is limited and reasonable; and that the State’s commitment will be to fund the balance of care costs for all his life.

Administrative work

Before the Fair Deal for Long-term Nursing Home Care can happen in 2008, a great deal of work has to be done. New legislation must be prepared and passed. Because it must be understandable to people throughout the country of different ages, in different locations and in different circumstances, information guidelines must be prepared and circulated.

Because it’s going to require major changes in the way patients access nursing home and the financial support they need, new systems must be put in place within the HSE and elsewhere.

That’s why the Fair Deal will start in January, 2008. But that doesn’t mean the old system just rolls on, unchanged, during 2007. That would not be acceptable.

Transition: improved subvention in 2007

So I’m taking a once-off initiative for 2007, to make the system fairer in the intervening year.

At present, subvention for nursing home care is at three levels:

  • Medium Dependency € 114.49
  • High Dependency € 152.40
  • Maximum Dependency € 190.50

Because there is no clear link between these categories and the actual cost of care that people have to meet, I am replacing the three levels with one maximum rate of €300 a week. We’re also upping the threshold outside Dublin at which – in the words of the 1993 Regulations – you ‘may be refused’ subvention, from €300,000 to €350,000.

Taken together, these two moves will allow the state to better serve people on modest incomes, owning moderately-priced homes. We estimate that 2,000 additional people will be able to access care in private nursing homes through these revisions to the subvention scheme.

€85 million has been set aside to cover this. It’s a down-payment on the Fair Deal coming in 2008, allowing us to ease current inequities.

We’re not, by the way, talking only of patients who will need long term nursing home care in the future. The 21,000 patients currently in long term nursing home care – and their families – should know that nobody currently resident in either a private or a public nursing home is going to be worse off as a result of the Fair Deal or the improved subvention in 2007.

Guidelines will be issued to the HSE to ensure that if there’s any effect on an older person already in long term nursing home care, it’ll be a good effect. An improvement.

Building blocks of the new policy

I should add that this policy builds on significant reports produced over the last six years:

  • The Ombudsman’s Report
  • Mercer’s Study on the Future Financing of Long Term Care Finance and the public consultation that followed
  • Eamon O’Shea’s Review of the Nursing Subvention Scheme.
  • The ESRI’s study of public opinion on long term care financing
  • Analysis by the National Council for Ageing and Older People
  • ICTU’s publication on Caring for the Future
  • The OECD’s study of Long Term Care for Older People
  • The Report of the National Economic and Social Forum on Care for Older People
  • The National Economic and Social Council’s report on the Developmental Welfare State
  • Work and inputs from the Equality Authority and many of the social partners

I mention all these to illustrate the huge interest in this area and the complexity of the issues involved, in Ireland and internationally. I would like to thank everyone who made an input. Their work has significantly informed the actions we’re taking today.

These reports were valuable inputs for the interdepartmental group Minister Brennan and I set up two years ago. I would like to record our appreciation to all the members of the interdepartmental committee who brought this work forward.

The Government took certain decisions on principles of long term care policy before the start of the social partnership talks this year and submitted these principles for discussion at the talks. They were endorsed in the social partnership agreement Towards 2016. I look forward to discussions with the social partners on the implementation of the policy.

Future financing

I’ve concentrated today on what this means for people and their families. Because they’re the people at the sharp end of this issue.

The actions the Government is taking to make sense of long term care for our older people requires massive change in State financing of that care. Any funding arrangements for long term care in general – not just residential care – have to be sustainable in the medium and long term.

Nobody can predict with certainty long term care costs in the future. We intend to examine this further over the next three years, in the light of how the new arrangements work in practice. Today we can fund long term care principally from general taxation.

The small change in the health levy and the increased charges for private beds in public hospitals are providing €85m more next year as a down-payment on the Fair Deal in 2008. We now have to concentrate on long-term prudent planning to ensure the availability of finance to meet these commitments over the coming decades.

We’re are examining options like pre-funding higher costs in the future, as we have done with the National Pension Reserve Fund.

In order to do what we must do for people who are now in their forties and fifties, we’ve got to ensure the economy stays strong, with high productivity growth. Without that, no funding mechanism can work.

If anyone had looked at long term care costs in 2006 back in the economically depressed 1980s, they’d have said: “Forget it. We’ll never be able to afford that good stuff. The country’s going to be even more bankrupt in the new century than it is at the moment.”

Our economic performance has given us options and finance that didn’t seemed possible, back then. A strong economy isn’t just statistics: it’s an engine of societal change. It allows us to concentrate on – and deliver – freedom, dignity and certainty of care to our older citizens.

Broader context – social commitments

Having outlined the realities of the Fair Deal and of the improved subvention, I want to make a point about the times we live in. Times of unprecedented success, growth and prosperity.

Those times change what is required of us, as a society.

Poverty and deprivation require one kind of response. A peaceful and prosperous society demands quite different policies and virtues.

  • It demands that instead of cutbacks and postponements, we think of responsibilities and commitments.
  • It demands that we look at the long-term, not just the short-term.
  • It demands policies that serve as a statement of what Ireland is and what we are determined it can be. Values in action.

The question I have set out to answer with the government over the last two years is about the commitments we give to each other on long term care.

The commitments we make to each other in our society – the commitment of the young to the old, the strong to the weak, the wealthy to the poor, the healthy to the sick at all ages.

The policy decisions the government has made are not about technical benefits changes or rule changes. Still less are they decisions ‘targeted’ at older people. They are about the fundamentals.

They are about ourselves. All of us. Establishing by policy and action what we stand for as a country and what we wish to pass on to the next generation.

It also means making commitments about the cost of care and the standards of care. These are commitments to ourselves, because age is the great inevitability. Commitments that we can deliver on – and that the next generation can deliver on, too.

I believe the policy I’ve set out today is more than a new deal.

It’s fair deal for our older generation who built up this country.

It’s a fair deal for those of us at middle age whose parents are fortunately still with us.

It’s a fair deal for younger people who will inherit the running of a country that took the benefits of a boom and applied them to what matters.

It will also be more easily understood than the current chaotic situation – and making it easy to understand is a priority.

I believe, very strongly, that a key aspect of the Fair Deal on Long-term Nursing Home care must be the respectful way it is communicated to those who’ll gain from it.

Throughout the coming year, my Department and the HSE will be at pains to develop a series of communications that will simplify and make sense of this Fair Deal. So that when it kicks in at the start of 2008, individuals and families will understand precisely how it will serve their needs.

Because that’s what it’s all about: serving the needs of our older citizens in a clear, simple, understandable way. That leaves nobody out….