Social care and the COVID-19 pandemic

Published on 3 July 2020

In this blog we explore how care homes fit into the wider system of adult social care in England, and why they appear particularly badly hit by the pandemic.

Care homes are receiving a lot of attention during the COVID-19 pandemic. Death rates of care home residents are high; there are concerns that the lack of COVID-19 testing and personal protective equipment for staff in care homes has caused the virus to spread further and faster.

In this blog we explore how care homes fit into the wider system of adult social care in England, and why they appear particularly badly hit by the pandemic.

What is adult social care and where do care homes fit in?

Adult social care includes support for people of working age (aged 18-64) who have disabilities or learning difficulties, and older people (aged 65 and over) who need help with daily activities such as washing, dressing or making meals as they get frail or develop illnesses such as dementia.

It is often a person’s health or frailty that means that they need social care. However, in England, the social care system looks very different to the healthcare system in several important ways. First, healthcare services are available based on clinical need, free at the point they have their treatment, through the taxpayer funded NHS. By contrast, access to government social care is means-tested. This means that people who are assessed as needing social care only qualify for government-funded care if they have less than £23,250 in savings.

Second, the organisations and workers who provide social care are different to the NHS. Most social care providers are privately owned. By contrast, NHS hospitals are owned by the state. Both the NHS and social care are large employers: in 2018 an estimated 1.5 million were employed in social care, compared to 1.2 million employed directly for the NHS[1]. Social care workers are much more likely to have few or no formal qualifications, although this does not mean they are unskilled. It is common in social care to work part time or for multiple employers, and many workers are on temporary or zero hours contracts. People change jobs more often in social care than they do in the NHS.

Third, government-funded social care is funded and organised by local authorities. Each local authority must decide how much of their budget to allocate to adult social care and what mix of social care services to provide. This means that there can be large differences across local areas in spending, services offered, and what level of need (or disablement) is required to be eligible. By contrast, NHS funding comes from a ring-fenced pot and cannot be used for other services. There are also national standards about what health services are offered, and performance targets for hospitals and GPs on the number of patients they see and how they are treated. In 2018/19, local councils in England spent £18 billion on social care, with roughly half spent on those over 65 and half spent on younger adults. This compares to total public spending on health of £129 billion[2].

Why are we hearing more about social care?

The focus of recent attention has been on social care for older people and specifically on care homes, due to the high rates of infection and deaths. The figure below shows the rise in deaths from COVID-19 and non-COVID-19 causes relative to 2019.

Source: Office for National Statistics

People in care homes are vulnerable to COVD19 – they tend to be older and in poor health. It is also harder to control the spread of the virus in a place where people live together. Less is known about people who receive social care in their own home, but there are some indications that death rates are also high[3].

There are however several features of the social care sector in England, which may have made the COVID-19 outbreak harder to control and more deadly both in care homes and for those receiving home help. These include:

  • Many older people receive less social care than they might need prior to the pandemic.
  • The NHS not having the right incentives to take in account the full consequences of discharging patients who have or may have COVID-19 into care homes.
  • A lack of information about who receives social care, where and from whom, making it harder to give guidance and make sure COVID-19 tests and protective equipment for staff get to where they are needed.

Many of these issues can be related to a lack of full, private insurance against the risk that people will have to pay for their own social care. In 2011, the Dilnot Commission estimated that the over-65s face a 50/50 chance of having to pay over £20,000 towards their own social care, and a one in ten chance of paying £100,000+.[4] Many people would like to insure themselves against this risk. You or your family probably have several insurance policies, such as car insurance, home insurance or holiday insurance. You pay a premium, and the insurance company will pay out if you need to claim. However, there is no market for social care insurance in England.

The reason that there is no private social care insurance is due to what economists call adverse selection. People typically know more about how likely they are to need social care than an insurance company does. For example, they may know information from their family history (eg whether dementia runs in the family) or how healthy their lifestyle is (eg how much alcohol they drink). When buyers and sellers do not have the same information, economists refer to this as asymmetric information. If an insurance company sets a price or premium for social care insurance, the only people willing to take up the policy would be those who expect to claim more than the total they pay to company. The insurance company would therefore make a loss. This happens at every price the insurance company could set, and therefore no insurance company offers insurance cover – instead people have to self-insure by building up savings. This is an extreme example of a market failure, which is a missing market.

Exactly the same missing market problem exists in health too. It is hard for the market to provide private health insurance. This is one of main reasons why governments in most developed countries either provide or heavily regulate health care insurance. The NHS not only provides us with healthcare when we need it, it also insures us against costs associated with falling ill. In countries such as Germany and the Netherlands, healthcare is funded by compulsory social insurance, where premiums are like taxes and depend on a person’s income not their health. Germany and the Netherlands also operate similar universal systems of social care insurance but there is no such system in the UK.[5]

Why does the lack of social care insurance matter for COVID-19?

The lack of insurance provided by the social care system in England may have made it harder to manage the COVID-19 crisis in at least three ways.

First, as many older people must either pay for their own social care or rely on friends and family, they will tend have less social care than they need. Added to this, substantial cuts in publicly funded social care since 2010 mean more people must arrange or pay for their own social care. Many rely on unpaid help from friends and family, which has been estimated to be worth around £60 billion each year[6], or paid home help where the helper or carer may or may not come through an agency and may or may not have any care qualifications. The costs of care homes can mean people tend to stay in their own home longer. While this has not necessarily had a direct impact on deaths in care homes, it does mean that the COVID-19 hit at a time when many older people still living at home already had less social care than they needed. These people are vulnerable not just to COVID-19 but to death from other conditions that it is harder to get help with during the lockdown.

Second, the separation of NHS and social care means that the two systems do not have incentives to consider the impacts that their decisions have on the other system. At the start of the pandemic, some patients who had COVID-19 or may have had COVID-19 were discharged from NHS hospitals into care homes. This allowed the virus to spread to other residents. While in many cases this will not have been intentional, there were few consequences for NHS hospitals of discharging these patients as most care home residents with COVID-19 are not taken to hospital. By contrast, hospitals have strong incentives not to transfer patients with COVID-19 to a hospital ward with non-COVID19 patients, to prevent spread across the hospital. This is an example of where decisions by the NHS had an external cost or negative externality on the social care sector.   

Third, there a very large number of organisations providing social care. This has made it hard to coordinate responses to COVID-19, trace people who may have been exposed to infected social care workers and get tests and protective equipment for staff to where they are needed. In 2018, it was estimated that there were 18,500 mostly private organisations that provided social care[7]. This does not include the many family carers, or paid carers older people employ directly. The NHS can track all patients, and knows where they receive treatment, what they receive treatment for, and which healthcare workers care for them. By contrast, local councils only know about the social care use of those that they fund and will have limited information about the staff employed to care for them. Taken together this lack of information has made many aspects of COVID-19 much harder to manage.

There have been many attempts to reform social care over the two decades, in order to address the multiple sources of market failure. None have succeeded so far. Will COVID-19 and the widely publicised crisis in care homes mark a turning point in public and political debate about social care and allow reform to happen?

Talking points

What are the sources of market failure in social care? How might you address the sources of market failure in social care? What might happen to public spending, social care use, and NHS hospital admissions if those market failures were addressed?

How might COVID-19 change how individuals and families plan for the social care they might need in old age?

Footnotes

[1] For social care see https://www.skillsforcare.org.uk/adult-social-care-workforce-data/Workforce-intelligence/documents/Size-of-the-adult-social-care-sector/Size-and-Structure-2019.pdf

For NHS see: https://digital.nhs.uk/data-and-information/publications/statistical/nhs-workforce-statistics. NHS numbers do not include GPs and their staff.

[2] See https://www.kingsfund.org.uk/sites/default/files/2018-11/budget-2018-what-it-means-for-health-and-social-care_0.pdf#page=3 for health and  https://www.health.org.uk/publications/long-reads/health-and-social-care-funding for social care (2019/20 prices).

[3] https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/deaths/articles/deathsinvolvingcovid19inthecaresectorenglandandwales/deathsoccurringupto1may2020andregisteredupto9may2020provisional

[4] https://webarchive.nationalarchives.gov.uk/20130221121534/http://www.dilnotcommission.dh.gov.uk/our-report/

[5] https://www.kingsfund.org.uk/sites/default/files/media/commission-background-paper-social-care-health-system-other-countries.pdf

[6] https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/unpaidcarersprovidesocialcareworth57billion/2017-07-10

[7] https://www.skillsforcare.org.uk/adult-social-care-workforce-data/Workforce-intelligence/documents/Size-of-the-adult-social-care-sector/Size-and-Structure-2019.pdf

This article was originally published by Discover Economics. You can read the original article here.