Should the Fair Deal scheme be social insurance, rather than means-tested social assistance?

I was speaking to a man who was involved at an academic level in the design of the Fair Deal scheme.

An original proposal was that it would be social insurance, based on PRSI contributions.

In reality, this did not happen, and it is means-tested social assistance.

This means that if you never work, you can qualify for the same care and nursing home as somebody who worked and paid income tax for 45 years.


Question: do people think long-term (or parts of it) care should be social insurance, like the contributory State Pension?



The German scheme is, unsurprisingly for the birthplace of social insurance, based on making PRSI contributions:

• Long-term care insurance: 3.05% (3.4% for childless individuals, beginning with age 23), up to an income ceiling of EUR 58,050 annually. The contribution is borne 1.525% by the employer and 1.525% (1.875% for childless individuals, beginning with age 23) by the employee.

So German workers pay a max of (1.525%)*(58,050) = €885 annual insurance contribution towards possible future LT care.

Unless your proposal is that people who never worked should be left to die in the gutter (and I'm sure it isn't) if they need residential care but aren't able to pay for it privately (and most of them won't be able to) they are going to have to get it at public expense. So, one way or another, means-tested support for residential care looks inevitable.

So the consequence of providing a second, social insurance-based scheme for funding residential care is that people who, currently, don't get support (because they don't satisfy the means test) will get it. That will have to be paid for, either through higher taxes or higher social insurance contributions (or a bit of both). If we assume that the German contributions are set at a level high enough to actually finance the residential care (which is not necessarily the case)and that a similar level of contribution would finance residential care in Ireland you're looking at an extra 3-3.5% on social insurance contributions or tax rates (or maybe a bit less, because we don't have a ceiling for assessable earnings).

Most people would pay, directly or indirectly, this extra contribtuion all their working lives and get no benefit ffrom it (because only a minority of people ever move into residential care). They'd be doing this so that other people, who don't satisfy a means test and therefore could afford to pay for themselves, wouldn't have to. They might not think that that was a great deal.

I could see this being controversial, to be honest.

Unemployed workers in Germany are covered by the same LTC insurance. A premium is paid for them while they are unemployed. This applies to workers receiving JSB for up to a year.

The long-term unemployed in Germany are also covered by LTC insurance, if they were previosly receiving JSB.

Similarly, I suspect (but have not confirmed) that spouses of insured workers are also covered by LTC insurance.

Protocol said:

Question: do people think long-term (or parts of it) care should be social insurance, like the contributory State Pension?

Click to expand...

No, we already tax work far too much and wealth far too little. This would just be more of the same. I think the current system is too generous but far better than another tax on work.