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Social care funding: what can we learn from Germany and Japan?

BMJ 2018; 363 doi: (Published 25 October 2018) Cite this as: BMJ 2018;363:k4429
  1. Camilla Cavendish, senior fellow
  1. Mossavar-Rahmani Center for Business and Government, Harvard Kennedy School, USA
  1. camilla_cavendish{at}

Any long term solution to social care will need to take people with it

The government will announce the autumn budget on 29 October. All eyes will be on the chancellor to see how he plans to fund the promised extra £20bn (€23bn; $26bn) a year for the NHS and what he will do to fund social care.

The Care Quality Commission’s (CQC) recent list of care “blackspots”—areas where patients face the double whammy of a failing local hospital and poor care services—brings home the impact on the NHS of our threadbare system of looking after frail older people.

If the public can be persuaded that social care is crippling the NHS, they are more likely to support new taxes to pay for it.

Until now, social care has not been a salient political matter. While almost everyone sees their GP at some point, few people have any idea what social care means unless they have an elderly relative who needs help to cope—or until they become elderly themselves. Many are then horrified to discover that the long term consequences of living with dementia, Parkinson’s disease, or arthritis don’t fall within the ambit of our free universal health service.

Theresa May tried to tackle this in the 2017 election manifesto, by proposing people pay more of the costs of social care. The proposals were branded a “dementia tax” and she had to do a swift handbrake turn to escape from the resulting fury of millions of people who were, in part, waking up to the reality of bills that they’d never even thought about.

Any long term solution for social care will need to take people with it. It must be trusted to be sustainable, stable, and fair. That is one of the lessons from Germany and Japan, countries that I visited this summer as part of the wider research I am conducting into our ageing world.

Germany’s mandatory long term care insurance system was introduced in 1994, when its care system looked as frayed as England’s does now. The scheme was painstakingly built to ensure that no one gets something for nothing, that everyone gets something, and that everyone—workers over 40, employers, pensioners—puts something in. The government widened access by abolishing means testing. The deal with voters was simple: you will pay more in, but you will get more out. The burden is shared, the risk is pooled, and everyone in need can benefit.

Stable funding is vital. Many Japanese have more confidence in their long term care insurance fund (LTCI) than in their pensions, which have been tweaked so often by the government that some young people no longer bother to pay in. LTCI payments are reviewed every three years and they have been uprated, but within the context of clear mechanisms for capping costs. Hypothecation helps to assure people that their money will not be siphoned off.

The UK Treasury would need to overcome its traditional dislike of hypothecation if we implemented a version of the German or Japanese models. Despite the differences in our systems, that would mean raising national insurance for everyone over 40, including over 65s who are currently exempt from national insurance payments even if they are still working. I think this is a system that could be fair—and I hope it may be one of the options floated in the government’s forthcoming green paper—but I have no doubt that it will take years of painstaking consultation and explanation.

One reason that the German and Japanese systems have commanded cross party support is that both were created at a time of growing worries about local bills for disability. By centralising funding, revenue raising, and eligibility criteria, LTCI takes pressure off local authorities, while keeping assessments local. In England and Wales, the widely differing resources and council tax bases of different local authorities—with councils in deprived areas often facing the greatest need—are a strong argument for centralising social care funding. Until we can do that, the care injustices identified by the CQC will only grow.


  • Competing interests: None declared

  • Provenance: Commissioned, not peer reviewed

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